Humanoid Robots May Be Biggest Product Ever, Sell The News On Tesla's We, Robot And AMD's AI Event

To gain an edge, this is what you need to know today.

Opportunities In Humanoid Robots

Please click here for an enlarged chart of Tesla Inc TSLA.

Note the following:

• This article is about the big picture, not an individual stock. The chart of TSLA stock is being used to illustrate the point.
• The chart shows that TSLA stock ran up in anticipation of the Cybercab event, dubbed by Tesla CEO Elon Musk as We, Robot.
• The chart shows that TSLA stock hit the top resistance zone and backed off.
• The chart shows a big drop in TSLA stock after the much hyped Cybercab event.
• The chart shows that TSLA stock has now fallen in the premarket, significantly below the lower resistance zone.
• RSI on the chart shows that TSLA stock is now oversold.
• From a technical perspective, the combination of the foregoing is a negative.
• In spite of the sell the news reaction, Musk's presentation was impressive.
• In The Arora Report analysis, the global revenue opportunity for robotaxis is about $2T, 15 years from now. Tesla is well positioned to capture a meaningful portion of the $2T market.
• Tesla bulls are delighted by the details given in Musk's presentation. However, Tesla bears are highly critical that there were not enough details.
• Musk showed off humanoid robots dancing and pouring drinks. Musk said that humanoid robots may be the biggest product ever. In The Arora Report analysis, we agree with Musk. Of note, is that Apple Inc AAPL is hard at work to produce humanoid robots. 
• The reaction to Advanced Micro Devices, Inc. AMD Advancing AI event has also been to sell the news. AMD bears point to AMD not naming new customers.
• Inflation at the producer level came inline with expectations. Here are the details:
  • Headline PPI came at 0.0% vs. 0.1% consensus.
  • Core PPI came at 0.2% vs. 0.2% consensus.
• Earnings season has started. The most important earnings are from the country's largest bank, JPMorgan Chase & Co JPM.  JPM earnings are inline with the whisper numbers. As full disclosure, JPM is in The Arora Report’s ZYX Buy Core Model Portfolio, long form $34.14.
• University of Michigan consumer sentiment will be released at 10am ET and may be market moving.

Magnificent Seven Money Flows

In the early trade, money flows are neutral in Amazon.com, Inc. AMZN, Alphabet Inc Class C GOOG, Meta Platforms Inc META, Microsoft Corp MSFT, and AAPL.

In the early trade, money flows are negative in NVIDIA Corp NVDA, and TSLA.

In the early trade, money flows are neutral in SPDR S&P 500 ETF Trust SPY and Invesco QQQ Trust Series 1 QQQ.

Momo Crowd And Smart Money In Stocks

Investors can gain an edge by knowing money flows in SPY and QQQ. Investors can get a bigger edge by knowing when smart money is buying stocks, gold, and oil.  The most popular ETF for gold is SPDR Gold Trust GLD.  The most popular ETF for silver is iShares Silver Trust SLV. The most popular ETF for oil is United States Oil ETF USO.

Bitcoin

Bitcoin BTC/USD is range bound.

Protection Band And What To Do Now

It is important for investors to look ahead and not in the rearview mirror.

Consider continuing to hold good, very long term, existing positions. Based on individual risk preference, consider a protection band consisting of cash or Treasury bills or short-term tactical trades as well as short to medium term hedges and short term hedges. This is a good way to protect yourself and participate in the upside at the same time.

You can determine your protection bands by adding cash to hedges. The high band of the protection is appropriate for those who are older or conservative. The low band of the protection is appropriate for those who are younger or aggressive. If you do not hedge, the total cash level should be more than stated above but significantly less than cash plus hedges.

A protection band of 0% would be very bullish and would indicate full investment with 0% in cash.  A protection band of 100% would be very bearish and would indicate a need for aggressive protection with cash and hedges or aggressive short selling.

It is worth reminding that you cannot take advantage of new upcoming opportunities if you are not holding enough cash.  When adjusting hedge levels, consider adjusting partial stop quantities for stock positions (non ETF); consider using wider stops on remaining quantities and also allowing more room for high beta stocks. High beta stocks are the ones that move more than the market.

Traditional 60/40 Portfolio

Probability based risk reward adjusted for inflation does not favor long duration strategic bond allocation at this time.

Those who want to stick to traditional 60% allocation to stocks and 40% to bonds may consider focusing on only high quality bonds and bonds of five year duration or less.  Those willing to bring sophistication to their investing may consider using bond ETFs as tactical positions and not strategic positions at this time.

The Arora Report is known for its accurate calls. The Arora Report correctly called the big artificial intelligence rally before anyone else, the new bull market of 2023, the bear market of 2022, new stock market highs right after the virus low in 2020, the virus drop in 2020, the DJIA rally to 30,000 when it was trading at 16,000, the start of a mega bull market in 2009, and the financial crash of 2008. Please click here to sign up for a free forever Generate Wealth Newsletter.