Musk Spends $130M – Tesla Gains $344B On Trump Election, Stock Market Focusing On Trump Appointments

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

Incredible Gain

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 TSLA stock broke out on Trump's election.
• As full disclosure, the chart shows the Arora buy signal that was given in the premarket after Trump's election.
• The chart shows that TSLA stock hit the low band of the resistance zone.
• The chart shows that this morning TSLA stock is backing off.  This is an early indication that the Trump rally may be slowing.
• Tesla's CEO Elon Musk spent $130M supporting Trump.  Since Trump's election, TSLA stock has added $344B in market value.  This is an incredible gain.  There are additional gains in the private market value of Musk's SpaceX.
•  Wall Street believes that Musk's relationship with Trump will yield substantial gains for both Tesla and SpaceX.
• As full disclosure, TSLA has been added to The Arora Report’s ZYX Buy Core Model Portfolio.   The TSLA position is suitable for aggressive investors.  Those who are not aggressive may consider a smaller quantity.
• RSI on the chart shows that TSLA is overbought and may pullback.
• In The Arora Report analysis, markets across the globe are now focused on Trump's appointments for key positions.  
  • Trump appears to be picking China hawks.  As a result, stocks in Hong Kong fell 2.8%.
  • Trump appears to be picking Iran hawks who are very pro-Israel.  This is causing markets in Asia and Europe to fall.  This is also bringing buying into oil and gold. 
  • Trump appears to be picking deportation hawks.  This is impacting markets in Mexico and South America.  
• In The Arora Report analysis, the rally yesterday was driven primarily by retail investors after the weekend pump on social media.  Prudent investors need to be careful that the gurus who pump on social media often dump into the rallies caused by their followers buying.  

Magnificent Seven Money Flows

In the early trade, money flows are positive in Amazon.com, Inc. AMZN, Meta Platforms Inc META, and NVIDIA Corp NVDA.

In the early trade, money flows are neutral in Apple Inc AAPL, Alphabet Inc Class C GOOG, and Microsoft Corp MSFT.

In the early trade, money flows are negative in TSLA.

In the early trade, money flows are negative 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 rally is slowing as it approaches $90,000.

Protection Band And What To Do Now

It is important for investors to look ahead and not in the rearview mirror.  The proprietary protection band from The Arora Report is very popular.  The protection band puts all of the data, all of the indicators, all of the news, all of the crosscurrents, all of the models, and all of the analysis in an analytical framework that is easily actionable by investors.

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.