Money Flowing Into Chinese Stocks, Especially Alibaba; The Main Event Ahead Is Nvidia Earnings

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

King Nvidia Earnings Ahead

Please click here for an enlarged chart of Chinese e-commerce company Alibaba Group Holding Ltd – ADR (BABA).

Note the following:

• This article is about the big picture, not an individual stock.  The chart of BABA stock is being used to illustrate the point.
• The chart shows the rise in BABA stock over the last several weeks. The rise is due to money flowing into Chinese stocks, especially BABA.
• The chart shows when an Arora buy signal was triggered.
• The chart shows the jump up in BABA stock yesterday on earnings.
• The chart shows the jump up was on heavy volume, indicating conviction.
• The chart shows the Arora signals to take partial profits during the rise and on yesterday's jump up.
• RSI on the chart shows BABA stock is overbought.  Overbought stocks are susceptible to a pullback.
• Part of the buying in BABA is coming from the meme crowd after a report that Ryan Cohen, founder of Chewy Inc (CHWY), has bought almost $1B worth of BABA stock.  Previously, Ryan Cohen triggered a meme crowd buying frenzy in GameStop Corp (GME).
• Money is flowing in aggressively in all Chinese stocks, especially tech stocks.  Overnight, stocks in Hong Kong jumped 4%.
• Recently, the momo crowd's favorite stocks took a hit.  In the early trade, the momo crowd is aggressively buying the dip in its favorite stocks, including Palantir Technologies Inc (PLTR), MicroStrategy Inc (MSTR), Robinhood Markets Inc (HOOD), Applovin Corp ( APP), Hims & Hers Health Inc (HIMS), Oklo Inc (OKLO), IONQ Inc (IONQ), and Rigetti Computing Inc (RGTI).
• Crypto company Coinbase Global Inc (COIN) is seeing aggressive buying after the SEC dropped a long running case against Coinbase.
• The drop in the Dow Jones Industrial Average (DJIA) is due to only one stock, UnitedHealth Group Inc UNH.  UNH stock is falling 11.6% as of this writing in the premarket. UNH stock is falling this morning on the news that the Department of Justice has launched an investigation.  The news is bringing down other stocks such as CVS Health Corp (CVS), Humana Inc (HUM), and Cigna Group (CI).
• The main event ahead for the stock market is NVIDIA Corp (NVDA) earnings.  Investors will be looking for insights on the impact of DeepSeek on Nvidia.  As full disclosure, when NVDA stock fell on DeepSeek panic, The Arora Report gave a buy signal for a trade around position in ZYX Buy.  In The Arora Report analysis, Nvidia earnings will impact the entire stock market.  
• University of Michigan consumer sentiment was released at 10am ET.  At The Arora Report, we will be very carefully scrutinizing this data after the lower guidance from Walmart Inc (WMT).  The data may be market moving.

Magnificent Seven Money Flows

In the early trade, money flows are positive in Amazon.com, Inc. (AMZN), Alphabet Inc Class C (GOOG), Meta Platforms Inc (META), Microsoft Corp (MSFT), NVDA, and Tesla Inc (TSLA).

In the early trade, money flows are neutral in Apple Inc (AAPL).

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 is seeing buying on SEC withdrawing its long running case against COIN.

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.