Some Chinese Abandoning Apple, Stock Buying On No Response From Iran, All Eyes On Bank Of Japan

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

Buying On Iran, Ignoring Apple

Please click here for a chart of Apple Inc AAPL.

Note the following:

• The Morning Capsule is about the big picture, not an individual stock. The chart of AAPL stock is being used to illustrate the point.
• This morning investors are aggressively buying stocks on no military response from Iran or its proxies over the weekend to Israeli actions in Gaza.
• Investors are ignoring the potential bad news on Apple. Apple is the largest stock and carries a very heavy weight in the indexes.
• There are reports that many Chinese are abandoning iPhones in favor of Huawei’s Mate 60 Pro.
• The chart shows when the Morning Capsule read,

Another challenge to Apple is a chip breakthrough in China leading to Huawei Mate 60 Pro. Previously due to the U.S. chip sanctions, Huawei was not able to produce a 5G phone. In a breakthrough, Semiconductor Manufacturing International, aka SMIC, a Chinese state-owned chip manufacturer was able to produce an advanced chip. Before the U.S. ban, Huawei had 12% of the smartphone market globally.  Especially in China, the ban benefited Apple. The U.S. government is concerned and investigating how Huawei was able to produce such an advanced phone. This is an important subject for investors.

• As a member of The Arora Report, you have had an advanced notice of Apple’s trouble in China through various posts.
• China is also targeting Apple’s largest supplier Foxconn with tax audits and land use audits. Foxconn is the main assembler of iPhones.
• The chart shows that after the iPhone 15 release, attempts to break above the top band of the support/resistance zone have failed.
• The chart shows that AAPL stock is currently below the low band of the support/resistance zone.
• The chart shows that members of The Arora Report were able to buy AAPL stock last year at a lucrative price when it dipped in the Arora buy zone.
• Why are investors ignoring the news from China regarding Apple? In The Arora Report analysis, the reason appears to be that the impact will be felt in the current quarter and not in the last quarter.
• Apple will report earnings later this week for the last quarter.
• Good earnings from McDonald's Corp MCD have brought in more buying. MCD is a member of Dow Jones Industrial Average.
• As an actionable item, the sum total of the foregoing is in the protection band, which strikes the optimum balance between various crosscurrents. Please scroll down to see the protection band.

Bank Of Japan

We have been sharing with you that the Bank of Japan’s (BOJ) actions are very important to the U.S. stock market for two reasons.

• Many funds have been borrowing in yen at very low rates and investing in the U.S. stock market.
• Japanese institutions are big holders of U.S. Treasury bonds.

The Bank of Japan will announce its decision tonight. There is no consensus. Opinions range from BOJ doing nothing to BOJ completely abandoning its yield curve control policy.

Fed

The FOMC meeting starts tomorrow. The rate decision will be announced on Wednesday at 2pm ET followed by Powell’s press conference at 2:30pm ET.

Magnificent Seven Money Flows

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

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

Momo Crowd And Smart Money In Stocks

The momo crowd is aggressively buying stocks in the early trade. Smart money is 🔒 in the early trade. To see the locked content, please click here to start a free trial.

Gold 

Gold is over $2000.

The momo crowd is buying gold in the early trade. Smart money is 🔒 in the early trade.

For longer-term, please see gold and silver ratings.

The most popular ETF for gold is SPDR Gold Trust GLD. The most popular ETF for silver is iShares Silver Trust SLV. 

Oil

Oil is being sold on no military action from Iran over the weekend.

The momo crowd is selling oil in the early trade. Smart money is 🔒 in the early trade.

For longer-term, please see oil ratings.

The most popular ETF for oil is United States Oil ETF USO.

Bitcoin

Bitcoin BTC/USD continues to levitate, but there is some disappointment that whales did not run it up higher over the weekend, taking advantage of low liquidity.

Markets

Our very, very short-term early stock market indicator is 🔒. This indicator, with a great track record, is popular among long term investors to stay in tune with the market and among short term traders to independently undertake quick trades.

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 holding 🔒 in cash or Treasury bills or allocated to short-term tactical trades; and short to medium-term hedges of 🔒, and short term hedges of 🔒. 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.

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 2008 financial crash, the start of a mega bull market in 2009, the COVID crash, the post-COVID bull market, and the 2022 bear market. Please click here to sign up for a free forever Generate Wealth Newsletter.