Humanoid Robots Bigget Than Evs, Retail Investors Buy $1B Nvidia But Institutions Sell, Microsoft Offers DeepSeek

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

Humanoid Robot Opportunities Ahead

Please click here for an enlarged chart of Tesla stock (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 the release of TSLA earnings.
• The chart shows TSLA stock is still above the support zone as of this writing in the premarket, despite terrible earnings.
• RSI on the chart shows that TSLA stock bounced back from oversold conditions.
• The chart shows significant gain in TSLA stock since the last Arora buy signal on November 6.
• Tesla earnings were terrible, significantly below consensus and whisper numbers.
  • Tesla missed EBIT by 38%.
  • Margin was the lowest in years.
• TSLA stock first fell on terrible earnings, but then it shot up on humanoid robots and robotaxis.
  • Tesla CEO Elon Musk says the Optimus humanoid robot is a $10T opportunity.  Tesla plans to ramp production of Optimus faster than previous products.  In The Arora Report analysis, humanoid robots are a bigger opportunity than electric vehicles (EVs). 
  • Musk also announced unsupervised full self driving robotaxis are arriving by June 2025. In The Arora Report analysis, the June timeframe is earlier than expected. 
• Significant opportunities are ahead in robotaxis and humanoid robots.  The Arora Report will publish signals when opportunities for high risk adjusted returns arise.
• Buying in TSLA stock is almost all by retail investors.  Institutions are not buying TSLA stock.
• In The Arora Report analysis, Tesla's moonshots are getting closer to reality than institutions believe.  
• As full disclosure, TSLA is in The Arora Report’s ZYX Buy Core Model Portfolio.  In The Arora Report analysis, TSLA stock should be bought by those not in TSLA stock in the context of a properly diversified portfolio when TSLA stock drops in the buy zone.
• Retail investors are also rushing headlong into NVIDIA Corp NVDA stock.   So far this week, retail investors have bought more than $1B worth of NVDA stock.
• Prudent investors should note that institutions are taking advantage of retail investor buying and selling NVDA stock on up spikes.  Keep in mind, institutions still have massive positions in NVDA.  Institutions are simply engaging in the prudent practice of reducing risk in NVDA stock after DeepSeek.
• We previously shared with you that we would be listening to conference calls from Meta Platforms Inc META and Microsoft Corp MSFT, especially regarding CapEx for AI.
  • Meta is not backing off.  Meta reiterated $60B – $65B of CapEx for the year.
  • Microsoft is also not backing off. Microsoft is planning to spend $22B during each of the next two quarters.
• SoftBank Group Corp – ADR SFTBY, the big Japanese conglomerate that is the prime mover behind Stargate is also not backing off.  SoftBank is in discussions to invest $25B in OpenAI.  If this investment occurs, SoftBank will become the largest investor in OpenAI, displacing Microsoft.  Such an investment indicates that SoftBank does not believe DeepSeek is an existential threat to OpenAI.
• To date, Microsoft has been mostly dependent on OpenAI.  In a development worth noting, Microsoft is hedging its bets.  Even after investigating DeepSeek for improperly using data from OpenAI from Microsoft servers, Microsoft has started offering DeepSeek to its customers.
• Initial jobless claims came at 207K vs. 221K consensus.  This data shows the jobs picture is stronger than anticipated.
• GDP data is inline with expectation.  Investors should note this is a lagging indicator.  We publish it because the market pays attention to GDP data.  However, The Arora Report system is focused on leading indicators.  Here are the details:
  • Q4 GDP-Adv. came at 2.3% vs. 2.3% consensus.
  • Q4 GDP Deflator-Adv. came at 2.2% vs. 2.4% consensus.
• Earnings will be released after the close today from Apple Inc (AAPL), Intel Corp (INTC), and Visa Inc (V).
• In the early trade, the U.S. market is seeing buying due to developments in Japan.  Please scroll down. DJIA is not representing what is happening in the early trade due to Caterpillar Inc (CAT) earnings coming below consensus and whisper numbers.

Japan

With quantitative tightening, the Bank of Japan (BOJ) has shrunk its balance sheet by $500B.  This move is causing the dollar to weaken.

Europe

The European Central Bank (ECB) has cut its key interest rate by 25 basis points.  This is inline with expectations.

Magnificent Seven Money Flows

In the early trade, money flows are positive in GOOG, META, and TSLA.

In the early trade, money flows are negative in AAPL, Amazon.com, Inc. (AMZN), MSFT, and NVDA.

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

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 seeing buying along with tech stocks.

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.