Noisy Jobs Report Temporarily Dashes Bulls Hopium, Amazon Guidance Disappoints, India Cuts Rate

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

Noisy Jobs Report

Please click here for an enlarged chart of SPDR S&P 500 ETF Trust (SPY), which represents the benchmark stock market index S&P 500 (SPX).

Note the following:

• The chart shows that the stock market is in the micro resistance zone.
• Bulls were certain that the jobs report this morning would trigger a breakout of the stock market above the micro resistance zone.  Bulls were hoping for weaker jobs data that would allow the Fed to cut interest rates in March.  Bulls got their wish in the headline, but overall the jobs report is very noisy.  As a result, as of this writing, the stock market is still in the resistance zone.
• Here are the details of the jobs report:
  • The most notable point from the jobs report is that the prior nonfarm payrolls have been revised from 256K to 307K.  This is a huge increase.
  • Nonfarm payrolls came at 143K vs. 155K consensus.  This is a weaker number.
  • Nonfarm private payrolls came at  111K vs. 163K consensus.
  • Average hourly earnings came at 0.5% vs. 0.3% consensus.
  • Average work week came at 34.1 hours vs. 34.3 hours consensus.  This number is important as it shows people are working less.
  • Unemployment rate came at 4.0% vs. 4.1% consensus.  This is a stronger number.
• In The Arora Report analysis, overall the data in this jobs report is too strong for the Fed to have a logical reason to cut interest rates. 
• Amazon.com, Inc. (AMZN) reported strong earnings but guidance disappointed.  Amazon is guiding Q1 revenue of $151B – $155B vs. $158.33B consensus.  In The Arora Report analysis, cloud growth rate is also likely to slow at Amazon AWS even though Amazon plans a CapEx of $100B.  Further, in our analysis, Amazon CapEx plans indicate that Amazon is not concerned about DeepSeek.  As full disclosure, AMZN is in The Arora Report’s ZYX Buy Model Portfolio.
• University of Michigan consumer sentiment was released today at 10am ET.

India cuts interest rates by 25 bps

For the long term investor, India represents one of the best opportunities.

The Reserve Bank of India cut interest rates by 25 bps by unanimous vote in an effort to spur the economy.  This is the first interest rate cut in about five years.  GDP growth is projected to come at 6.7%.

As full disclosure, there are three India ETFs in The Arora Report’s ZYX Emerging Model Portfolio.

Magnificent Seven Money Flows

In the early trade, money flows are positive in Meta Platforms Inc (META), Microsoft Corp (MSFT), and NVIDIA Corp (NVDA).

In the early trade, money flows are neutral in Alphabet Inc Class C (GOOG).

In the early trade, money flows are negative in AMZN, Apple Inc (AAPL), and Tesla Inc (TSLA).

In the early trade, money flows are mixed in S&P 500 ETF (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.  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.