Here Is How Smart Money Invests; Stock Buying On Ukraine Peace Talks

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

How Smart Money Invests

Please click here for a chart of SoundHound AI Inc SOUN.

Note the following:

• This article is about the big picture, not an individual stock.  The chart of SOUN stock is being used to illustrate the point.
• SoundHound makes conversational intelligence and voice AI technologies that allow hands free interactions for businesses across many industries, including restaurants.
• The chart illustrates how smart money invests and how the momo crowd often becomes the bag holder.
• In the case of SOUN stock, smart money is NVIDIA Corp (NVDA).  Nvidia bought SOUN stock, presumably around $2.13 per share in late 2023.
• The chart shows when SOUN stock became one of the most popular momo crowd stocks.
• The chart shows the momo crowd aggressively bought SOUN, rapidly running up the stock.
• The volume on the chart shows how aggressive the buying was.
• Nvidia took advantage of the momo crowd buying and presumably sold near the highs shown on the chart.
• The chart shows that after momo crowd buying was exhausted, the stock started drifting down.  The chart shows when the news broke that Nvidia had already sold SOUN stock.  The chart shows a gap down.
• This also illustrates why investors need to get ahead of the news. The news that the momo crowd relies on about smart money buying and selling is often delayed by months.
• In The Arora Report analysis, due to the latest developments in AI, the system from SoundHound is likely falling behind the state of the art.  Presumably, this was the reason for Nvidia selling, in addition to taking advantage of the strength created by momo crowd buying.
• Prudent investors should note, there are a large number of popular stocks in this market that have run up on momo crowd buying.  The day of reckoning for such stocks is ahead.
• In the early trade, stocks are being bought on Ukraine peace talks between the U.S. and Russia.  Prudent investors should note that Ukraine and Europe have been left out of these talks.  S&P 500 is breaking above the prior micro resistance zone in the early trade and heading towards a new high.

Magnificent Seven Money Flows

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

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

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 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.