Apple Earnings And Jobs Report Ahead, Market Mechanics Taking Over

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

Market Mechanics

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. A chart of AAPL stock is being used to illustrate the point.
• AAPL is the largest stock and carries heavy weight in the indexes. For this reason, AAPL stock is very important to the stock market. Apple reports earnings after the market close.
• The chart shows that AAPL stock made a lower low below the support/resistance zone.
• The chart shows that AAPL stock moved up back into the support/resistance zone yesterday on the Fed and market mechanics induced rally.
• Market mechanics continue to drive aggressive stock buying this morning.
• Apple has been showing declining growth for several quarters, and Apple has China troubles. AAPL stock is also very expensive. However, none of the traditional fundamentals seem to matter in the case of Apple because a large number of investors believe in Apple and they want to buy AAPL stock.
• We will be carefully looking at Apple’s sales in China, iPhone sales, services growth, and AI plans. The mention of AI is still very powerful. For example, Advanced Micro Devices, Inc. AMD reported weak earnings Tuesday. After earnings, the stock fell to $94, but aggressive buying came in when the company gave rosie projections of its AI chip. The stock moved up $14 from its low.
• The all important jobs report will be released Friday at 8:30am ET. The jobs report will test the budding rally in stocks.
• Initial jobless claims came at 217K vs. 214K consensus. This indicates that the jobs picture is staying strong. Initial jobless claims is a leading indicator and carries heavy weight in our adaptive ZYX Asset Allocation Model with inputs in ten categories. In plain English, adaptiveness means that the model changes itself with market conditions. Please click here to see how this is achieved. One of the reasons behind The Arora Report’s unrivaled performance in both bull and bear markets is the adaptiveness of the model.  Most models on Wall Street are static.  They work for a while and then stop working when market conditions change.
• Q3 Unit Labor Costs - Prelim came at -0.8% vs. 1.5% consensus. In The Arora Report analysis, this is very positive data for the stock market. 
• Q3 Productivity - Prelim came at 4.7% vs. 3.6% consensus. In The Arora Report analysis, this increase in productivity is also very positive for the stock market. In the long run, the use of AI will significantly increase productivity.  
• Please be sure to read yesterday’s Afternoon Capsule as hedges were reduced and the call was to deploy more cash, i.e. buy more stocks.
• A part of yesterday’s rally in the afternoon was blind money buying. Blind money buying will continue today.
• 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.

England

The Bank of England left its rate unchanged at 5.25% vs. 5.25% consensus.

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 S&P 500 ETF SPY and Nasdaq 100 ETF QQQ.

Momo Crowd And Smart Money In Stocks

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

Gold

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

The momo crowd is buying oil in the early trade. Smart money is 🔒 oil 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 has crossed $35,000.

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.