Salesforce In Artificial Intelligence Era, Personal Spending Rises But Income Falls, New Inflation Data

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

Quick Recovery

Please click here for a chart of SPDR S&P 500 ETF Trust SPY which represents the benchmark stock market index S&P 500.

Note the following:

• The chart shows that the stock market has quickly recovered most of August losses in the last five trading sessions.
• The chart shows that RSI has quickly gone from oversold to overbought.
• Today is the last day of the month. Expect month end volatility.
• Tomorrow, blind money will pour into the stock market. Blind money is the money that pours into the stock market on the first two days of the new month without any analysis and irrespective of market conditions.
• Salesforce Inc CRM, an important software company that is also in Global X Dow 30 Covered Call ETF DJIA, reported better than expected earnings. There is excitement about Salesforce, as the company is now in the artificial intelligence era.  About one half of the gain in DJIA this morning is due to the rise in CRM.
• The new data shows that personal income is falling but personal spending is rising. How long can this continue? Since the U.S. economy is about 70% consumer based and the recession has been postponed because of strong consumer spending, investors need to pay attention to this data.
  • Personal income came at 0.2% vs. 0.3% consensus.
  • Personal spending came at 0.8% vs. 0.7% consensus.
• Both headline and core PCE came at 0.2% month-over-month vs. 0.2% consensus. This is the Fed’s favorite inflation gauge.
  • Core PCE came at 4.2% year-over-year vs. 4.2% consensus.
• Initial claims came at 228K vs. 235K consensus. Initial claims data 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.
• UBS Group AG UBS, the giant Swiss bank, is reporting a record $29B profit. UBS plans to layoff 3,000 people and generate $10B in cost savings by 2026. The stock is jumping.
• 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.

Green Shoots In China

Manufacturing PMI in China came at 49.7 vs. 49.4 consensus.

Non-manufacturing PMI in China came at 51.0 vs. 51.1 consensus.

The data is giving hope that the slump in China may be coming to an end.

Magnificent Seven Money Flows

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

In the early trade, money flows are negative in Tesla Inc TSLA and Microsoft Corp MSFT.

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

Momo Crowd And Smart Money In Stocks

The momo crowd is 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

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

The momo crowd is buying 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 is range bound.

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.