Prudent Investors Watching Semiconductors For Sign Of A Pullback, Gold Hits All Time High

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

Watch Semiconductors

Please click here for an enlarged version of the chart of VanEck Semiconductor ETF SMH.

Note the following:

• Semiconductors are a leading indicator and at the heart of the AI revolution.
• The chart shows there is a 62% gain on semiconductors from the Arora buy zone.
• The pattern shown on the chart often precedes a pullback.
• If semiconductors pullback, the rest of the stock market will also likely pullback, as semiconductors tend to lead.
• The chart shows the support zone.
• As long as semiconductors stay above the support zone, the long term trend is intact.
• As a full disclosure, Semiconductor ETF SMH has been the largest position in the ZYX Allocation Core Model Portfolio, with up to 16% allocation.
• At The Arora Report, our two most favorite individual semiconductor stocks are NVIDIA Corp NVDA and Applied Materials, Inc. AMAT. As a full disclosure, both of these stocks are in the ZYX Buy Core Model Portfolio.  Other notable semiconductor stocks in the ZYX Buy Portfolio are NXP Semiconductors NV NXPI, Qualcomm Inc QCOM, Micron Technology Inc MU, and Analog Devices, Inc. ADI.  Among semiconductor stocks on our radar to buy are ASML Holding NV ASML, Arm Holdings PLC - ADR ARM, Advanced Micro Devices, Inc. AMD, and Intel Corp INTC.
• More details, including buy zones, on all of these semiconductor stocks and semiconductor ETF SMH can be found in ZYX Buy and ZYX Allocation.
• AMD stock is pulling back on the news that the U.S. is blocking AMD from exporting weaker AI chips to China.  As a full disclosure, a signal was recently given on AMD stock by The Arora Report.
• Apple Inc AAPL is a very important company for the stock market.  There is more bad news on Apple.  A wave of patriotism and a great phone from Huawei has caused Apple’s market share in the Chinese market to fall below 16% from about 20% previously.  There is selling in AAPL stock this morning as this is a surprise to many investors.  Readers and members of The Arora Report, knew this in advance months ago, when we shared with you in several posts the details of the Huawei phone and the Chinese government banning the use of the iPhone in government agencies.
  • See Investors Pay Attention To How Apple iPhone 15 Tests Nationalism Over Status Symbol In China
  • See Jobs Report Upsets Bulls' Hopium But They Might Not Care, Layoffs Help Meta And Amazon Add $275B In Market Cap
• Gold has broken out to a new high on hopes of an interest rate cut. As a full disclosure, SPDR Gold Trust GLD is in the ZYX Allocation Core Model Portfolio.  iShares Silver Trust SLV and gold miner Newmont Corporation NEM along with buy zones are in ZYX Buy Model Portfolio.
• The stock market is waiting for Powell’s testimony in front of Congress tomorrow.

China

China is targeting GDP growth of 5%. This is inline with expectations. There are serious doubts if China will be able to meet this ambitious goal.

Prices of goods produced in China continue to fall. This will help reduce goods inflation in the U.S.

Magnificent Seven Money Flows

In the early trade, money flows are positive in NVDA.

In the early trade, money flows are negative in Amazon.com, Inc. AMZN, Alphabet Inc Class C GOOG, Meta Platforms Inc META, Microsoft Corp MSFT, Tesla Inc TSLA and AAPL.

In the early trade, money flows are negative in SPDR S&P 500 ETF Trust SPY 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 selling stocks in the early trade.

Gold

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

For longer-term, please see gold and silver ratings.

Oil

The momo crowd is buying oil in the early trade. Smart money is inactive in the early trade.

For longer-term, please see oil ratings.

The most popular ETF for gold is SPDR Gold Trust GLD. The most popular ETF for silver is iShares Silver Trust SLV. 

Bitcoin

Bitcoin BTC/USD is trading over $68,000, near the all-time high on excitement about the upcoming bitcoin halving. Highly misleading information about bitcoin halving is being extensively spread to run up bitcoin. It is important to not fall prey to the widespread misinformation.  

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 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.

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 seven 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.

This article is from an unpaid external contributor. It does not represent Benzinga's reporting and has not been edited for content or accuracy.