Nvidia Aggressively Bought, Russia Fires First Intercontinental Ballistic Missile, Adani Indicted

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

Nvidia Dips Aggressively Bought

Please click here for an enlarged chart of NVIDIA Corp NVDA.

Note the following:

• This article is about the big picture, not an individual stock.  The chart of NVDA stock is being used to illustrate the point. As full disclosure, NVDA is part of The Arora Report’s ZYX Buy Model Portfolio.
• The chart shows the dip in NVDA stock has been aggressively bought.
• The chart shows that NVDA stock dipped into the support zone after earnings.  The buying in NVDA this morning has been extremely aggressive as illustrated by the fact that NVDA traded as high as $149.40 vs. the prior high of $149.77.
• The chart shows the NVDA bounced from the support zone to the resistance zone.
• As of this writing, NVDA stock is very volatile.
• In The Arora Report analysis, a tell for the stock market will be to see if NVDA stock breaks out or retraces back to the support zone.
• Nvidia reported earnings better than the consensus numbers, better than some whisper numbers, but less than the top end of the whisper numbers.
• Overheating was a big concern going into earnings.  It appears that most of the overheating issues have been resolved.  Here are the key points from Nvidia earnings:
  • Nvidia CEO Jensen Huang said, "The age of AI is in full steam, propelling a global shift to Nvidia computing."
  • Blackwell demand is likely to exceed supply in FY26.
  • Hopper demand is also very strong.
  • Nvidia is working on the next data center architecture that will improve production yields.
  • Nvidia expects enterprise AI, industrial AI, and robotics to continue to increase.
  • Nvidia beat on revenue.
    • Data center revenue and automotive revenue hit records.
    • Gaming revenue increased 15% from last year.
    • Professional visualization revenue increased 17% from last year.
• The fact that NVDA dips are being aggressively bought is helping the overall stock market.
• Also helping the stock market this morning is Bitcoin BTC/USD approaching $100K.
• Sentiment is extremely positive.
• Investors are buying stocks and cryptos with total abandon.  If it was not for the positive seasonality and year end chase, this kind of reckless buying would have resulted in increasing the protection band because extreme positive sentiment is historically a sell signal.  However, The Arora Report call remains to buy the dips because the year end chase is likely to trump all other factors.  In year end chase, even bearish money managers aggressively buy stocks to keep up with their benchmarks.
• Initial jobless claims came at 213K vs. 221K consensus.  This indicates that the job market is very strong.  This is another data point that shows that the Fed should not have been cutting interest rates as aggressively as it did. In the short term, the Fed's actions have poured gasoline over the fire to aggressively buy stocks and cryptos.

First ICBM Fired

The first operational intercontinental ballistic missile (ICBM) was developed by Russia in 1957, followed by development by the U.S. in 1959.  To the best of our knowledge, Russia has fired the first ICBM in battle since its invention.  This is Russia's response to Ukraine firing U.S. and British long range missiles on Russian territory.

In The Arora Report analysis, both Russia and Ukraine are escalating the conflict to gain an advantage before Trump stops the war.  These developments have major implications for investors. 

Problem For India

Gautam Adani is the most important industrialist in India.  He is also very closely allied with India’s Prime Minister Modi.  The U.S. Department of Justice has just indicted Adani for bribes in solar contracts.

The Indian stock market has fallen on the news.  In The Arora Report analysis, some foreign money is going to flow out of India on this development.  The Arora Report call has been to steadily take partial profits on India positions Fairfax India Holdings Corp FFXDF, WisdomTree India Earnings Fund EPI, iShares MSCI India Small-Cap ETF SMIN, and VanEck India Growth Leaders ETF GLIN.  The Arora Report’s call yesterday evening was to take more partial profits on India positions.

Magnificent Seven Money Flows

In the early trade, money flows are positive in Apple Inc AAPL, Amazon.com, Inc. AMZN, Meta Platforms Inc META, Microsoft Corp MSFT, and NVDA.

In the early trade, money flows are neutral in Tesla Inc TSLA.

In the early trade, money flows are negative in Alphabet Inc Class C GOOG.

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 approaching $100K.

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.