8% MOVE EXPECTED IN NVIDIA AFTER EARNINGS – THE MOST IMPORTANT EVENT FOR THE STOCK MARKET

By?Nigam Arora?& Dr. Natasha Arora

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

Stock Market Direction

Please click here for a chart of Nvidia stock (NVDA).

Note the following:

• The Morning Capsule is about the big picture, not an individual stock. The chart of NVDA stock is being used to illustrate the point.
• The chart shows NVDA stock has moved up against the low band of the resistance zone.
• RSI on the chart shows that there is room for a significant move in either direction.
• NVDA options implied volatility indicates an 8% move in either direction after earnings. Previously, options were implying a 9% move.? Going into earnings options players have become more bullish on NVDA.
• Money is moving out of semiconductors and into software stocks as the AI frenzy shifts to software.? Software ETF IGV is in the ZYX Allocation Model Portfolio.? For investors wanting next level information on the shift in AI investing, listen to the podcast titled “EXCITEMENT OVER AI AGENTS SHIFTS AI FRENZY FROM SEMIS TO SOFTWARE” in Arora Ambassador Club.? To get on the waitlist to join Arora Ambassador Club, please click here to fill out the form.
• NVDA whisper numbers have continued to move up. ?Whisper numbers are the numbers analysts privately share with their best clients.? Whisper numbers are different from the numbers the same analysts publish for public consumption.? Stocks move based on the difference between reported numbers and whisper numbers.
• In The Arora Report analysis, there is wide dispersion among whisper numbers from different analysts.? The difference between the lowest and the highest number is $7B.? Due to such high dispersion, it is difficult to tell how the stock market is going to react, even to good earnings, unless they are a blowout.
• In The Arora Report analysis, this is a transition quarter for Nvidia as customers make a transition from H100 and H200 to Blackwell.? This makes prediction difficult.
• At The Arora Report, we track dozens of data points regarding Nvidia.? These data points are positive as of this writing.
• We will be carefully listening to the conference call.? Of particular interest will be? Nvidia’s comments on the reports of Blackwell chips overheating.? It appears that the heating problem is contained to GB200, the high end AI chips and systems.? Of particular interest is how long it is going to take to solve this particular overheating problem.
• Nvidia earnings are the most important event for the entire stock market.? There is a perception on Wall Street that Nvidia earnings are more important than even the Fed.???
• After Walmart (WMT) earnings, the concern about consumer spending was assuaged.? However, the concern about consumer spending is back after Target (TGT) earnings.? TGT stock is plunging about 16% as of this writing in the premarket.? The reason is that the consumer is stretched and is being very careful.? This is impacting many stocks in the market that depend on the consumer such as Macy’s (M) and Kohl’s (KSS).
• 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. The protection band is one of the large number of unique edges that are available to members of The Arora Report.

See also? WEEKLY STOCK MARKET DIGEST: WHAT PRUDENT INVESTORS NEED TO KNOW NOW

Magnificent Seven Money Flows

In the early trade, money flows are positive in NVDA, Microsoft (MSFT), and Meta (META).

In the early trade, money flows are neutral in Apple (AAPL) and Alphabet (GOOG).

In the early trade, money flows are negative in Amazon (AMZN) and Tesla (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 *** (To see the locked content, please take a 30 day free trial) stocks in the early trade.? Smart money is *** in the early trade.

Note for new members: Smart money often sells into the strength generated by momo crowd buying and buys into the weakness generated by momo crowd selling.? Over a long period of time, investors come out ahead by adopting smart money’s ways.? The exception is in a raging bull market – for very short term trades, consider following the momo crowd and not smart money.

Very Very Short-Term Indicator

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.

Gold

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

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

Oil

API crude inventories came at a build of 4.753M barrels vs. a consensus of a build of 0.8M barrels.

See also? INVESTORS CHANGE BEHAVIOR TO HEDGING INSTEAD OF SELLING, 80% OF EARNINGS BETTER THAN EXPECTED

The momo crowd is *** oil in the early trade.? Smart money is *** in the early trade.

For longer-term, please see oil ratings.

Bitcoin

There is more excitement around bitcoin (BTC.USD) as options start trading on bitcoin ETF (IBIT).? Options allow more leverage, allowing speculators to buy more bitcoin, and in the process, options can run bitcoin higher.? Bitcoin is knocking at the door of $95K.

Markets

Interest rates are ticking up, and bonds are ticking down.

The dollar is stronger.

Trading futures is not recommended for most investors. The purpose of providing this information is to give an indication of the premarket activity that usually guides the activity when the market opens.

S&P 500 futures are trading at 5942 as of this writing.? S&P 500 futures resistance levels are 6017, 6131, and 6256: support levels are 5926, 5748, and 5622.

DJIA futures are up 64 points.

Gold futures are at $2640, silver futures are at $31.23, and oil futures are at $69.87.

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 holding *** in cash, Treasury bills, short term fixed income, 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.

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.

See also? WEEKLY STOCK MARKET DIGEST: TESLA EARNINGS AND NVIDIA COUNTERACT NEGATIVE IMPACT OF RISING YIELDS ON THE STOCK MARKET

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.

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