GROWTH FEARS SEEPING INTO THE STOCK MARKET – NVIDIA’S RUBIN AND RATE CUT HOPE HELP THE STOCK MARKET

By?Nigam Arora?& Dr. Natasha Arora

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

Growth Fears

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

Note the following:

• The chart shows over 1% rally on Friday afternoon on rebalancing.
• We wrote in yesterday’s Morning Capsule:

In The Arora Report analysis, the last hour rally was due to month end rebalancing.? Often, the rally on rebalancing reverses.

• The chart shows the giveback of the rebalancing rally’s gains, which is inline with historical patterns.
• The chart shows Wall Street front running blind money.
• The chart shows a rally in the afternoon on blind money buying.? Blind money is invested in the afternoon.
• The chart shows the selloff in the early trade today on growth fears rising out of yesterday’s ISM data.
• ISM Manufacturing Index came at 48.7 vs. 49.6 consensus. A number less than 50 reflects economic contraction.
• In The Arora Report analysis, ISM data is going against momo gurus hopes of no landing.
• In The Arora Report analysis, after the weak ISM data the probability of a rate cut in September has increased to more than 50%.? A higher probability of interest rate cuts helps the stock market go higher as long as the economy is not substantially weakening.? In The Arora Report analysis, the issue here is that ISM data indicates a weakening economy.? A weaker economy hits earnings.??
• The stock market is waiting for factory orders and the JOLTS-job openings report.? Both will be released today at 10am ET.? In view of the growth fears, this data is taking on more importance than normal.
• Rubin from Nvidia (NVDA) is helping the stock market stay up.? From yesterday’s Morning Capsule:

We previously shared with you about Blackwell, the next generation chip platform for AI from Nvidia (NVDA). ? Now, NVDA is announcing the generation after Blackwell.? It will be called Rubin.

• Actual election results in India are not inline with exit polls.? Modi will have the majority but will have less seats in the lower house of Parliament than the stock market expected.? The Indian stock market is extremely volatile as a result.? This is dampening the sentiment across the globe.
• Blind money will be buying again today, providing support to the stock market.
• 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? AGGRESSIVE STOCK BUYING ON RISING LAYOFFS AND REVENUE RISE AT THE LARGEST CHIP MANUFACTURER TSMC

Magnificent Seven Money Flows

In the early trade, money flows are positive in Tesla (TSLA) and NVDA.

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

In the early trade, money flows are negative in Amazon (AMZN), Microsoft (MSFT), Alphabet (GOOG), and Meta (META).

In the early trade, money flows are negative 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.

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

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

For longer-term, please see oil ratings.

Bitcoin

Bitcoin (BTC.USD) is range bound.? Meme crowd buying is supporting bitcoin.

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.

See also? SOFT TREASURY AUCTIONS ARE HITTING THE STOCK MARKET, MT. GOX RELATED DROP IN BITCOIN

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

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.

Gold futures are at $2332, silver futures are at $30.06, and oil futures are at $73.02.

S&P 500 futures are trading at 5282 as of this writing.? S&P 500 futures resistance levels are 5400, 5500, and 5622 : support levels are 5256, 5210, and 5020.

DJIA futures are down 82 points.

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.

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.

See also? SILVER, GOLD, AND COPPER BREAKOUT, WALL STREET’S LAST BEAR THROWS IN THE TOWEL

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.

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