NVIDIA’S FIRST QUANTUM COMPUTING DAY, $4.5T QUAD WITCHING, EUROPEAN BANKS BEAT TECH STOCKS BY 34%

By?Nigam Arora?& Dr. Natasha Arora

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

Fed Rethink

Please click here for a chart comparing Nasdaq 100 ETF (QQQ) to European financials ETF (EUFN).

Note the following:

• When 2025 started, investors were rushing headlong to buy tech stocks.? Investors were also selling European financial stocks.
• The chart is an eye popper – the opposite of the prevailing wisdom from early 2025 has happened.? The chart shows in 2025 European financials have outperformed tech stocks, represented by QQQ, by 33.88%.
• Members of The Arora Report who follow ZYX Allocation have profited from the move in European financial stocks.? European financial ETF EUFN is in the ZYX Allocation Model Portfolio.
• The eye popping 33.88% outperformance in less than three months illustrates why investors need to diversify beyond tech stocks.
• Yesterday after the Fed announcement, when the momo crowd was aggressively buying stocks and the stock market was running up fast, we wrote in the Afternoon Capsule:

In The Arora Report analysis, Powell has done a masterful job of comforting the stock market.? However, prudent investors should note that the risks are not balanced anymore and the dot plot is mildly more hawkish.? Right now, the momo crowd is buying stocks as Powell provides comfort.? Smart money is not likely to find the same comfort that the momo crowd is finding.

• The call from the Afternoon Capsule has proven spot on.? This morning, smart money is selling stocks due to the Fed’s announcement.? This morning on Wall Street, there is a rethink of what the Fed said.? The rethink is inline with what you already knew in advance from The Arora Report’s analysis in yesterday’s Afternoon Capsule.
• Nvidia is hosting its first quantum computing day today.? Quantum computing stocks have been running up in anticipation of bullish news coming out of the event.
• Companies participating in Nvidia’s quantum computing day include IonQ (IONQ), D-Wave (QBTS), and Rigetti Computing (RGTI).
• Investors need to be very careful with quantum computing stocks at this time as they have become the mecca of pump and dump schemes and short squeezes.
• In The Arora Report analysis, there is a high probability of a sell-the-news reaction in quantum stocks.? Quantum computing has the potential to be bigger than the internet.? For those who are interested in next level information and learning when to invest in quantum stocks, listen to the podcast series in Arora Ambassador Club.
• Initial jobless claims came at 223K vs. 220K consensus. Jobless claims continue to behave well.? Initial jobless claims is a leading indicator and carries heavy weight in The Arora Report’s adaptive ZYX Asset Allocation Model with inputs in ten categories.
• Quadruple witching is tomorrow.? $4.5T notional value of derivatives will expire.? Quad witching appears to be deterring the stock market from falling and may even cause an upspike.
• 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? THE UNTHINKABLE HAPPENED FOR SMART CRYPTO BULLS, TRUMP’S TARIFF PLAN HAMPERS STOCK MARKET RALLY

U.K.

The Bank of England (BOE) has announced its rate decision.? BOE is maintaining rates at 4.5%.

Magnificent Seven Money Flows

In the early trade, money flows are negative in Amazon (AMZN), Nvidia (NVDA), Microsoft (MSFT), Alphabet (GOOG), Meta (META), Tesla (TSLA), and Apple (AAPL).

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 *** stocks 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 *** in 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 *** in oil in the early trade.? Smart money is *** in the early trade.

See also? MONEY FLOWING OUT OF U.S. STOCK MARKET INTO EUROPE, “A PERIOD OF TRANSITION” SAYS TRUMP

For longer-term, please see oil ratings.

Bitcoin

Bitcoin (BTC.USD) ran up with stocks yesterday on the Fed’s announcement.

Markets

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.

S&P 500 futures are trading at 57034 as of this writing.? S&P 500 futures resistance levels are 5748, 5926, and 6017: support levels are 5622, 5500, and 5400.

DJIA futures are down 204 points.

Gold futures are at $3049, silver futures are at $34.00, and oil futures are at $67.05.

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.

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? PRODUCER INFLATION CRATERS, A GOVERNMENT SHUTDOWN WILL BE A BUYING OPPORTUNITY

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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