Here’s what you need to know today to get the edge.
Speculative emotions
Note the following:
This article is about the big picture, not individual stocks. The chart of TSLA stock is used to illustrate the point. Speculative sentiment is one of the main drivers of the stock market. Currently, speculative sentiment is in the very high zone. The battle of humanoid robots and robotaxis vs electric cars awaits. The outcome of the battle will significantly boost or lower speculative sentiment. The chart shows that TSLA stock rose in a gamma squeeze. The gamma squeeze is an important mechanism of Wall Street. Investors can gain a great advantage by learning the mechanism of Wall Street. The chart shows the resistance and support zones of TSLA stock. The RSI of the chart shows that TSLA stock is close to being oversold. This will make it easier for TSLA stock to rise. The battle after Tesla’s earnings announcement will be the main determinant of the stock price. Tesla will announce its earnings after the close of trading today. Elon Musk has managed to concentrate part of Tesla’s shareholder base on humanoid robots, robotaxis and AI. Despite Musk’s success in refocusing the shareholder base, the majority of Tesla shareholders remain focused on the electric vehicle business. The electric vehicle business remains weak and may weaken further. Musk has said that Tesla is producing humanoid robots and will put them to work at Tesla next year. Tesla aims to sell humanoid robots to other companies starting in 2026. Tesla’s robotaxi event has been postponed from August to October. Expect more excitement and astounding predictions about robotaxis. After the earnings announcement, a battle will unfold between those who focus on electric vehicles and those who focus on humanoid robots and robotaxis. The outcome of the battle will affect not only TSLA stock but also the sentiment of the entire stock market. In key earnings calls, General Motors (GM), General Electric (GE), Coca-Cola (KO), Lockheed Martin (LMT), SAP (SAP), and Spotify Technology (SPOT) are reporting better-than-expected profits.United Parcel Service (UPS) and NXP Semiconductors (NXPI) reported weaker than expected profits. About 25% of S&P 500 companies will report earnings this week. The stock market is excited that Kamala Harris has secured the number of delegates needed to win the nomination. This excitement will not last long. India
India continues to be one of the best long-term investment opportunities. Full disclosure, our India-focused fund, Fairfax India Holdings Corp FFXDF, is included in The Arora Report’s ZYX Buy Model Portfolio. Three India-focused ETFs, WisdomTree India Earnings Fund EPI, iShares MSCI India Small-Cap ETF SMIN, and VanEck India Growth Leaders ETF GLIN, are included in The Arora Report’s ZYX Emerging Model Portfolio.
The central government budget is always a big event for Indian stocks. The just-announced budget is great in the long run, but in the short run, investors are feeling uneasy due to the hike in capital gains tax. The tax rate for short-term capital gains will be 20% and for long-term capital gains it will be 12.5%.
The seven grandiose flows of money
Funds flowing into Tesla Inc. (TSLA) has been positive since the start of trading.
At the start of trading, Apple Inc AAPL, Amazon.com Inc. AMZN, Alphabet Inc Class C GOOG, Meta Platforms Inc META and Microsoft Corp MSFT were at neutral fund flows.
At the start of trading, NVIDIA Corp NVDA has negative funds flow.
At the start of trading, SPDR S&P 500 ETF Trust SPY and Invesco QQQ Trust Series 1 QQQ had negative fund flows.
Momocloud and Smart Money in Stocks
Investors can get an edge by knowing the money flows of SPY and QQQ. Investors can get an even bigger edge by knowing when smart investors buy 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
Big Bitcoin investors are working hard to send Bitcoin (BTC/USD) soaring with rumors about Trump that he may create a National Bitcoin Strategic Reserve. Notably, Trump has apparently invited investors to his highly-anticipated Bitcoin 2024 conference, which will include private roundtable discussions. Trump is reportedly charging $845,000 per person.
Protective bands and what to do now
It’s important for investors to look to the future, not the past.
Consider continuing to hold existing quality long-term positions. Based on your personal risk appetite, consider a protective band consisting of cash or Treasury bills, short-term tactical trades, and short- to medium-term hedges and short-term hedges. This is a good way to participate in the upside while simultaneously protecting yourself.
By adding cash to your hedge, you can determine your protection band. A high band of protection is better for older/more conservative investors. A low band of protection is better for younger/more aggressive investors. If you don’t hedge, your total cash amount will be more than the amounts shown above, but significantly less than your cash and hedge combined.
A protection band of 0% indicates you are very bullish and fully invested with 0% cash, and a protection band of 100% indicates you are very bearish and need aggressive protection with cash and hedges, or aggressive short selling.
It’s worth remembering that if you don’t have enough cash, you won’t be able to take advantage of new opportunities down the road. When adjusting your hedge levels, consider adjusting the stop quantities on partial equity positions (non-ETFs). Also consider widening the stops on the remaining quantities to give room to high beta stocks. High beta stocks are stocks that move more than the market.
Traditional 60/40 Portfolio
At present, inflation-adjusted probability-based risk reward does not favor a long-term strategic fixed income allocation.
Those who want to maintain a traditional allocation of 60% in stocks and 40% in bonds may consider focusing only on high-quality bonds and bonds with maturities of five years or less.Those who want to incorporate more technology into their investing may consider using bond ETFs as a tactical rather than strategic position at this time.
The Arora Report is known for its accurate predictions. The Arora Report accurately predicted the great rise of artificial intelligence before anyone else, the new bull market of 2023, the bear market of 2022, the new highs in the stock market right after the 2020 virus lows, the 2020 virus drop, the Dow Jones Industrial Average rising to 30,000 after trading at 16,000, the start of the mega bull market in 2009, and the financial crisis of 2008. Click here to sign up for a lifetime free subscription to the Generate Wealth newsletter.
This article is an unpaid outside contributor, does not reflect Benzinga reporting, and has not been edited for content or accuracy.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
