• The Morning Capsule is about the big picture, not an individual stock. The chart of Nvidia stock is being used to illustrate the point.
• What happens next in the stock market will come down to Nvidia earnings and Powell’s speech at Jackson Hole.
• The chart shows when Nvidia earnings were last released. Nvidia guided current revenues to $11B from $7B for the quarter.
• The gap up shown on the chart added about $184B in market cap. This was the third largest market cap gain in one day in U.S. stock market history.
• Nvidia earnings accelerated the AI frenzy rally.
• The chart shows that there was a 262% gain in the Nvidia position if it was bought in the Arora buy zone shown on the chart.
• In addition, the trade around position in Nvidia has been nicely profitable. Trade around positions are a technique used by hedge funds and billionaires that can dramatically increase your returns and reduce your risks. To learn about trade around positions, please see the Trade Management Guidelines.
• In The Arora Report analysis, the demand for AI chips from Nvidia is far exceeding supply. As good as this sounds, the whisper numbers have moved up. Nvidia guided current quarter sales to $11B but whisper numbers are around $12B. A lot will also depend on what Nvidia guides for the current quarter that ends in October. Whisper numbers are around $12.5B.
• A major factor will also be what Nvidia guides for 2025.
• In The Arora Report analysis, if no other competition emerges, Nvidia will be looking at $18B in quarterly revenues. On the surface, Nvidia stock seems very expensive. It is trading at a forward PE of 42. However, in The Arora Report analysis, this PE can be justified based on the potential growth.
• Prudent investors should stick to the discipline of buying strategic positions in the buy zones and surrounding them with trade around positions as signals are given.  
• Nvidia earnings are scheduled to be released on Wednesday after the close.
• Powell will be speaking at Jackson Hole on Friday.
  • Bulls are hoping that he will say rate cuts are coming.
  • Momo gurus are already laying the groundwork to twist his words to run up the stock market irrespective of what he says.
• In The Arora Report analysis, the highest probability is that Powell will say the Fed will be data dependent.  
• 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.

Interest rate cuts in China were less than expected. This caused a sell off in Shanghai and Hong Kong. Stocks in Mainland China were down 1.2% and stocks in Hong Kong were down 1.8%. The ETF of choice for Mainland China is Xtrackers Hvst CSI 300 China A-Shs ETF (NYSE:ASHR). The ETF of choice for Hong Kong is iShares China Large-Cap ETF (NYSE:FXI). ZYX Emerging from The Arora Report has covered China continuously for 16 years.

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. To see the locked content, please click here to start a free trial.