iPhone 15 Launch, OpenAI At $1 Billion Rate, Four Negative Data Points, Inflation Back In Europe

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

iPhone 15

Please click here for a chart of Invesco QQQ Trust Series 1 QQQ.

Note the following:

• The chart shows that QQQ has moved decisively above the downward sloping trendline.
• The chart shows that RSI has quickly gone from oversold to overbought.
• Both of the foregoing are bullish behaviors.
• In yesterday’s Afternoon Capsule, we shared with you two new negative data points for the economy. We wrote:

The chart shows when consumer confidence and the JOLTS report were released.

• Consumer confidence came at 106.1 vs. 116.0 consensus.

• JOLTS job openings came at 8.825M vs. 9.5M consensus.

• This morning there are two new negative data points for the economy:
  • The ADP employment change came at 177K vs. 195K consensus.
  • Q2 GDP-second estimate came at 2.1% vs. 2.4% consensus.
• The rise in the stock market is due to three reasons.
  • Excitement about AI - OpenAI, the creator of ChatGPT, has reached a $1B run rate.
  • iPhone 15 will be launched on September 12.  Apple stock historically moves up going into the launch and sells off after the launch. Since Apple is the biggest stock and has heavy weight in indexes, it has a disproportionate impact.
  • The new economic data points are weak.
• Inflation is back in Europe.
  • In Spain, CPI came at 0.5% month-over-month vs. 0.4% consensus.
  • In Germany, flash CPI came at 0.3% month-over-month vs. 0.3% consensus. Inflation accelerated in four German states.
• 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.

Magnificent Seven Money Flows

In the early trade, money flows are positive in Apple Inc AAPL, Amazon.com, Inc. AMZN, Alphabet Inc Class C GOOG, Meta Platforms Inc META, Microsoft Corp MSFT, and NVIDIA Corp NVDA.

In the early trade, money flows are negative in Tesla Inc TSLA.

In the early trade, money flows are mixed in SPDR S&P 500 ETF Trust SPY and Invesco QQQ Trust Series 1 QQQ.

Momo Crowd And Smart Money In Stocks

The momo crowd is buying stocks in the early trade. Smart money is 🔒 in the early trade. To see the locked content, please click here to start a free trial.

Gold

Gold is rising on weak economic data.  

The momo crowd is aggressively buying gold in the early trade. Smart money is 🔒 in the early trade.

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

The most popular ETF for gold is SPDR Gold Trust GLD. The most popular ETF for silver is iShares Silver Trust SLV. 

Oil

API crude inventories came at a draw of 11.486M barrels vs. a consensus of a draw of 2.9M barrels.

The momo crowd is buying oil in the early trade. Smart money is 🔒 in the early trade.

For longer-term, please see oil ratings.

The most popular ETF for oil is United States Oil ETF USO.

Bitcoin

Bitcoin BTC/USD ran up yesterday after GBTC’s victory against SEC in court. This morning bitcoin is giving up some of yesterday’s gain as investors realize that the court victory does not automatically mean approval of a bitcoin ETF.

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.

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.

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.

The Arora Report is known for its accurate calls. The Arora Report correctly called the 2008 financial crash, the start of a mega bull market in 2009, the COVID crash, the post-COVID bull market, and the 2022 bear market.  Please click here to sign up for a free forever Generate Wealth Newsletter.