320% Profits — Nvidia Breaks Out, Reigniting AI Frenzy Ahead Of Inflation Data

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

Nvidia Breakout

Please click here for a chart of NVIDIA Corp NVDA.

Note the following:

• The Morning Capsule is about the big picture, not an individual stock. The chart of NVDA is being used to illustrate the point.
• The chart shows NVDA stock broke out yesterday.
• The chart shows the volume was higher on the breakout than in recent days. This is a mild positive.
• The chart shows RSI divergence.  In plain English, this means RSI and price action are not inline. This is a negative.
• The chart illustrates the power of buy zones.  Members of The Arora Report were able to buy NVDA stock at an average price of $125.51. The core position now has a gain of 320%.
• In the Afternoon Capsule, we shared with you:

• Announcements from Advanced Micro Devices, Inc. AMD and Nvidia (NVDA) are pushing the market higher.

  • AMD is announcing an AI chip for desktop PCs.
  • NVDA is announcing GeForce RTX SUPER desktop GPUs for AI desktops. NVDA will be able to export these chips to China.

• Announcements from AMD and NVDA have rekindled the artificial intelligence frenzy, bringing significant buying into tech stocks.

• The breakout in NVDA stock has reignited the AI stock buying frenzy ahead of key inflation data.
  • CPI will be released Thursday at 8:30am ET.
  • PPI will be released Friday at 8:30am ET.
• Earnings season starts Friday morning. Earnings season will provide many opportunities from both the long and short sides.
• In the early trade, weakness from Europe is carrying over to the U.S.
• 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.

Europe

European stock markets are under pressure on rising yields.

Magnificent Seven Money Flows

In the early trade, money flows are positive in Nvidia (NVDA).

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

The momo crowd is like a yoyo 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

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 has run up above $47,000 in anticipation of ETF approval as early as today.

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 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.

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.

This article is from an external contributor. It does not represent Benzinga's reporting and has not been edited for content or accuracy.