Trump Gives Apple A Reprieve But Tramples On Stock Market Bulls' Initial Jubilation

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

Reprieve For Apple

Please click here for an enlarged chart of Apple Inc AAPL.

Note the following:

• This article is about the big picture, not an individual stock.  The chart of AAPL stock is being used to illustrate the point.
• The power of our support and resistance zones is evident from the chart, which shows that during the recent swoon, AAPL stock dipped to the low band of the support zone and then bounced.  This support zone is not recent.  It is a long standing support zone that was previously given to our members.
• The chart shows heavy volume when AAPL stock bounced from the low band of the support zone.
• RSI on the chart shows AAPL stock is neither overbought nor oversold.
• The chart shows a potential island reversal pattern in AAPL stock.  This is a positive.
• The chart shows AAPL stock trading in the premarket today with a gap up.  The reason for the gap up is President Trump granting Apple a temporary reprieve. The reprieve also includes other smart phones, laptops, servers, and certain semiconductors.
• The chart shows the prior gap.  On Friday in the late evening when it was announced that the reciprocal tariffs would not apply to smartphones, the expectation of stock market bulls was that today AAPL stock would close the prior gap shown on the chart.
• On Friday’s announcement, stock market bulls were jubilant.  Stock market bulls were proclaiming that today would see a massive stock market rally for the ages.
• Prudent investors should note that on Friday, AAPL stock moved more than the market.
• The administration is clearly extremely sharp.  In our analysis, they recognized the unintended consequences of the dollar falling and Treasury bonds falling when President Trump paused reciprocal tariffs. We previously shared with you that the reason for the drop in the dollar was a perception among foreigners that President Trump had blinked, the U.S. was unreliable, and now foreign leaders would be tougher in negotiations with President Trump as they knew President Trump's pain point.
• Over the weekend, there was a frenzy with a full court press, including a post from President Trump that the reprieve was temporary.  President Trump will be reviewing the entire electronics supply chain.  The administration took great pains to explain that this was not a reduction in tariffs but a reclassification.  The tech products under review accounted for 23%, $100B, of U.S. imports from China last year.  In 2024, 78% of computer monitors and 81% of smartphones were imported from China.
• As full disclosure, AAPL stock is in our ZYX Buy Core Model Portfolio.  AAPL stock is long from $4.68. 
• As the trade war between the U.S. and China intensifies, China has suspended the export of rare earth minerals.  Rare earth minerals are very important for the American economy.  China dominates in rare earth minerals.  MP Materials Corp MP is a major American rare earth miner.  As full disclosure, MP is in our ZYX Buy Core Model Portfolio.

Magnificent Seven Money Flows

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

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

Investors can gain an edge by knowing money flows in SPY and QQQ.  Investors can get a bigger edge by knowing when smart money is buying 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

Bitcoin is seeing aggressive buying.

Protection Band And What To Do Now

It is important for investors to look ahead and not in the rearview mirror.  Our proprietary 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 a protection band consisting of cash or Treasury bills or short-term tactical trades as well as short to medium term hedges and short term hedges. 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.

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 big artificial intelligence rally before anyone else, the new bull market of 2023, the bear market of 2022, new stock market highs right after the virus low in 2020, the virus drop in 2020, the DJIA rally to 30,000 when it was trading at 16,000, the start of a mega bull market in 2009, and the financial crash of 2008. Please click here to sign up for a free forever Generate Wealth Newsletter.