Blackwell Guidance Is The Key To Nvidia And Stock Market, Whales Sell Bitcoin – Russia To Compete

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

Blackwell Guidance Is The Key

Please click here for an enlarged chart of NVIDIA Corp NVDA.

Note the following:

• This article is about the big picture, not an individual stock.  The chart of NVDA stock is being used to illustrate the point.
• In the history of the stock market, there has seldom been a stock like NVDA.  Nvidia earnings will determine the near term course of the stock market.
• The chart shows that NVDA stock staged a major rally after touching the low band of the support zone.
• The chart shows that over the last few days NVDA stock has been consolidating.
• The chart shows the consolidation has been on average volume, indicating that there is not strong conviction ahead of earnings.
• The options market indicates a tilt towards buying.
• The Arora Report’s proprietary VUD indicator measures net supply and demand in real time.  Going into earnings, the VUD indicator for NVDA is mixed.
• RSI on the chart shows that NVDA stock can easily go in either direction.
• The momo crowd is aggressively buying NVDA stock.  The belief among the momo crowd is that NVDA will go to $150 after earnings.
• Institutions and hedge funds continue to trim NVDA ahead of earnings.  They are not trimming because they are negative on NVDA.  They are trimming because they know that earnings is a risk event.  Smart money tends to reduce risk ahead of events.  In contrast, the momo crowd buys ahead of events because the momo crowd is fixated on the possible rewards and ignores the risks.
• As we have been sharing with you, whisper numbers for Nvidia earnings continue to ratchet up.  Whisper numbers are higher than consensus.
• Stocks move based on the difference between the reported numbers and whisper numbers. Whisper numbers are the numbers that analysts privately share only with their best clients.  Whisper numbers from the same analysts are often quite different from the numbers they publish for public consumption. Whisper numbers is a technique used by analysts to drum up business.
• Previously we shared with you that Nvidia was expecting significant Blackwell revenues this year.  Blackwell is the next generation system from Nvidia.
  • In large part, the drop in NVDA stock shown on the chart from the highs was related to the potential delay in Blackwell shipments.
  • The rally in NVDA stock shown on the chart is in part due to analysts defending Nvidia and a building consensus that the delay is only for four to six weeks.
• In The Arora Report analysis, what happens to NVDA stock and the stock market, in large part, will depend on Nvidia’s guidance on Blackwell shipments.  
• The options market is implying about a 10% move in either direction after Nvidia earnings, compared to the prior 9%.  Such a move will mean value creation or value destruction of about $300B.

Magnificent Seven Money Flows

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

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

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

Momo Crowd And Smart Money In Stocks

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 has seen a significant sell off as bitcoin whales unload bitcoin to retail investors.  As is their pattern, bitcoin whales tend to sell bitcoin into the strength generated by retail buying.

There are three other developments negatively impacting bitcoin.

• Telegram is a messaging app that is popular among bitcoin users.  French authorities have arrested Pavel Durov, the Russian born founder of Telegram.  France is investigating criminal activities on the app.
• A bitcoin rival toncoin has crashed.  The reason for the toncoin drop is that toncoin is linked to Telegram.
• The third reason is a leak that Russia is getting ready to set up crypto exchanges.  Russia’s intention is to use bitcoin to circumvent U.S. sanctions.

Both Trump and Harris are showing enthusiasm for crypto to garner votes from single issue voters – these are crypto bulls.  In The Arora Report analysis, the concern is that when elected the new president will not support crypto due to the Russia development.

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 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.

© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.