Dow Jones hits all-time high, but semiconductor and AI stocks fall ahead of Nvidia earnings release – Apple (NASDAQ:AAPL)

To gain an advantage, here's what you need to know today.

rotation

Click here for an enlarged overview of SPDR Dow Jones Industrial Average ETF Trust SLIDE.

Please note the following:

• The chart shows that the Dow Jones Industrial Average (DJIA) has reached a new all-time high.
• The chart shows that the breakout is not convincing.
• The RSI in the chart shows that the DJIA is overbought. An overbought index tends to be vulnerable to a decline.
• The chart shows that the volume on the breakout to a new all-time high is not large, indicating a lack of conviction.
• The reason for the breakout of the DJIA is that there is a rotation towards cyclical and interest rate sensitive stocks and away from technology stocks.
• Prudent investors should note that as the DJIA hit a new all-time high, AI and semiconductor stocks have also been hit.
  • In the Arora report analysis, this rotation is particularly notable as the Momo crowd is aggressively buying AI and semiconductor stocks before NVIDIA Corp NVDA Result.
  • Nvidia will announce its results tomorrow after the stock market closes.
• In the Arora Report's analysis, aggressive buying by the Momo crowd in NVDA and other AI stocks is offset by selling by hedge funds and institutions. Prudent investors should note that it's not that hedge funds and institutions are negative on Nvidia. It's that they represent smart money. Smart money knows that Nvidia's earnings are a risk event. The risk is both upside and downside. As we've explained to you time and time again over the years, smart money tends to reduce risk in advance of events. In contrast, the Momo crowd buys in advance of events because the Momo crowd always has stars in its eyes and doesn't consider risk.
• The options market is expecting a 9% move following Nvidia's earnings.
• There is a widespread belief in the Momo community that NVDA stock will rise above $150 after the results are released. Such a rise would correspond to an upside of about 20%.
• For full disclosure, Nvidia is long in the Arora Report ZYX Buy Model Portfolio starting at $12.55.
• The above illustrates the need for optimum Diversification. The Arora Report achieves optimal diversification by diversifying across stocks and ETFs, asset classes, geography, strategy, time frame and protection.
• Consumer confidence will be released at 10:00 a.m. ET and could have market-moving implications.

Germany

The German economy is no longer growing. Germany is the largest economy in Europe.

German GDP fell by 0.1% in the second quarter, compared to the consensus forecast of 0.1%.

China

China is determined to become a world leader in autonomous vehicles. China has just issued 16,000 license plates for testing autonomous vehicles on certain public roads.

For investors, autonomous driving is the next big opportunity.

The Magnificent Seven Money Flows

In early trading, money flows are neutral in Microsoft Corp MSFT.

In early trading, cash flows are negative in Apple Inc AAPL, Amazon.com, Inc. Amazon, Alphabet Inc. Class C GOOG, Meta Platforms Inc METANVDA and Tesla Inc TSL.

In early trading, cash 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 advantage by knowing the money flows in SPY and QQQ. Investors can gain a greater advantage by knowing when smart money is buying stocks, gold and oil. The most popular ETF for gold is SPDR Gold Trust GLDThe most popular ETF for silver is iShares Silver Trust SLVThe most popular ETF for oil is US Oil ETF USO.

Bitcoin

Bitcoin BTC/USD is experiencing a decline along with speculative and junk stocks.

Protective tape and what to do now

It is important for investors to look forward and not in the rearview mirror.

Consider continuing to hold good, very long-term, existing positions. Depending on individual risk preference, consider a protective band of cash or Treasuries 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 while participating in the upside.

You can determine your protection bands by adding cash to hedges. The high protection band is appropriate for older or conservative individuals. The low protection band is appropriate for younger or aggressive individuals. If you do not hedge, the total amount of cash should be higher than above, but significantly lower than cash plus hedges.

A protection band of 0% would be very optimistic and would imply a full investment with 0% in cash. A protection band of 100% would be very pessimistic and would imply a need for aggressive protection with cash and hedges or aggressive short selling.

Remember that you cannot take advantage of new opportunities if you do not have enough cash. When adjusting hedge levels, consider adjusting partial stop quantities for equity (non-ETF) positions; consider using wider stops for remaining quantities and also allow more slack for high beta stocks. High beta stocks are those that move more than the market.

Traditional 60/40 portfolio

The probability-based and inflation-adjusted risk-return trade-off does not currently support a long-dated strategic bond allocation.

Those who want to stick to the traditional allocation of 60% to stocks and 40% to bonds should focus only on high-quality bonds and bonds with a maturity of five years or less. Those who want to refine their investment should currently use bond ETFs as a tactical rather than a strategic position.

The Arora Report is known for its accurate predictions. The Arora Report has correctly predicted before anyone else the great rise in artificial intelligence, the new bull market of 2023, the bear market of 2022, new stock market highs right after the virus low in 2020, the virus decline in 2020, the DJIA rising 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. Click here to sign up free forever Generate Wealth Newsletter.