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

Hope lies in Apple Intelligence

Click here for an enlarged overview of Apple Inc AAPL.

Please note the following:

• This article is about the big picture, not a single stock. The chart of AAPL stock is used for illustration.
• The chart shows when the iPhone 15 was launched.
• The chart shows the evolution from the launch of the iPhone 15 to today’s launch of the iPhone 16.
• Investors are hoping that the price movement of AAPL stock from the launch of the iPhone 16 to the launch of the iPhone 17 will be significantly larger than the price movement between the launch of the iPhone 15 and the iPhone 16.
• The chart shows that AAPL stock is exhibiting a negative pattern in the short term despite investors’ optimistic outlook.
  • The chart shows that AAPL stock reached the upper edge of the resistance zone in July.
  • The chart shows that AAPL stock failed to break the resistance zone.
  • The chart shows that after failing to break through the resistance zone, AAPL stock fell to the bottom of the support zone.
  • The chart shows that AAPL stock recovered after falling to the bottom of the support zone.
  • The chart shows that the rally ended at the bottom of the resistance zone.
• Investors are primarily focused on the hope that Apple Intelligence, the name of Apple’s artificial intelligence, will usher in a new supercycle in iPhone sales and thus pull Apple sales out of their long-standing slump.
• While Apple Intelligence is generating a lot of excitement, prudent investors should keep in mind that the Momo crowd only focuses on the bullish factors and ignores the negative ones. In contrast, smart money considers both positive and negative factors.
• There are several negative factors about Apple that the stock market is currently ignoring and that prudent investors should be aware of:
  • Apple Intelligence will likely not be available in the European Union and China.
  • Even in the US, most Apple Intelligence features will not be available immediately.
  • The introduction of all Apple Intelligence features will be staggered over a longer period of time.
  • The fact that the Apple Intelligence that will initially be present in the iPhone is only half-mature could delay the supercycle.
  • The marketing hype surrounding Apple Intelligence far exceeds reality.
  • Apple does not own its AI. Apple licenses its AI from OpenAI.
  • The model behind the AI ​​that Apple offers does not run on the iPhone or on Apple servers. The model seems to run on NVIDIA Corp NVDA based servers owned by Microsoft Corp MSFT.
  • Apple receives $20 billion annually from Alphabet Inc. Class C GOOG to make Google the default search engine. A judge has ruled that Google is a monopolist. In due course, the government could force Google to stop paying Apple $20 billion.
  • In China, Apple is losing market share to Huawei.
    • Many Chinese believe that Huawei phones are superior to the iPhone.
    • Huawei is trying to take on Apple’s iPhone by introducing the world’s first triple-folding phone.
    • Due to geopolitics between the US and China, nationalist sentiments towards the US are on the rise in China. This poses a significant risk to Apple as about 20% of Apple’s revenue comes from China.
• We know investors are very loyal to Apple. Before you send us hate mail for a comprehensive analysis, note that Apple is the largest position in the Arora Report’s ZYX Buy Model Portfolio. Long-term Arora Report members are long AAPL shares starting at $4.68.
  • Note that Warren Buffett sold AAPL shares.
• Prudent investors should also be aware that Apple can easily manipulate its stock. After the last Apple event, where Apple was careful to drive up its stock, Apple shares began to fall. Apple aggressively bought its own stock in an attempt to create a technical breakout.
• Apple is clearly concerned about today’s event, as evidenced by the fact that it is taking place on a Monday, when Apple doesn’t usually hold large events on Mondays. Apple is trying to pre-empt a possible ruling by the European Commission that would require Apple to pay $14 billion in taxes.
• There are two reasons for aggressive stock buying this morning:
  • A short squeeze occurs. The technical pattern in the stock market, particularly in AI stocks, observed on Friday afternoon historically leads to a sell-off on Monday. When stock futures did not open much lower on Sunday evening, a short squeeze began. As the night went on, the short squeeze accelerated.
  • The reason why stock futures did not open much lower is the weakness of the Japanese yen. The weakening yen saved AI shares from a bloodbath this morning.
  • The fact that a short squeeze and a weakening yen saved the stock market means that prudent investors should not become complacent. Watch for the protective band. Read the “Protective Band and What to Do Now” section below.

The Magnificent Seven Money Flows

In early trading, cash flows are positive in Amazon.com, Inc. AmazonNVDA, MSFT, GOOGLE, Meta Platforms Inc METAAnd Tesla Inc TSL.

In early trading, AAPL’s money flows are negative.

In early trading, cash flows are positive 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 is bound in a range. Bitcoin ETFs have seen $1.2 billion in negative flows over the past eight days, the longest streak of negative flows for Bitcoin ETFs.

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 for older or conservative people. The low protection band is for younger or aggressive people. 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, inflation-adjusted risk-return ratio does not currently support a long-term 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.

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