Growth Concerns Permeate Stock Market – Hopes NVIDIA’s Rubin and Rate Cuts Help Stock Market – NVIDIA (NASDAQ:NVDA)

Here’s what you need to know today to get the edge.

Concerns about growth

Click here for enlarged chart SPDR S&P 500 ETF Trust (NYSE:SPY) represents the benchmark stock index S&P 500 (SPX).

Note the following:

• The chart shows that the rebalancing resulted in a rise of over 1% on Friday afternoon.
• I wrote this in yesterday’s Morning Capsule:

According to an analysis by Arora Reports, the rally in the final hour was due to an end-of-month rebalancing. Gains due to rebalancing often reverse.

• The chart shows the return of profits from the rebalancing rally, which is consistent with historical patterns.
• This chart shows that Wall Street is blindly bleeding money.
• This chart shows a rally due to blind money buying in the afternoon. Blind money is invested in the afternoon.
• This chart shows that growth concerns following yesterday’s ISM data led to early selling today.
• The ISM manufacturing index came in at 48.7, below the consensus estimate of 49.6. A reading below 50 reflects a contracting economy.
• According to the Arora Report’s analysis, the ISM data contradicts Momo’s experts’ expectations that there would be no landings.
• The weak ISM data has raised the chances of a September rate cut to over 50% in Arora Report’s analysis. A higher chance of a rate cut will drive stock markets higher unless the economy weakens significantly. The problem here, Arora Report’s analysis says, is that the ISM data points to a weakening economy. A weakening economy hits earnings.
• The stock market is awaiting factory orders and JOLTS job openings, both of which are due to be released at 10 a.m. ET today, and the data is taking on more importance than usual given concerns about growth.
• Rubin NVIDIA (NASDAQ:NVDA) is helping the stock market rise. From yesterday’s Morning Capsule:

Previously, we covered Nvidia’s (NVDA) next-generation AI chip platform, Blackwell. Now, NVDA has announced the next generation of Blackwell, which will be called Rubin.

• The actual election results in India are not in line with the exit polls. Modi gets a majority but fewer seats in the lower house than the stock market expects. As a result, the Indian stock market is extremely volatile. This is dampening sentiment across the world.
• Blind money will continue to buy today, supporting the stock market.

The seven grandiose flows of money

At the beginning of trading, the flow of funds was positive. Tesla (NASDAQ:TSLA) and NVDA.

In the initial trading period, the flow of funds is neutral. Apple (NASDAQ:AAPL).

In the initial trading period, the flow of funds was negative. Amazon.com, Inc. (NASDAQ:AMZN), Microsoft (NASDAQ:MSFT), Alphabet Class C (NASDAQ:GOOG), and Meta Platforms, Inc. (NASDAQ:META).

At the start of trading, the S&P 500 ETF (SPY) had negative fund flows. Invesco QQQ Trust Series 1 (NASDAQ:QQQ).

Momocloud and smart money in stock investment

The Momo faction buys stocks in the early morning trade. Smart money is not active in the early morning trade.

Note to new investors: Smart investors often sell in bull markets created by Momo crowd buying and buy in bear markets created by Momo crowd selling. In the long term, investors will benefit from adopting the smart investor approach. The exception is a raging bull market. In very short-term trades, consider following the Momo crowd instead of the smart investor.

Money

The Momo faction is selling gold in the early morning trade. Smart money is not active in the early morning trade.

For a longer-term perspective, take a look at the valuation of gold and silver.

The most popular gold ETFs are SPDR Gold Trust (NYSE:GLD). The most popular silver ETF is iShares Silver Trust (NYSE:SLV).

oil

The Momo faction is selling crude oil in the early morning trade. Smart money is not active in the early morning trade.

For the long term, see oil ratings.

The most popular oil ETFs are US Oil ETF (NYSE:USO).

Bitcoin

Bitcoin (CRYPTO: BTC) is in a range. Meme crowdbuying is supporting Bitcoin.

Protective bands and what to do now

It’s important for investors to look to the future, not the past.

Consider continuing to hold existing quality long-term positions. Based on your personal risk appetite, consider a protective band consisting of cash or Treasury bills, short-term tactical trades, and 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.

By adding cash to your hedge, you can determine your protection band. A high band of protection is better for older/more conservative investors. A low band of protection is better for younger/more aggressive investors. If you don’t hedge, your total cash amount will be more than the amounts shown above, but significantly less than your cash and hedge combined.

A protection band of 0% indicates you are very bullish and fully invested with 0% cash, while a protection band of 100% indicates you are very bearish and need aggressive protection with cash and hedges or aggressive short selling.

It’s worth remembering that if you don’t have enough cash, you won’t be able to take advantage of new opportunities down the line. When adjusting your hedge levels, consider adjusting the partial stop quantities of your stock positions (non-ETFs). Consider using wider stops for the remaining quantities and also giving room to high beta stocks. High beta stocks are stocks that move more than the market.

Traditional 60/40 Portfolio

At present, inflation-adjusted probability-based risk reward does not favor a long-term strategic fixed income allocation.

Those who want to maintain a traditional allocation of 60% in stocks and 40% in bonds may consider focusing only on high-quality bonds and bonds with maturities of seven years or less.Those who want to incorporate more technology into their investing may consider using bond ETFs as a tactical rather than strategic position at this time.

The Arora Report is known for its accurate predictions. The Arora Report accurately predicted the massive rise of artificial intelligence before anyone else, the new bull market of 2023, the bear market of 2022, the new stock market highs immediately after the 2020 virus lows, the 2020 virus drop, the DJIA trading at 16,000 to 30,000, the start of the mega bull market in 2009, and the financial crisis of 2008. Click here to sign up for a lifetime free subscription to the Generate Wealth newsletter.

This article is an unpaid outside contributor, does not reflect Benzinga reporting, and has not been edited for content or accuracy.