Get Ahead with Today’s Key Insights
In the fast-paced world of investments, here are some crucial points to keep in mind today:
Earnings Anticipation
Investors are eagerly awaiting earnings reports from industry giants like Apple Inc (NASDAQ:AAPL) and Amazon.com, Inc. (NASDAQ:AMZN), with hopes that positive results will boost the overall stock market, particularly in the domain of artificial intelligence (AI).
AAPL: A Major Player
AAPL stands tall as one of the largest and most sought-after stocks in the market. Many investors consider it a safe haven, almost equivalent to a money market fund, and its significant weight in various indexes makes it a significant driving force in the stock market.
Spotting Opportunities
A keen observation of the charts reveals instances when AAPL stock dipped into the Arora buy zone, providing opportunities for potential investors to buy into the stock.
The Power of Buy Zones
Buy zones, a technique favored by billionaires and hedge funds, exhibit their effectiveness as demonstrated in the chart. It’s crucial to explore the Trade Management Guidelines for deeper insights.
Liquidity Injection and RSI Divergence
Following the failure of Silicon Valley Bank, the Federal Reserve’s massive liquidity injection into the system had a notable impact on AAPL stock, driving it higher. Additionally, the chart shows RSI divergence, a warning signal ahead of earnings.
Earnings Watch
Investors should closely monitor the trendline after the earnings release. Bullish investors are hopeful that AAPL stock might surge to about $210, banking on a mention of AI in the earnings release and call to drive the stock upwards.
Fundamental Considerations
Despite the rise in AAPL stock, it’s essential to recognize that it occurred amidst declining earnings. The stock’s upward trajectory is driven by PE expansion and positive investor sentiment, leading to higher valuations.
The Prudent Perspective
We understand the appeal of AAPL to investors. However, it’s vital to note that the stock is now very expensive compared to its past values. It’s worth considering the long-term journey of AAPL stock in the ZYX Buy Model Portfolio by The Arora Report, which has significantly contributed to its weight in the portfolios of long-term members.
Insights from Qualcomm and Other Players
Qualcomm Inc (NASDAQ:QCOM), a significant technology supplier for smartphones, including Apple, reports notable weakness in phone sales in China, especially concerning Android phones. The situation raises questions about the immunity of the iPhone to the same challenges.
Earnings Reports in Focus
Earnings reports from AT&T Inc. (NYSE:T), Verizon Communications Inc. (NYSE:VZ), and T-Mobile Us Inc (NASDAQ:TMUS) indicate weakness in phone sales, but it’s unclear if this pertains solely to Android phones.
Market Indicators
Keep a close eye on the magnificent seven stocks, including Apple, Amazon, Alphabet Inc Class C (NASDAQ:GOOG), Meta Platforms Inc (NASDAQ:META), Microsoft Corp (NASDAQ:MSFT), NVIDIA Corp (NASDAQ:NVDA), and Tesla Inc (NASDAQ:TSLA). The AI-driven rally has been led by these stocks, and their behavior following Apple and Amazon earnings is particularly significant.
Jobless Claims and Labor Costs
Jobless claims came in slightly higher than expected at 227K. Unit labor costs are at 1.6%, lower than the consensus of 2.7%, while Q2 productivity exceeds expectations at 3.7%.
Strong Performance in India
India’s economy continues to thrive, with July services PMI coming in at 62.3, surpassing the consensus of 58.0.
Market Outlook
Our early stock market indicator suggests a negative trend, but the momo crowd is expected to aggressively buy Apple and Amazon shares before earnings, potentially impacting the market’s trajectory.
Protecting Your Investments
For investors, it’s crucial to anticipate future opportunities and not dwell on the past. Holding onto existing positions while strategically balancing cash, Treasury bills, and short-term tactical trades can offer both protection and participation in potential market gains.
Long-Term Portfolio Considerations
With inflation-adjusted risk-reward probabilities in mind, it may not be the best time for long-duration strategic bond allocations. Traditional 60/40 portfolios may want to focus on high-quality bonds with a five-year duration or less, and those seeking sophistication can consider using bond ETFs tactically rather than strategically.