DISNEY, UBER, STARBUCKS, AND MCDONALD’S SEND A POWERFUL SIGNAL TO INVESTORS BUT MOMO CROWD OBLIVIOUS » The Arora Report Stock Market News (2024)

• May 8, 2024

ByNigam Arora& Dr. Natasha Arora

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

Consumer Pulling Back

Please click here for a chart of Disney stock (DIS).

Note the following:

• The Morning Capsule is about the big picture, not an individual stock. The chart of DIS is being used to illustrate the point.
• The chart shows the drop in DIS stock on earnings.
• Overall, Disney earnings were good. The reason the stock was hit is because Disney projects operating income for its Experiences segment which consists of parks will show no growth in the June quarter vs. a consensus of 12% growth. Theme parks are important for Disney as they account for 52% of its operating profit.
• The Arora Report’s detailed analysis of Disney’s earnings and conference call indicates that the consumer is now resisting high park prices and is pulling back.
• This morning, the stock of ride hailing and food delivery company Uber (UBER) is falling. In The Arora Report analysis, the main reason behind the drop in UBER stock is that the consumer is pulling back.
• On May 6, the big meat producer Tyson stock (TSN) fell after reporting earnings. The Arora Report’s analysis of earnings show that the consumer is pulling back.
• On April 30, Starbucks stock (SBUX) fell after reporting earnings. In The Arora Report’s analysis of the earnings and conference call, the main reason behind SBUX earnings shortfall is that the consumer is pulling back.
• On April 30, McDonald’s (MCD) reported earnings. The earnings showed flat to declining trends. In The Arora Report analysis, the reason is that the consumer is becoming price wary.
• The foregoing is just a sampling. The Arora Report analysis of earnings so far shows that the consumer pulling back is impacting a large number of companies.
• Further, The Arora Report analysis shows that about 60% of consumers are pulling back, but the remaining 40% are still on a spending binge.
• As a member of The Arora Report, none of the foregoing should surprise you – we have been sharing with you that liquidity of consumers at the low end was drying up.
• The U.S. economy avoided a recession for two reasons:
  • Excessive consumer spending that was triggered by the free money from the government. This factor is now abating.
  • Excessive fiscal spending by the U.S. government. This spending continues.
• The consumer pulling back impacts earnings. However, in The Arora Report analysis, so far Wall Street analysts have not properly adjusted their earnings estimates. By next quarter, they will need to adjust their estimates. Prudent investors need to get ahead of upcoming reductions in earrings estimates.
• It is important to remember that there are three other factors driving this stock market higher:
  • Exuberance over AI. Yesterday we shared with you real examples of Nvidia (NVDA) and Palantir (PLTR). For the first time, smart money is willing to take on the momo crowd. In The Arora Report analysis, a fortune is to be made from artificial intelligence between now and 2030. However, in the short term, the move up in many stocks is overdone. Again, prudent investors need to look ahead and not just through the rearview mirror.
  • The Fed’s second blunder that has dramatically eased financial conditions. Here, prudent investors need to carefully watch on an ongoing basis, as Powell appears to be itching to compound his blunder. The thinking in some conservative circles is that Powell’s stance when the data does not justify it is to help with Biden’s reelection. Trump has already stated that he will not reappoint Powell. The Arora Report is politically neutral. Our sole job is to help investors. Having said that, it is important that investors do not let their politics get in the way of making money.
  • Reckless fiscal spending by the U.S. government. The spending continues with no sign of abating.
• The stock market always has crosscurrents. Powell’s actions and fiscal spending will likely lead to more buying of stocks, even though other factors seem to be at the cusp of turning.
• As an actionable item, the sum total of the foregoing is in the protection band, which strikes the optimum balance between various crosscurrents. Please scroll down to see the protection band.

Magnificent Seven Money Flows

In the early trade, money flows are neutral in Apple (AAPL).

In the early trade, money flows are negative in Amazon (AMZN), Alphabet (GOOG), Meta (META), Microsoft (MSFT), Tesla (TSLA), and NVDA.

In the early trade, money flows are negative in S&P 500 ETF (SPY) and Nasdaq 100 ETF (QQQ).

Momo Crowd And Smart Money In Stocks

The momo crowd is *** (To see the locked content, please take a 30 day free trial) stocks in the early trade. Smart money is *** stocks in the early trade.

Gold

The momo crowd is *** gold in the early trade. Smart money is *** in the early trade.

For longer-term, please see gold and silver ratings.

Oil

API crude inventories came at a build of 0.509M barrels vs. a consensus of a draw of 1.430M barrels.

The momo crowd is *** in oil in the early trade. Smart money is *** in the early trade.

For longer-term, please see oil ratings.

Bitcoin

Bitcoin (BTC.USD) is range bound.

Markets

Our very, very short-term early stock market indicator is ***. This indicator, with a great track record, is popular among long term investors to stay in tune with the market and among short term traders to independently undertake quick trades.

Interest rates are ticking up, and bonds are ticking down.

The dollar is stronger.

Trading futures is not recommended for most investors. The purpose of providing this information is to give an indication of the premarket activity that usually guides the activity when the market opens.

Gold futures are at $2322, silver futures are at $27.54, and oil futures are at $77.55.

S&P 500 futures are trading at 5193 as of this writing. S&P 500 futures resistance levels are 5210, 5256, and 5400: support levels are 5020, 4918, and 4852.

DJIA futures are down 52 points.

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 holding *** in cash or Treasury bills or allocated to short-term tactical trades; and short to medium-term hedges of ***, and short term hedges of ***. 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 seven 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.

To take a free 30-day trial to paid services to gain access to more opportunities, please click here.

This post was just published onZYXBuy Change Alert.

Markets can generate substantial wealth for knowledgeable investors. NOW YOU TOO CAN ALSO SPECTACULARLY SUCCEED AT MEETING YOUR GOALS WITH THE HELP OF THE ARORA REPORT. You are receiving less than 2% of the content from our paid services. …TO RECEIVE REMAINING 98% INCLUDING MANY ATTRACTIVE INVESTMENT OPPORTUNITIES, TAKE A FREE
TRIAL TO PAID SERVICES.

Please click here to take advantage of a FREE 30 day trial.

• AAPL, AMZN, BTCUSD, DIS, GOLD, GOOG, GOOGL, MARKETS, MCD, META, MSFT, NVDA, OIL, QQQ, SBUX, SILVER, SPY, TSLA, TSN, UBER