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India Opportunity Please click here for an enlarged chart of India ETF (ARCA: EPI).
Note the following:
- The Arora Report has been sharing with members and readers for 17 years that India represents one of the best opportunities for long term investors.
- The chart shows that Indian stocks are hitting a lifetime high on election results.
- RSI on the chart shows there is more room to run.
- India’s GDP is growing at 8% per year. In comparison, without excessive government spending, the underlying growth rate of the U.S. economy is 2% - 3%.
- Official results of the Indian election will be released tomorrow. The market is rallying on exit polls.
- The exit polls show that Modi’s Bharatiya Janata Party (BJP) along with its alliance members is likely to get a two thirds majority in the 543 member lower house.
- A two thirds majority will allow Modi to push tough reforms.
- India is on track to become the world’s third largest economy.
- Indian stocks saw the highest gain since February 1, 2021.
- The Indian currency, rupee, saw the best single day gain in five months.
- Yields on 10 year Indian bonds fell to the lowest level since April 2022.
- In The Arora Report analysis, foreign money is likely to pour into India.
- India is attracting manufacturing as it moves out of China. For example, production of Apple Inc's (NASDAQ: AAPL) iPhone is accelerating in India.
- The Arora Report's ETF of choice for India is EPI. As full disclosure, buy zones for EPI are in The Arora Report's ZYX Allocation and ZYX Emerging Model Portfolios.
- Small caps and growth stocks provide exceptional opportunities in India. As full disclosure, small cap ETF SMIN and growth leaders ETF GLIN are in The Arora Report's ZYX Emerging. India focused fund FFXDF run by Prem Watsa, known as the Warren Buffett of Canada, is in The Arora Report's ZYX Buy Model Portfolio. There is also a trade around position in FFXDF in The Arora Report's ZYX Buy. A trade around position is a technique used by billionaires and hedge funds that can dramatically increase profits and reduce risks.
- Election results are also out in Mexico. In Mexico, the ruling party is winning a landslide victory.
- Claudia Sheinbaum will become the first female president of Mexico.
- Mexican currency peso is dropping about 2% as of this writing. Mexican stocks are also falling in the early trade.
- The Arora Report's ETF of choice for Mexico is EWW. As full disclosure, the buy zone for EWW is in The Arora Report's ZYX Emerging.
- In both India and Mexico, the ruling parties are winning by a landslide. The markets in India are rejoicing, but the markets in Mexico are falling.
- In India, the ruling party plans to carry out tough economic reforms and promote free enterprise.
- In Mexico, the ruling party plans to increase state intervention in the economy.
- On the AI front, there is significant news.
- We previously shared with you about Blackwell, the next generation chip platform for AI from NVIDIA Corp (NASDAQ: NVDA). Now, NVDA is announcing the generation after Blackwell. It will be called Rubin.
- Advanced Micro Devices, Inc. (NASDAQ: AMD) is announcing its next generation chip MI350. MI350 will be released in 2025, followed by MI400 in 2026. MI350 will perform inference 35 times better than the current generation from AMD.
- S&P 500 staged a 1% rally going into the close on Friday. In The Arora Report analysis, the last hour rally was due to month end rebalancing. Often, the rally on rebalancing reverses. However, this morning in the early trade, buying is occurring as Wall Street tries to front run the blind money. Blind money is the money that pours into the stock market on the first two days of the month without any analysis and irrespective of market conditions.
- Positive sentiment is again hitting an extreme as the meme crowd frenzy ignites again. GameStop Corp (NYSE: GME) is almost doubling as of this writing in the premarket on what appears to be a $116M position in GME by Keith Gill, also known as Roaring Kitty. This is the same person who ignited the meme stock mania in 2021. So far, there is no verification of the authenticity of the position, but it does not matter to the meme and momo crowds. They are buying aggressively.
Magnificent Seven Money Flows In the early trade, money flows are positive in Amazon.com, Inc. (NASDAQ: AMZN), NVDA, Microsoft Corp (NASDAQ: MSFT), Alphabet Inc Class C (NASDAQ: GOOG), Meta Platforms Inc (NASDAQ: META), Tesla Inc (NASDAQ: TSLA), and AAPL.
In the early trade, money flows are positive in SPDR S&P 500 ETF Trust (ARCA:SPY) and Invesco QQQ Trust Series 1 (NASDAQ: QQQ).
Momo Crowd And Smart Money In Stocks The momo crowd is buying stocks in the early trade. Smart money is inactive in the early trade.
Note for new investors: Smart money often sells into the strength generated by momo crowd buying and buys into the weakness generated by momo crowd selling. Over a long period of time, investors come out ahead by adopting smart money’s ways. The exception is in a raging bull market – for very short term trades, consider following the momo crowd and not smart money.
Gold The momo crowd is buying gold in the early trade. Smart money is inactive in the early trade.
For longer-term, please see gold and silver ratings.
The most popular ETF for gold is SPDR Gold Trust (ARCA:GLD). The most popular ETF for silver is iShares Silver Trust (ARCA:SLV).
Oil OPEC+ has decided that some of the production that was cut will return. As a result, oil is falling.
The momo crowd is selling oil in the early trade. Smart money is buying oil in the early trade.
For longer-term, please see oil ratings.
The most popular ETF for oil is United States Oil ETF (ARCA:USO).
Bitcoin In The Arora Report analysis, meme crowd mania is spilling into bitcoin (CRYPTO: BTC), leading to aggressive bitcoin buying.
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 a protection band consisting of cash or Treasury bills 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 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.
The Arora Report is known for its accurate calls. The Arora Report correctly called the big artificial intelligence rally before anyone else, the new bull market of 2023, the bear market of 2022, new stock market highs right after the virus low in 2020, the virus drop in 2020, the DJIA rally 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. Please click here to sign up for a free forever Generate Wealth Newsletter.
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