Benzinga - by The Arora Report, Benzinga Contributor.
To gain an edge, this is what you need to know today.
Slowdown Please click here for a chart of Walmart Inc (NYSE: WMT).
Note the following:
- The Morning Capsule is about the big picture, not an individual stock. The chart of WMT stock is being used to illustrate the point.
- Walmart is the largest retailer in the U.S. For this reason, any outlook from Walmart is very important.
- The chart shows that WMT stock has fallen after the release of earnings.
- The chart shows that WMT stock is now below the prior breakout line.
- Walmart reported good earnings, but the stock is falling due to Walmart providing a cautious outlook after it saw consumer spending slow. Walmart primarily caters to the lower income segment of the population.
- The Arora Report call for months has been that consumer liquidity would start shrinking at the end of October. Yesterday’s retail sales data showed that The Arora Report call is spot on. Today, caution from Walmart provides another data point showing that The Arora Report call has proven spot on.
- In addition to Walmart, two other important companies are indicating a slowdown in enterprise spending.
- Cisco Systems Inc (NASDAQ: CSCO), the biggest networking company, is indicating that enterprise spending is slowing down.
- Palo Alto Networks Inc (NASDAQ: PANW), a big cybersecurity company, is indicating that even in cybersecurity, spending is likely to slow down.
- We have been sharing with you that Wall Street’s earnings estimates are too high. None of the three, new, important slowdown data points are a surprise to members of The Arora Report. However, they are a surprise to Wall Street and most investors who are not members of The Arora Report.
- Will the stock market fall after seeing a slowdown from these three important companies? The stock market always has crosscurrents. The crosscurrent here pushing the stock market to the upside is a combination of several market mechanics. We have been sharing these market mechanics with you and how they have impacted the stock market. About two thirds of the market rise this year is due to market mechanics.
- The market mechanic that is going to have the most impact on the stock market today is the 100:1 leverage in bonds. Bond yields are moving lower on the slowdown reports. Typically when the stock market is not afraid of a recession, when bond yields move lower, the stock market moves higher due to 100:1 leverage. Since understanding market mechanics gives investors a big edge and details of market mechanics are kept close to the chest by Wall Street professionals due to their very high value, to help you, a new podcast titled “Market Mechanics: 100:1 Bond Leverage Can Trigger Major Stock Market Moves” is now live in Arora Ambassador Club.
- Initial claims came at 231K vs. 220K consensus. The slowdown is not appearing in this data yet. Initial claims is a leading indicator and carries heavy weight in our adaptive ZYX Asset Allocation Model with inputs in ten categories. In plain English, adaptiveness means that the model changes itself with market conditions. Please click here to see how this is achieved. One of the reasons behind The Arora Report’s unrivaled performance in both bull and bear markets is the adaptiveness of the model. Most models on Wall Street are static. They work for a while and then stop working when market conditions change.
- 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.
In the early trade, money flows are negative in Amazon.com, Inc. (NASDAQ: AMZN), Meta Platforms Inc (NASDAQ: META), Tesla Inc (NASDAQ: TSLA), and NVIDIA Corp (NASDAQ: NVDA).
In the early trade, money flows are mixed 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