Google Goes Nuclear For AI Power, Israeli Restraint Impacts Stocks, Gold, And Oil

Benzinga · 10/15 16:21

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

Google Goes Nuclear

Please click here for an enlarged chart of Nano Nuclear Energy Inc (NASDAQ:NNE).

Note the following:

  • This article is about the big picture, not an individual stock. The chart of NNE is being used to illustrate the point.
  • NNE is a micro reactor company.
  • The trendline on the chart shows a steady uptrend since last month on the excitement about the use of nuclear power for AI data centers.
  • As full disclosure, there is a position in NNE in The Arora Report’s ZYX Buy Change Alert.
  • Alphabet Inc Class C (NASDAQ:GOOG) has decided on nuclear power for AI data centers. Most importantly, Google has signed a Master Plant Development Agreement for smart modular reactors with Kairos Power. The first plant will be deployed by 2030.
  • The Google agreement will likely build more excitement for nuclear power. The Arora Report has previously mentioned three conventional nuclear plant operators: Constellation Energy Corp (NASDAQ:CEG), Vistra Corp (NYSE:VST), and Public Service Enterprise Group Inc. (NYSE:PEG). There are two publicly traded smart modular reactors of note – Nuscale Power Corp (NYSE:SMR) and Oklo Inc (NYSE:OKLO).
  • There are reports Israel has told the U.S. that Israel will not attack Iran's nuclear facilities or oil infrastructure. This development is impacting the markets in the following ways:
    • Buying in stocks
    • Selling in volatility index (VIX) futures
    • Selling in the dollar
    • Selling in oil
    • Selling in gold and silver
    • As full disclosure, The Arora Report anticipated this scenario as the highest probability scenario and gave the following signals. Readers of The Arora Report got ahead of the curve when they received a signal to take partial profits on gold ETF SPDR Gold Trust (NYSE:GLD) in The Arora Report’s ZYX Allocation as well as silver ETF SLV and gold miner Newmont Corporation (NYSE:NEM) in The Arora Report’s ZYX Buy.
  • Earnings season is in full swing.
    • Among important earnings of note, Bank of America Corp (NYSE:BAC) and Goldman Sachs Group Inc (NYSE:GS) reported earnings better than the consensus. As full disclosure, BAC is in The Arora Report’s ZYX Buy Core Model Portfolio and is long from $7.69. 
    • Johnson & Johnson (NYSE:JNJ) reported lower than expected earnings.
    • The nation's largest health insurer UnitedHealth Group Inc (NYSE:UNH) is lowering its outlook due to rising medical costs.

Magnificent Seven Money Flows

In the early trade, money flows are positive in Apple Inc (NASDAQ:AAPL), Amazon.com, Inc. (NASDAQ:AMZN), GOOG, Meta Platforms Inc (NASDAQ:META), Microsoft Corp (NASDAQ:MSFT), and Tesla Inc (NASDAQ:TSLA).

In the early trade, money flows are neutral in NVIDIA Corp (NASDAQ:NVDA).

In the early trade, money flows are positive in SPDR S&P 500 ETF Trust (NYSE:SPY) and Invesco QQQ Trust Series 1 (NASDAQ:QQQ).

Momo Crowd And Smart Money In Stocks

Investors can gain an edge by knowing money flows in SPY and QQQ. Investors can get a bigger edge by knowing when smart money is buying stocks, gold, and oil. The most popular ETF for gold is SPDR Gold Trust (NYSE:GLD). The most popular ETF for silver is iShares Silver Trust (NYSE:SLV). The most popular ETF for oil is United States Oil ETF (NYSE:USO).

Bitcoin

Bitcoin (CRYPTO: BTC) is range bound.

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 five 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.