Will Tesla's Earnings Propel NASDAQ to New Heights?

To gain an edge, here’s what you need to know today.

Potential for Nasdaq Breakout

Investors can view performance trends through the Invesco QQQ Trust Series 1 QQQ chart.

Key insights include:

• The QQQ chart is currently within a resistance zone.
• A significant uptick in QQQ followed the robust earnings report from Tesla Inc (Tesla). For additional details about Tesla's earnings, review our previous commentary. Following the report, Tesla added an impressive $150 billion to its market capitalization.
• Investors are optimistic that strong Tesla earnings, coupled with a possible short squeeze, will help QQQ break through its resistance levels.
• It’s crucial for investors to recognize that while the S&P 500 index has managed to break out, the Nasdaq 100 is still experiencing constraints. Many technology stocks have been underperforming lately, highlighting the importance of diversification beyond tech.
• The Relative Strength Index (RSI) suggests that QQQ is not yet overbought, making it relatively easier for prices to appreciate.
• According to The Arora Report, key earnings from major tech companies next week will heavily influence QQQ's movement.
• The stock market is seeing increased purchases this morning following the release of durable goods orders data:
• Durable Orders registered a decrease of -0.8%, compared to a consensus estimate of -0.9%.
• Durable Orders excluding Transportation experienced a rise of 0.4%, surpassing the -0.1% consensus.
• The University of Michigan’s consumer sentiment index is set to be released at 10 am ET, which could impact market movements significantly since consumer spending constitutes 70% of the U.S. economy.
• In summary, the interplay of these factors places the market in a protective stance, balancing various influences. For more detailed insights, consider reviewing our protection band information available to our members.

Upcoming Elections in Japan

Japan will hold a general election this Sunday, raising concerns about whether the ruling party may lose its parliamentary majority. If this occurs, it is anticipated that it could negatively affect both the yen and Japanese stock markets.

Economic Insights from Europe

The Chief Economist of the European Central Bank (ECB) has indicated expectations that inflation in Europe should reach the bank's target by 2025.

Market Activity Among Major Tech Players

During early trading, money flows appear positive for Amazon.com, Inc. (Amazon), Alphabet Inc Class C (Google), Meta Platforms Inc (Meta), Microsoft Corp (Microsoft), and NVIDIA Corp (NVIDIA). Conversely, money flows are neutral for Tesla and negative for Apple Inc (Apple). In contrast, flows are positive in the SPDR S&P 500 ETF Trust and Invesco QQQ Trust Series 1.

Understanding Investor Behaviors

Gaining an edge in investing can be achieved by monitoring the money flows in the SPY and QQQ funds. Additionally, being aware of when smart money invests in stocks, gold, and oil can provide further insight. Popular ETFs include the SPDR Gold Trust for gold, iShares Silver Trust for silver, and United States Oil ETF for oil investments.

Current Bitcoin Trends

Bitcoin (BTC/USD) is currently experiencing a range-bound pattern.

What Investors Should Do Now

It’s critical for investors to focus forward rather than on past performance.

Consider maintaining strong, long-term positions while also evaluating the use of a protection band strategy which includes cash, Treasury bills, or short-term tactical trades. This approach balances protection with the potential for upside participation.

Establishing protection bands allows investors to determine appropriate levels of cash alongside their stock holdings. A high band may be suited for conservative investors, while aggressive strategies may lean towards lower bands. A complete lack of hedging might indicate full investment readiness.

Remember, holding sufficient cash is essential for seizing new opportunities. When adjusting hedge levels, it might be wise to set partial stop quantities for stock positions and to allow more flexibility for high volatility stocks.

Reassessing Traditional Portfolios

Analyzing risk-adjusted returns against inflation suggests that long-duration bonds are not currently favorable. Investors adhering to a traditional 60% stock and 40% bond allocation may benefit from focusing on high-quality bonds with durations of five years or less. Those willing to take a more sophisticated approach could consider bond ETFs more strategically during this period.

NASDAQ, Tesla, Earnings