Hotter Inflation

Please click here for an enlarged chart of Micron Technology Inc (NASDAQ:MU).

Note the following:

  • This article is about the big picture, not an individual stock.  The chart of MU stock is being used to illustrate the point.
  • The chart shows MU stock has broken out of zone 1 (support).
  • The chart shows MU stock has gone parabolic for the second time since late 2025.
  • The chart shows that the trendline this time has a much steeper slope than the prior trendline.  The reason is that unlike NVIDIA Corp (NASDAQ:NVDA), MU stock has not been over-owned, and late comers in the momo crowd are super aggressively buying MU stock.
  • RSI on the chart shows divergence, indicating the internal upward momentum is now slower.  An RSI divergence often leads to a pullback.
  • We shared with you a long time ago when the cycle had not even started, that AI needs high bandwidth memory and Micron was sold out of high bandwidth memory.  To get a grip on the memory supercycle, take a look at these numbers:
    • Consensus estimate for Micron earnings per share is $9.19 vs. $1.56 last year.  Whisper numbers are over $10.  Further, Micron is showing gross margins of 69%. This is extremely high for the memory business.
  • Micron will report earnings after the close today.  Micron earnings will impact not only the AI trade but the entire stock market.  Other stocks that move with MU as a group are SanDisk Corp (NASDAQ:SNDK), Western Digital Corp (NASDAQ:WDC), and Seagate Technology Holdings PLC (NASDAQ:STX).
  • As full disclosure, we are long MU from an average of  $21.77.
  • The hottest stock market in the world is South Korea.  The South Korean stock market is primarily driven by two memory makers: SK Hynix (HXSCL) and Samsung Electronics Co Ltd (OTC:SSNLF).  As full disclosure, Ishares Msci South Korea ETF (NYSE:EWY) is in our portfolio.  From the April 9, 2025 buy signal, EWY is long from $48.60, just before the South Korean market rise started.  Recently, we gave a signal to take partial profits on EWY as high as $150.69.
  • Until this morning, the U.S. had refrained from attacking Iran's energy infrastructure.  Israel has attacked Iran oil storage facilities.  In our analysis, restraint by the U.S. has been prudent because if the U.S. were to attack Iran's energy infrastructure, Iran would attack the energy infrastructure of U.S. allies in the Gulf.
  • Earlier this morning, the sentiment in the stock market was very positive, and the momo crowd was aggressively buying stocks, especially AI related stocks.  Two developments added to the already very positive sentiment:
    • Eurozone CPI came at 0.6% month-over-month vs. 0.7% consensus.  Better than expected CPI in Europe lifted European stocks, and the positive sentiment carried to U.S. stocks.
    • President Trump again indicated that the Iran war would be short.
  • As the morning progressed, the momo crowd was buying aggressively as if the war was over.  Two developments injected a dose of reality:
    • Producer Price Index (PPI) came hotter than expected.  Here are the details:
      • Headline PPI came at 0.7% vs. 0.3% consensus.
      • Core PPI came at 0.5% vs. 0.4% consensus.
    • South Pars gas field has been attacked.  South Pars is a very large gas field in Iran.
  • The FOMC interest rate decision is followed by a press conference from Fed Chair Powell.
  • Given the PPI data, it will be very difficult for anyone to cut interest rates based on logic.  Of course, advocating for interest rate cuts based on politics is a different animal.

Magnificent Seven Money Flows

Most portfolios are now heavily concentrated in the Mag 7 stocks.  For this reason, it is important to pay attention to early money flows in the Mag 7 stocks on a daily basis. 

In the early trade, money flows are neutral in Nvidia (NVDA).

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

In the early trade, money flows are negative 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).

Gold

Of special note is the momo crowd is aggressively selling gold as if the Iran war is over.  There is aggressive selling in gold ETF (GLD), silver ETF (SLV), VanEck Gold Miners ETF (NYSE:GDX), and Global X Silver Miners ETF (NYSE:SIL).

Oil

API crude inventories came at a build of 6.6M barrels vs. a consensus of a draw of 0.6M barrels.

Bitcoin

Bitcoin (CRYPTO: BTC) is seeing selling on hot PPI and the attack on South Pars.

What To Do Now

Consider continuing to hold good, very long term, existing positions and add tactical positions based on signals.

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.

Benzinga Disclaimer: This article is from an unpaid external contributor. It does not represent Benzinga’s reporting and has not been edited for content or accuracy.