OECD Warning

Please click here for an enlarged chart of SPDR S&P 500 ETF Trust (NYSE:SPY) which represents the benchmark stock market index S&P 500 (SPX).

Note the following:

  • The chart shows rally attempts so far have fizzled.
  • The chart shows the stock market is again approaching the top band of zone 1 (support) in the early trade.
  • This morning, there is selling in the stock market on the lack of progress in the Iran war as the weekend approaches.  The concern is that unless President Trump makes positive statements about the Iran war, institutional investors will sell tomorrow to reduce risk ahead of the weekend.
  • This morning, regarding the Iran war, the following are upsetting the markets:
    • President Trump is telling Iran to "get serious soon, before it is too late."
    • The U.S. military is planning a "massive" final blow to Iran.
    • The U.S. now has over 50K troops in the area and 10K more on the way.
  • On the positive side, President Trump is saying that private comments from Iran are different from their public statements.  President Trump said, "They are ‘begging' us to make a deal."
  • This morning, the stock market is also paying attention to a warning from the Organisation for Economic Cooperation and Development (OECD).  OECD is issuing a warning on the impact of the Iran war on the economy.  Here are the key points:
    • The forecast for U.S. inflation is now 4.2% in 2026.
    • Annual GDP growth in the U.S. is forecast to fall to 1.7% in 2027.
    • G20 inflation is forecast to be 4.0%.
    • Global GDP growth is forecast to fall to 2.9% from 3.0% last year.
  • We previously shared with you that the weak 2-year Treasury auction was a reality check.  The 5-year Treasury auction was also weak, adding to the reality check.  Here are the details:
    • $70B 5-year Treasury note auction
    • High yield: 3.980% (When-Issued: 3.966%)
    • Bid-to-cover: 2.29
    • Indirect bid: 61.9%
    • Direct bid: 22.5%
  • The $44B 7-year Treasury auction is ahead.
  • Rising yields and rising oil prices this morning are also bringing selling in the stock market.
  • Initial jobless claims came at 210K vs. 210K consensus.  The data shows the Iran war is not impacting the jobs picture so far.

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 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), NVIDIA Corp (NASDAQ:NVDA), and Tesla Inc (NASDAQ:TSLA).

In the early trade, money flows are negative in S&P 500 ETF (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

There is selling in gold in the Middle East, India, and China as their economies are negatively impacted by the Iran war.  

The momo crowd is selling gold in the early trade.  This is reflected in gold ETF (GLD), silver ETF (SLV), VanEck Gold Miners ETF (NYSE:GDX), and Global X Silver Miners ETF (NYSE:SIL).  Smart money is inactive in the early trade.

Bitcoin

Bitcoin (CRYPTO: BTC) is seeing selling. On the positive side, Fannie Mae will now allow buyers to use bitcoin for down payments on houses.

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.