Trade Probe

Please click here for a 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 the rally from Monday's low has failed.
  • The chart shows that SPY is now in zone 1 (support).
  • Our charts show premarket data only for the current day.  For a majority of the situations, this leads to better analysis.  However, here it is important to know that the premarket low on Monday shown on this previously published chart was $641.61.  SPY is trading at $642.09 as of this writing in the premarket.  If the market does not bounce from here, it will be a negative.
  • RSI on the chart shows the stock market is oversold again.
  • Yesterday, the stock market experienced significant institutional selling during the regular session on concerns about the approaching weekend.
  • President Trump is a keen watcher of the stock market.  Minutes after the stock market hit the lows yesterday, President Trump extended the deadline to bomb Iran's energy infrastructure to April 6.  In the after market, the stock market rallied, but then China issued a blow.  China is starting a trade probe against the U.S.  Of note is that China is starting this probe at a time when the U.S. is preoccupied in the Middle East and before the Trump and Xi summit.  The stock market did not expect such an aggressive move by China against the U.S., and as such, this move has brought in more selling in the early trade.
  • There are two very different interpretations of President Trump's move to extend the deadline:  
    • For the stock market, the positive interpretation is that President Trump is trying very hard to extract the U.S. out of the situation even though Iran is not cooperating.
    • The interpretation that is negative for the stock market is that the U.S. military was not ready to carry out President Trump's ultimatum and needed more time.  With the extension, President Trump bought more time for the U.S. military to prepare for a big attack on Iran. 
  • The price action in the stock market today will depend on which of the foregoing two narratives takes dominant hold.
  • Turkey is selling gold.  Please see the gold section below.

Japan

Japan's Finance Minister Katayama is warning that Japan may intervene to support the yen.  Prudent investors need to keep an eye on such developments in Japan due to the carry trade.  In the carry trade, funds have borrowed hundreds of billions of dollars in Japan and invested in the U.S., lately in the AI trade.

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 Apple Inc (NASDAQ:AAPL).

In the early trade, money flows are negative in 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

We previously shared with you that central banks were now selling gold.  Now the news is out that Turkey has sold about 54 tonnes of gold to support its currency lira.

Momo gurus are in shock.  As we have previously shared with you, a vast majority of momo gurus who were leading the momo crowd to buy gold near the highs had no history or experience with gold but claimed to have become instant experts.   Prudent investors need to keep in mind that such momo guru behavior is common.  Momo gurus often become instant experts on whatever is popular.

The momo crowd is like a yoyo in gold in the early trade, and 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.

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.