Power Struggle In Iran

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 stock market continues to levitate well above the magnet.
  • The chart shows that volume yesterday was even lower on a micro pullback.  This indicates that investors do not want to sell.  In yesterday's Morning Capsule before the stock market opened, we wrote:
  • The momo crowd is afflicted with extreme FOMO (fear of missing out).  As is often the case, the momo crowd believes stonks are going to the moon, and they want to be onboard.   
  • Even prudent investors do not want to sell because of the history of optimistic posts from President Trump every time the stock market starts going down.  Investors are waiting for another post from President Trump that may run up the stock market.  
  • RSI on the chart shows the stock market is very overbought.
  • Investors are convinced that a deal with Iran is at hand.  However, investors are oblivious to the power struggle taking place in Iran.
    • Moderates in Iran want to make a peace deal.
    • Hardliners in Iran believe that Iran has an upper hand and do not want to give into U.S. demands.
  • Investors are paying attention to optimistic statements from President Trump but are ignoring statements from President Trump saying that he is unlikely to renew the ceasefire and is in no rush to end the war.
  • Among hardliners in Iran, Senior Commander Ali Abdollahi is saying that Iran has the upper hand militarily and Iran will not allow President Trump to create a false narrative over the situation on the ground.
  • China is the biggest customer of Iran's oil.  President Trump is angling for China to pressure Iran to accept a deal.
  • In our analysis, in the end it will come down to what President Trump is willing to accept and declare victory.
  • With Tim Cook stepping down, a new era has begun at Apple Inc (NASDAQ:AAPL).  Prudent investors should note that at a time when Apple has fallen behind in the AI race, Apple has chosen John Ternus, who is a hardware expert, not an AI or software expert.  There are obvious risks to Apple by not picking an AI expert as the CEO, but here are the potential positives that may come out of this decision:
    • Apple may usher in a new era of hardware innovations, just like what happened under Steve Jobs.
    • Apple may not need to spend billions of dollars on AI like other Mag7 companies.
    • There is potential for the narrative about Apple to change.  If the narrative changes, AAPL stock can quickly move to our very long term target of $426 – $434.  As full disclosure, AAPL is in our portfolio, long from $4.68. 
  • Amazon.com, Inc. (NASDAQ:AMZN) is pushing deeper into AI with a new deal with Anthropic.  Amazon is investing an additional $5 billion in Anthropic and plans to invest up to $20B tied to milestones.  In return, Anthropic plans to spend $100B on compute from AWS.
  • Prudent investors closely watch retail sales data as the U.S. economy is 70% consumer based.  Retail sales came hotter than expected.  American consumers continue to spend.  Here is the latest retail sales data:
    • March headline retail sales came at 1.7% vs. 1.3% consensus.
    • March retail sales ex-auto came at 1.9% vs. 0.9% consensus.
  • Among earnings of note, UnitedHealth Group Inc (NYSE:UNH), D.R. Horton Inc (NYSE:DHI), General Electric Co (NYSE:GE), and Rtx Corp (NYSE:RTX) are reporting earnings better than consensus.

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 positive in Amazon (AMZN), NVIDIA Corp (NASDAQ:NVDA), Microsoft Corp (NASDAQ:MSFT), Alphabet Inc Class C (NASDAQ:GOOG), Meta Platforms Inc (NASDAQ:META), and Tesla Inc (NASDAQ:TSLA).

In the early trade, money flows are negative in Apple (AAPL).

In the early trade, money flows are positive 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 (GLD).  The most popular ETF for silver is iShares Silver Trust (SLV).  The most popular ETF for oil is United States Oil ETF (NYSE:USO).

Bitcoin

Bitcoin (CRYPTO: BTC) is seeing buying.

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.