Iran Breakthrough

Please click here for an enlarged chart of Direxion Daily Semiconductor Bull 3X ETF (NYSE:SOXL).

Note the following:

  • The trendline on the chart shows an extraordinarily steep rise in leveraged semiconductor ETF (SOXL).  The ETF has moved from a low of around $40 to $107.06 as of this writing in the premarket.  This is a 168% rise in a very short time.
  • The chart shows that RSI is at 100, the most overbought it can be.
  • The momo crowd continues to pile into SOXL.  The reason is that semiconductors are not impacted by the Iran war.
  • In addition to the momo crowd, the meme crowd is also piling into SOXL.
  • For prudent investors, SOXL provides an important indication of the extreme positive sentiment.
  • We have been sharing with you for a while that software stocks have a structural problem due to AI.  iShares Expanded Tech-Software Sector ETF (BATS:IGV) has staged a major bounce from the lows.  Now, there is another setback. ServiceNow (NOW), a major software stock, reported good earnings after the market close, but the stock has experienced significant selling so far due to lower margins.  The market is interpreting it as AI hurting software stocks instead of helping software stocks.
  • Tesla Inc (NASDAQ:TSLA) reported good earnings after the market close.  Initially, TSLA stock went higher but pulled back when CEO Elon Musk said capex will surge to $25B.  The reveal of humanoid robot Optimus 3 is now scheduled for the second half of 2026.
  • Intel Corp (NASDAQ:INTC) finally has a customer for its 14A process.  The customer is Musk's Terafab.  INTC stock jumped on the news.  INTC stock has been ripping lately.  Intel will report earnings after the market close.  Investors should carefully watch to see if the optimism is justified.  As full disclosure, INTC is in our portfolio – long from an average of $19.05.
  • As of this writing, significant buying is coming into the stock market on a report that there might be a breakthrough with Iran.
  • Even though a ceasefire is in place with Iran, tensions at sea are rising.  The U.S. has intercepted an Iranian supertanker outside of the Persian Gulf.  Iran has seized two ships.
  • The Pentagon says that clearing mines from the Strait of Hormuz may take six months.  Of course, mine clearing cannot start until the war ends.  Prudent investors should note that this means disruptions in global trade for a long time.

Magnificent Seven Money Flows

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 range bound.

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.