Major Triggers Ahead

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

Note the following:

  • The chart shows SOXL was rising on a very steep trendline.
  • The chart shows SOXL gapped up on Intel Corp (NASDAQ:INTC) earnings and has continued to rise.  This is what a mania looks like.
  • RSI on the chart shows that SOXL continues to be extremely overbought.
  • The last time a similar mania in semiconductors occurred was in 2000, just before semiconductors crashed.
  • As full disclosure, VanEck Semiconductor ETF (NASDAQ:SMH) is in our portfolio, long from an average of $7.95. 
  • There is credible speculation that OpenAI is working with Qualcomm Inc (NASDAQ:QCOM) to develop custom smart phone processors (SoCs).  The smart phone from OpenAI will be focused on AI agents and will directly challenge Apple Inc’s (NASDAQ:AAPL) iPhone.
  • There are two potential triggers for the stock market this week:
    • Five of the seven Mag7 will report earnings this week.  Amazon (AMZN), Alphabet Inc Class C (NASDAQ:GOOG), Meta Platforms Inc (NASDAQ:META), and Microsoft Corp (NASDAQ:MSFT) will report earnings on Wednesday in the after hours.  Apple (AAPL) will report earnings on Thursday in the after hours.
    • The FOMC meeting starts tomorrow.  The Fed will announce its rate decision on Wednesday at 2pm ET, followed by a press conference by Fed Chair Powell at 2:30pm ET.
  • The expectation is that the interest rate will be left unchanged.   Here is the key question for prudent investors:
    • Will Powell decide to stay or leave the Fed after his term as Fed Chair ends?  If Powell decides to leave, it will make it easier for Kevin Warsh to cut rates.  President Trump has threatened that he will fire Powell if he does not leave.
  • Talks between Iran and the U.S. have reached a stalemate.  As a result, oil is rising.  Iran's Foreign Minister Araghchi is in Russia for talks with President Putin.  The stock market is oblivious.

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 Alphabet (GOOG) and NVIDIA Corp (NASDAQ:NVDA).

In the early trade, money flows are negative in Amazon (AMZN), Microsoft (MSFT), Meta (META), Tesla Inc (NASDAQ:TSLA), and Apple (AAPL).

In the early trade, money flows are mixed 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 (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.