Rising Oil And Yields

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 the stock market pulling back in the early trade.
  • RSI on the chart shows the stock market can go lower.
  • The chart shows zone 1, which will act as support if there is a pullback.
  • The chart shows the March 30 low occurred right at the low band of the zone 3 (support).
  • The chart shows our signal to raise cash and hedges. 
  • We previously wrote that high oil and high yields are inconsistent with the stock market near highs.
  • We have also previously shared with you that there are two manias driving the stock market higher.
    • Semiconductor mania
    • Call option mania
  • In the early trade, rising oil and yields are getting in the way of the dual manias, in spite of continued momo crowd buying.
  • Today is option expiration.  Gamma has been positive – without this the stock market would have been down much more in the early trade. 
  • This morning, oil is rising for two reasons: 
    • Statements at the end of President Trump's visit to China are positive and are designed to feel good for both countries.  In our analysis, these statements fall short of the market's expectations regarding Iran.  
    • In a BRICS summit in India, India tried hard to bridge the gap about Iran that would have helped to make Iranian oil flow again.  The effort failed.  Iran was in attendance.  
  • Rising oil is driving fears of inflation.  This, in turn, is causing yields to go higher.  
  • As a heads up, if yields and oil continue to go higher, it will likely trigger another increase in our protection band.

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 Microsoft Corp (NASDAQ:MSFT).

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), 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 (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.

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