Stock Market Manias

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 zone 1 (support).  There is a fair probability of the stock market pulling into zone 1 over the next two months. The upcoming SpaceX (SPCX) IPO is so massive that its post IPO behavior will have a major impact on when and how a pullback occurs in the broader stock market.  The reason is the rules are being changed for early inclusion of SPCX in the indexes. 
  • The chart shows volume continues to be low.  The traditional interpretation of volume is not applicable here because investors are not buying stocks and are instead caught up in the options mania.
  • Prudent investors should note that three of the biggest IPOs are coming.  These IPOs are going to absorb a large amount of capital.  Some of this capital will come from selling  other popular stocks.  These IPOs are:
    • SpaceX $75B+
    • OpenAI $50B – $150B
    • Anthropic $40B – $60B
  • Significant buying has occurred in the stock market on a report that the U.S. and Iran have reached a deal to extend the ceasefire by 60 days.  According to the report, the deal is pending President Trump's approval.  News of the deal has also caused selling in oil and buying in bonds.
  • Dell Technologies Inc (NYSE:DELL) reported blowout earnings driven by demand for AI servers.  Dell specifically highlighted the memory shortage.  This is benefiting the stocks of Micron Technology Inc (NASDAQ:MU) and SanDisk Corp (NASDAQ:SNDK).   Dell earnings are giving a second wind to the semiconductor mania, including Dell's suppliers Intel Corp (NASDAQ:INTC) and Advanced Micro Devices Inc (NASDAQ:AMD).  The reaction in NVIDIA Corp (NASDAQ:NVDA) stock is muted.
  • Jeff Bezos's space company Blue Origin's New Glenn rocket exploded on the launch pad. The rocket explosion happened as the space mania is in full swing among the momo crowd.  Space stocks such as AST SpaceMobile Inc (NASDAQ:ASTS), Firefly Aerospace Inc (NASDAQ:FLY), Intuitive Machines Inc (NASDAQ:LUNR), Voyager Technologies Inc (NYSE:VOYG), and Rocket Lab Corp (NASDAQRKLB) are pulling back as of this writing.  This is also not great news for Amazon.com, Inc. (NASDAQ:AMZN) as some of Amazon's plans count on Blue Origin's success.  The incident also highlights that rockets are difficult and how well Elon Musk's SpaceX has done.

Japan

Finance Minister Katayama is warning Japan may engage in currency intervention at any time.  Japan is important 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 positive in Microsoft Corp (NASDAQ:MSFT) and NVIDIA Corp (NASDAQ:NVDA).

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), and Meta Platforms Inc (NASDAQ:META).

In the early trade, money flows are positive in S&P 500 ETF (SPY) and Nasdaq 100 ETF (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.

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.