Hot Producer Price Index

Due to hot Producer Price Index (PPI) on the heels of hot Consumer Price Index (CPI), cash and hedges are being increased in our protection band.

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

Note the following:

  • The chart shows that from the March 30 low, SOXL had gained 366% at its peak on Monday.
  • The chart shows that yesterday there was a pullback in SOXL, but the pullback was aggressively bought.
  • The chart shows an early move up in SOXL.  The move was triggered by the news of NVIDIA Corp’s (NASDAQ:NVDA) CEO Jensen Huang going to China.  Initially, Huang was not going to China with President Trump.  President Trump called to invite Huang when he learned from the media that Huang was not coming.  Huang met Air Force One in Alaska where it was refueling.  As soon as the news broke, investors started piling in stock futures and semiconductor stocks in overnight trading.
  • In our analysis, investors are believing that the inclusion of Huang in the trip to China indicates President Trump is inclined to approve the sale of more AI chips to China.  
  • Selling is coming into SOXL after release of PPI data.
  • PPI came much hotter than expected.  Here are the details:
    • Headline PPI came at 1.4% vs. 0.4% consensus.
    • Core PPI came at 1.0% vs. 0.3% consensus.
  • The 10 year Treasury note auction was weak.  Here are the details:
    • $42B 10 year Treasury note auction
    • High yield: 4.468% (When-Issued: 4.464%)
    • Bid-to-cover: 2.40
    • Indirect bid: 64.0%
    • Direct bid: 24.1%
  • Prudent investors should keep an eye on the $25B 30 year Treasury bond auction today.
  • In our analysis, the stock market at all time high is inconsistent with oil above $100, rising yields, and high inflation.  Based on historic precedent, markets tend to resolve in favor of rising yields, i.e. the stock market falls.  Historical precedent is not completely applicable now because AI is more influential than anything that has been seen before in terms of its impact on society and economies.  
  • In our analysis, there is push-pull between AI and the macro.  AI is driving the stock market higher, but the macro poses a significant risk to the down side. 

India

India is increasing duties on the import of gold and silver to conserve foreign reserves.  India has been hit hard by rising oil prices as India is a big importer of oil.

India is a big importer of gold and silver.  Higher duties will reduce gold and silver demand.

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 Nvidia (NVDA) and Tesla Inc (NASDAQ:TSLA).

In the early trade, money flows are neutral in Alphabet Inc Class C (NASDAQ:GOOG).

In the early trade, money flows are negative in Amazon.com, Inc. (NASDAQ:AMZN), Microsoft Corp (NASDAQ:MSFT), Meta Platforms Inc (NASDAQ:META), and Apple Inc (NASDAQ: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 (NYSE:GLD).  The most popular ETF for silver is iShares Silver Trust (NYSE:SLV).  The most popular ETF for oil is United States Oil ETF (NYSE:USO).

Oil

API crude inventories came at a draw of 2.188M barrels vs. consensus of a draw of 1.65M barrels.

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.