Samsung Warning

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

Note the following:

  • Semiconductors are the leading sector that has been driving the stock market higher.  SOXL is the momo crowd’s favorite semiconductor ETF.
  • The chart shows that yesterday investors were buying SOXL, but SOXL was not able to hold its gain.
  • We shared with you in the Morning Capsule yesterday that buying in semiconductors in the U.S. was mostly the momo crowd buying in anticipation of good Samsung Electronics Co Ltd (OTC:SSNLF) earnings.
  • The chart shows the fall in SOXL in the early trade this morning after Samsung earnings.
  • The chart shows SOXL is now in zone 2 (support).
  • Prudent investors should carefully watch the following:
    • How SOXL behaves after the initial selling
    • Does SOXL hold zone 2 or move above zone 2
    • Volume of SOXL today
    • Price action in Micron Technology Inc (NASDAQ:MU), SanDisk Corp (NASDAQ:SNDK), and Roundhill Memory ETF (BATS:DRAM)
  • As we have been sharing with you, lately the U.S. stock market has been following the South Korean stock market.  Historically, the South Korean stock market followed the U.S. stock market.  The South Korean stock market fell after Samsung earnings, and the selling in South Korea carried over to the U.S.
  • Samsung earnings are outstanding and way above consensus.  Here are the details:
    • Q2 preliminary operating profit came at KRW 89.4T vs. KRW 84.2T consensus.  This is a 56% jump from the previous quarter and a 1900% jump from the same quarter a year earlier.
    • Q2 preliminary revenue came at KRW 171.0T vs. KRW 162.2T consensus.  Revenue has doubled from the prior year.
  • In spite of outstanding earnings significantly beating consensus, SSNLF stock fell 6.9% in South Korea.  KOSPI Composite, the benchmark for South Korean stocks, fell 4.9%.
  • Many investors are puzzled as to why SSNLF stock fell after Samsung reported outstanding earnings.  The reason for the fall is that even the outstanding numbers from Samsung did not meet the whisper numbers. Many investors, especially retail investors rely on consensus numbers and do not understand that stocks move on the difference between the reported numbers and the whisper numbers.  Whisper numbers are the numbers that analysts privately provide only to their best clients.  These numbers are often different from the numbers the same analysts publish for public consumption.
  • After the momo crowd bought semiconductor stocks aggressively ahead of Samsung earnings without any consideration of risk, this morning, the momo crowd is aggressively selling semiconductor stocks.  Momo crowd selling is exaggerating the down move in tech stocks far more than is justified for Samsung’s earnings.
  • Adding to the negative sentiment this morning is that DeepSeek, a leading Chinese LLM developer, is developing its own AI chip to reduce dependence on NVIDIA Corp (NASDAQ:NVDA).  The chip is designed for inference, not training.
  • Amazon.com, Inc. (NASDAQ:AMZN) is entering the AI debt binge by offering $25B in bonds.  The debt is being sold in eight tranches from 3 – 40 years.
  • We previously shared with you that one of the potential failure points in the AI rally is the debt binge that is not financed by banks but by private investors. 
  • Space Exploration Technologies Corp (NASDAQ:SPCX) is joining Nasdaq 100 today.  Wall Street banks are issuing very bullish targets, with one setting a target of $800 for SPCX.  The analyst behind the $800 price target is estimating the long term opportunity for SPCX to be $30T – this is far in excess of prior estimates from most analysts including us.

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 Amazon (AMZN), Microsoft Corp (NASDAQ:MSFT), Alphabet Inc Class C (NASDAQ:GOOG), Meta Platforms Inc (NASDAQ:META), and Apple Inc (NASDAQ:AAPL).

In the early trade, money flows are negative in Nvidia (NVDA) and Tesla Inc (NASDAQ:TSLA).

In the early trade, money flows are negative 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 where 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 (USO).

Bitcoin

Bitcoin (CRYPTO:BTC) is seeing buying.

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.