Buying In Semis

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 the selloff in SOXL yesterday stopped at the low band of zone 2 (support).
  • The chart shows that this morning there is aggressive buying in semiconductors, and SOXL is now above the upper band of zone 2.
  • Buying in semiconductors is lifting the overall stock market in spite of the second wave of U.S. attacks on Iran and Iran’s counter attacks.
  • In our analysis, aggressive buying in semiconductors is triggered by the U.S. listing of SK Hynix (HXSCL, SKHY) being 7X oversubscribed.  This indicates very heavy demand for the South Korean memory maker.  The SK Hynix offering is among the largest for a foreign company in the U.S.
  • SK Hynix will start trading in the U.S. tomorrow.  How SK Hynix trades will impact the entire semiconductor sector, and in turn, the entire stock market.
  • To keep you ahead of the curve, we have been sharing with you that the momo crowd is oblivious to increasing memory capacity that is going to come online.  So far, our thesis is on track.  The news this morning is that Micron Technology Inc (NASDAQ:MU) is accelerating, spending more than $250B through 2035 to increase production. 
  • Of special note, this morning Meta Platforms Inc (NASDAQ:META) stock is being sold on Meta placing its custom AI chip in production in September and Meta’s plan to double its capacity.
  • In our analysis, prudent investors should note the change in the character of this stock market.  If the same news from Meta had come out last month, META stock would have gone up.  In the past, when hyperscalers introduced their own chips and increased compute capacity, their stocks have gone up.  
  • Earnings season will start tomorrow with Delta Air Lines Inc (NYSE:DAL) reporting earnings. The first important set of earnings from banks, including Bank of America Corp (NYSE:BAC), Citigroup Inc (NYSE:C), Goldman Sachs Group Inc (NYSE:GS), JPMorgan Chase & Co (NYSE:JPM), and Wells Fargo & Co (NYSE:WFC), will be on Tuesday, July 14 before the regular session open.  Whisper numbers for bank earnings are running ahead of consensus numbers.
  • In our analysis, FOMC minutes showed that this is the most divided Fed in decades.
  • Initial jobless claims came at 215K vs. 220K consensus.  This indicates the jobs picture remains strong.
  • Oil rose yesterday after the regular session close on news of a second day of U.S. attacks on Iran.  Overnight, oil gave up all its gains in spite of massive Iranian counterattacks.
  • In our analysis, the reason oil is having a hard time sustaining gains is two-fold:
    • The belief among oil traders is that President Trump has an eye on the midterm elections, and as such, President Trump is not likely to escalate beyond limited attacks.  
    • Iran’s economy is in bad shape.  Iran needs to keep selling oil to sustain its economy.  As such, Iran is also not likely to escalate beyond limited counter attacks.  
  • In our analysis, to get ahead of the curve, prudent investors should be aware that there is a high probability of a scenario where there is no permanent deal between the U.S. and Iran, and low level warfare becomes the norm.  

China

China is experiencing deflation.  Here are the details:

  • June CPI came at -0.3% month-over-month vs. -0.2% consensus.
  • June PPI came at -0.3% month-over-month vs. -0.3% consensus.

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 Corp (NASDAQ:NVDA).

In the early trade, money flows are neutral in Tesla Inc (NASDAQ:TSLA).

In the early trade, money flows are negative in Amazon.com, Inc. (NASDAQ:AMZN), Microsoft Corp (NASDAQ:MSFT), Alphabet Inc Class C (NASDAQ:GOOG), Meta (META), and Apple Inc (NASDAQ:AAPL).

In the early trade, money flows are positive 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.

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.