Cooler Inflation Data

Please click here for an enlarged chart of JPMorgan stock (JPM).

Note the following:

  • This article is about the big picture, not an individual stock.  The chart of JPM stock is being used to illustrate the point.
  • JPMorgan is important because it is the largest bank in the U.S.  Overall, earnings from five banks this morning indicate a strong U.S. economy.
  • The chart shows JPM stock has fallen below the low band of zone 1 (resistance).
  • The chart shows that in the longer term, after a meteoric rise, JPM stock has been range bound between zone 2 (support) and zone 1(resistance).
  • In our analysis, the stock market’s reaction to JPMorgan earnings is particularly insightful.  JPMorgan reported blowout earnings significantly better than the consensus and whisper numbers, and yet, the stock has dropped in the early trade.  Normally stocks go up when they report better than whisper numbers.  The reason for the drop is JPM stock is very expensive and projections are lower than expectations.  Here are the details.
    • JPMorgan reported Q2 adjusted EPS of $6.14 vs. $5.80 consensus.
    • JPMorgan reported revenue of $57.3B vs. $51.3B consensus.
    • Excluding markets, JPMorgan expects FY26 net interest income of about $96.5B vs. prior view of $103B.
  • As full disclosure, JPMorgan is in our portfolio, long from an average of $34.14.
  • Bank of America Corp (NYSE:BAC) also reported strong earnings, but BAC stock is trading lower.  Here are the details:
    • Bank of America reported Q2 EPS $1.21 vs. $1.12 consensus.
    • Bank of America reported revenue of $31.56B vs. $30.77B consensus.
  • As full disclosure, BAC is in our portfolio, long from an average of $7.69. 
  • Citigroup Inc (NYSE:C) also reported strong earnings, but C stock is trading lower.  Here are the details:
    • Citigroup reported Q2 EPS of $3.15 vs. $2.71 consensus.
    • Citigroup reported revenue of $24.8B vs. $23.73B consensus.
  • As full disclosure, C is in our portfolio, long from an average of $33.80.  It is trading at $139.37 as of this writing in the premarket, representing a gain of 312%.
  • Goldman Sachs Group Inc (NYSE:GS) and Wells Fargo & Co (NYSE:WFC) also reported better than consensus earnings.
  • In our analysis, strong earnings from large banks is positive for the entire stock market.  
  • Consumer Price Index (CPI) came cooler than expected.  Here are the details:
    • Headline CPI came at -0.4% vs. -0.1% consensus.
    • Core CPI came at 0.0% vs. 0.2% consensus.
  • In our analysis, after the cooler CPI data, there is over 80% probability that the Fed will keep interest rates unchanged.  
  • In our analysis, falling oil prices has helped inflation cool down.  However, investors need to look ahead. Oil prices are rising again as the U.S. and Iran resume low level warfare.  The Strait of Hormuz is practically closed even though the U.S. says it is open.  
  • Producer Price Index (PPI) will be released tomorrow at 8:30am ET.
  • IBM Common Stock (NYSE:IBM) fell as much as 25% in the early trade before starting to recover.  So far, today is the worst day for IBM stock since 1987.  IBM’s short fall is due to customers shifting their budgets towards server and memory products delaying major deals for IBM.  The drop in IBM stock is dragging down software stocks such as Microsoft Corp (NASDAQ:MSFT), Oracle Corp (NYSE:ORCL), Salesforce Inc (NYSE:CRM), and ServiceNow Inc (NYSE:NOW).  iShares Expanded Tech-Software Sector ETF (BATS:IGV) is down about 4%.
  • Fed Chair Warsh will say in front of Congress that the Fed has no tolerance for elevated inflation.
  • After the success of memory maker SK Hynix Inc – ADR (NASDAQ:SKHY), Samsung Electronics Co Ltd (OTCPK:SSNLF) is now contemplating a U.S. listing.
  • In the early trade, there is very aggressive buying in semiconductor stocks following the recovery of stocks in South Korea.

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) and Tesla Inc (NASDAQ:TSLA).

In the early trade, money flows are neutral in Amazon.com, Inc. (NASDAQ:AMZN).

In the early trade, money flows are negative in Apple Inc (NASDAQ:AAPL), Microsoft Corp (NASDAQ:MSFT), Apple Inc (NASDAQ:AAPL), and Meta Platforms Inc (NASDAQ:META).

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 (USO).

Bitcoin

Bitcoin (CRYPTO:BTC) is being bought after lower CPI data.

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.