Korea Leading Semiconductors 

Please click here for an enlarged chart of Taiwan Semiconductor Manufacturing Co Ltd (NYSE:TSM).

Note the following:

  • This article is about the big picture, not an individual stock.  The chart of TSM stock is being used to illustrate the point.
  • Taiwan Semiconductor is important because it manufactures almost all high-performance AI chips.
  • The chart shows that even after good earnings, TSM stock has fallen in the early trade.
  • The chart shows the drop has caused TSM stock to be close to zone 2 (support).
  • In our analysis, TSM move above zone 1 (resistance) will indicate another potential leg up in semiconductors.
  • TSM earnings were good.  Here are the details:
    • TSM reported Q2 earnings of $4.31 vs. $3.81 consensus.
    • Revenues were reported as $40.2B vs. $39.83B consensus.  That is a 33.7% year-over-year increase.
    • TSM guided Q3 revenues of $44.6B – $45.8B vs. $43.67B consensus.
  • TSM is adding $100B to its investment in the U.S., bringing the total to $265B and 12 semiconductor and packaging facilities in the U.S.
  • In our analysis, if the same TSM earnings were reported in May, TSM stock would have been up significantly, driving semiconductors as a group much higher.  The character of the stock market has changed as semiconductors are now driven by South Korea.   Overnight, the South Korean stock market was down 6.4%. 
  • The Bank of Korea hiked its key interest rate by 25 bps to 2.75%.  This is the first hike in over three years.
  • Yesterday, we shared with you good earnings from extreme ultraviolet lithography leader ASML Holding NV (NASDAQ:ASML).  After early morning gains, ASML was not able to hold its gains due to anticipated selling in South Korea.
  • In the early trade, tech stocks are coming under considerable pressure, driven by the selloff in South Korea.
  • Of note is that in the early trade, Space Exploration Technologies Corp (NASDAQ:SPCX) stock has fallen below its IPO price.
  • AI stocks in China are getting a boost from Apple Inc.’s (NASDAQ:AAPL) decision to use Alibaba Group Holding Ltd – ADR (NYSE:BABA) Qwen large language model along with AI technology from Baidu Inc (NASDAQ:BIDU).  Both BIDU and BABA are in KraneShares CSI China Internet ETF (NYSE:KWEB).  As full disclosure, KWEB is in our portfolio.
  • Chinese AI stocks are also getting a boost from anticipation of China’s AI Conference, which begins Friday and includes a keynote from President Xi.  In our analysis, Chinese AI stocks are relatively inexpensive compared to U.S. AI stocks.  
  • Prudent investors closely watch retail sales data as the U.S. economy is 70% consumer based.  Retail sales are weaker than expected as most U.S. consumers are strapped.  Here is the latest retail sales data:
    • June headline retail sales came at 0.2% vs. 0.3% consensus.
    • June retail sales ex-auto came at -0.2% vs. 0.1% consensus.
  • Initial jobless claims came at 208K vs. 219K consensus.  This indicates the employment picture is stable.

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 Apple (AAPL), Alphabet Inc Class C (NASDAQ:GOOG), and Microsoft Corp (NASDAQ:MSFT).

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

In the early trade, money flows are negative in Meta Platforms Inc (NASDAQ:META), NVIDIA Corp (NASDAQ: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 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 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.