Aggressive Stock Buying

Please click here for a chart of Invesco QQQ Trust Series 1 (NASDAQ:QQQ).

Note the following:

  • The chart shows QQQ is bouncing off of the top band of zone 2 (support).
  • The chart shows zone 1 (resistance).  The consensus wisdom on Wall Street is that this year, QQQ will break above zone 1.
  • This morning in the early trade, there is aggressive buying in QQQ which represents mostly tech stocks.  The buying is especially aggressive in semiconductor stocks and other stocks that are part of the AI trade.  The buying is triggered by news that NVIDIA Corp (NASDAQ:NVDA) is looking at supporting a massive AI data center for OpenAI in Ohio with a $250B backstop.  If completed, this will be one of the largest financial transactions in AI’s history.   The project would cost over $500B excluding the chips.  The project is being developed by Japan’s SoftBank Group Corp – ADR (OTCPK:SFTBY).  The power for the project will be funded by Japan under a trade deal that President Trump previously promoted.  The power will be controlled by the U.S. government.
  • Nvidia is also in talks to finance as much as $350B of Nvidia chip purchases by OpenAI.
  • In our analysis, there are two important implications for investors:
    • The fact that Nvidia is willing to finance perhaps the most ambitious AI project to date, shows Nvidia’s confidence that capex on AI will produce great returns.  This implication is what is driving aggressive buying of AI stocks this morning.
    • There is also a negative implication of circular financing that the stock market is ignoring for the time being.  In circular financing, Nvidia would count $350B in sales to OpenAI, but OpenAI would not be paying for these chips out of its own pocket as the purchase will be financed by Nvidia.  The net result is that Nvidia gets no immediate cash for the sale.  Investors need to remember that this is the type of circular financing that, in part, lead to the 2000 crash of internet stocks and massive losses for investors in the darlings of the day such as Cisco Systems Inc (NASDAQ:CSCO), Northern Telecom (symbol at the time NT), Lucent (symbol at the time LU), and JDS Uniphase (symbol at that time JDSU).
  • In addition to the Nvidia news, aggressive stock buying in the early trade is due to President Trump deciding to stop attacking Iran after 13 days of attacks.  There is speculation that the reason for stopping the attacks is a shortage of defensive munitions, such as Patriot missiles, to defend against Iran’s counterattacks.  As full disclosure, Rtx Corp (NYSE:RTX), the maker of Patriot missiles, is in our portfolio and the position has large gains.  However, President Trump is denying a shortage of munitions and states that the U.S. has a stock pile of vast quantities of munitions.
  • Adding to the positive sentiment is the IPO of CXMT in China.  The IPO soared 466% on its first day, and thus became the most valuable stock in China with a valuation of $484B.  CXMT is a producer of semiconductor memory and had 8% global market share in 2025.
  • In our analysis, investors should carefully watch how the U.S. government responds to Apple’s (NASDAQ:AAPL) attempts to buy memory from CXMT.  If Apple gets permission, it will be negative for Micron stock (MU).  In such an event, we are likely to issue a signal to completely hedge our existing MU position and issue a short-sell signal on MU. As full disclosure, we are long MU from an average of $21.77.
  • As a major milestone, Space Exploration Technologies Corp (NASDAQ:SPCX) launched a successful test flight of Starship.  This is the first successful launch of Starship since the SPCX IPO.  Over the weekend, momo gurus were pumping SPCX stock and expectations were for SPCX stock to go higher in the early trade.  Instead, SPCX is seeing aggressive selling in the early trade as more and more investors are becoming aware of the upcoming massive unlock.  We wrote on July 22:

Since SpaceX (SPCX) has been added to several indexes, prudent investors should prepare for the volatility caused by a massive unlock of previously restricted shares.  On August 6, $116B worth of SPCX stock will become eligible for selling.  Short sellers see an opportunity.  The estimate is that about 30% of tradeable SPCX shares are now sold short.  Prudent investors should be careful about being influenced by the media.  There is a fair probability that on August 6, SPCX stock could rally if a short squeeze starts, instead of falling big time as the media is predicting.

  • Durable orders data is cooler than expected.  Here are the details:
    • Durable orders came in at 0.4?% vs 2.0% consensus.
    • Durable orders ex-transportation came at 0.6% vs 0.9% 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 Apple Inc (NASDAQ:AAPL), Amazon.com, Inc. (NASDAQ:AMZN), Alphabet Inc Class C (NASDAQ:GOOG), Meta Platforms Inc (NASDAQ:META), Microsoft Corp (NASDAQ:MSFT), NVIDIA Corp (NASDAQ:NVDA), and Tesla Inc (NASDAQ:TSLA).

In the early trade, money flows are positive in SPDR S&P 500 ETF Trust (NYSE:SPY) and Invesco QQQ Trust Series 1 (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.