Earnings Movers

Please click here for an enlarged chart of Amazon.com, Inc. (NASDAQ:AMZN).

Note the following:

  • This article is about the big picture, not an individual stock.  The chart of AMZN stock is being used to illustrate the point.
  • The AMZN chart illustrates the contrast between how smart money behaves and how the momo crowd behaves.  
  • The chart shows a gap up in AMZN stock on blowout earnings.
  • The chart shows a technical breakout above zone 1 (previously resistance).
  • The chart shows that the momo crowd, as well as those who follow traditional technical analysis, aggressively bought the breakout.
  • Who is the smartest man about AMZN stock?  Of course, it is Amazon founder Jeff Bezos.  Jeff Bezos is the smart money here. Did Bezos join the momo crowd in aggressively buying the breakout in AMZN stock? Of course not.  Bezos did exactly what smart money always does.  Bezos took advantage of the strength generated by the momo crowd and filed to sell 15M shares of AMZN stock, worth about $4.07B.
  • There have been a lot of concerns about AI software stock Palantir Technologies Inc (NASDAQ:PLTR).  PLTR stock has pulled back on concerns about competition from large language models.  Palantir reported blowout earnings better than the consensus and whisper numbers.  This quote from Palantir CEO Alex Karp is highly instructive: "Demand for AI sovereignty has now been unleashed. And Palantir is the only company that has demonstrated it can transform tokens into actual economic value. Our customers trust us to provide them with maximal control over their operations, data, and decisions. Their competitive advantage should never become the training data for future models. This quarter was otherworldly: our U.S. commercial revenue grew 149% year-over-year, our overall revenue grew 93% year-over-year, and our Rule of 40 score climbed to 155%. The sovereign AI revolution makes us very optimistic about the future."
  • As full disclosure, PLTR is in our portfolio and long from an average of $20.15.
  • Caterpillar Inc (NYSE:CAT) stock has been a major beneficiary of the AI data center buildout.  CAT stock had pulled back on concerns that AI data center growth might be slowing.  Caterpillar reported blowout earnings better than consensus and whisper numbers.  Going forward, Caterpillar sees broadening momentum.
  • CAT is in the Dow Jones Industrial Average (DJIA) and is primarily responsible for the move up in DJIA in the early trade.
  • Prudent investors pay attention.  Momo gurus are touting 47% earnings growth this quarter so far this quarter based on reported earnings.  In our analysis, the headline is highly misleading.  The reason is the large gains from equity investments in Amazon and Alphabet Inc Class A (NASDAQ:GOOGL) earnings need to be excluded to get a true picture.  When these equity gains are excluded, the earnings growth this quarter is about 28% vs. 23% consensus.  Earnings growth is strong, but nowhere near the misleading number momo gurus are touting.  
  • In the early trade, the stock market is jumping up on falling oil and falling bond yields.  Oil and bond yields are falling on Qatar signaling that a draft agreement is being circulated with various parties, including the U.S. and Iran.  
  • Expect blind money to flow into the stock market today.  Blind money is the money that flows into the stock market on the first two days of the month without any analysis irrespective of market conditions.
  • ISM Manufacturing Index came at 55.6% vs. 54% consensus.  This is the strongest data since 2022.  Manufacturing in the U.S. is picking up, primarily due the demands from construction of AI data centers.
  • JOLTS job openings will be released at 10am ET and may be market moving.
  • Advanced Micro Devices Inc (NASDAQ:AMD) and Space Exploration Technologies Corp (NASDAQ:SPCX) are scheduled to report earnings after the regular market session close today.

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

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.