Wild Stock Moves Ahead

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 drove the stock market higher.  SOXL is the momo crowd’s favorite semiconductor ETF.
  • The chart shows SOXL rallied to the bottom band of zone 2 (resistance) but was not able to sustain the rally to get to the top band of zone 2.  This is a negative.
  • The chart shows that SOXL has pulled back to the top band of zone 3 (support).
  • RSI on the chart shows that SOXL is approaching an oversold level and thus could bounce.
  • The chart shows that this morning there is selling in semiconductors.  Semiconductors are being sold this morning in the U.S. in sympathy with SSamsung Electronics Co Ltd (OTCPK:SSNLF) crash in South Korea.  Samsung stock in South Korea fell 8.7% overnight for the following reasons:
    • The selloff was a classic ‘sell the news’ reaction.  We previously shared with you that Samsung stock had rallied in anticipation of a shareholder return plan.
    • There was disappointment in the structure of the Samsung plan.  Samsung’s plan has an unprecedented 90T – 100T won for shareholder payout that investors like, but investors did not like that there was not an immediate, aggressive share buyback or a timeline for Treasury stock cancellations.
  • Prudent investors should note that when foreigners sold Samsung stock in South Korea overnight, South Korean retail traders took advantage of the dip and bought Samsung stock.
  • Stock market investors should keep in mind that more important than Samsung price action is Nvidia (NVDA) earnings that will be released Wednesday after the close.
  • Not as important as Nvidia, but still fairly important to the stock market are Marvell (MRVL) earnings that will be released Thursday after the close.  In our analysis, Marvell earnings will be an important data point for the next phase of AI.  
  • Trade talks between the U.S. and Canada are breaking down.  Canada is suspending negotiations, and beginning at midnight tonight, the U.S. will impose a 50% tariff on $28B in goods.  The Canadian government is planning to match the tariffs to insulate its businesses and people from the effects of U.S. tariffs.
  • Prudent investors should pay attention that Anthropic’s Fable 5 has weaker demand than anticipated.  In our analysis, if this continues, this is a big risk for the AI trade even though the crowd is oblivious at this time.  
  • NYSE and Nasdaq are planning 23 hours a day stock trading starting December 6.  This will be very lucrative for the exchanges and Wall Street as they will be able to attract foreign investors, especially from Asia.  In our analysis, for most investors, 23 hour trading will increase the risk.  The reason is that there will be low liquidity.  Due to low liquidity, stocks can have wild moves, especially in response to news.  The following regular trading session will likely be significantly impacted by overnight violent moves.  We are already witnessing wild moves in U.S. stocks in the early trade based on what happens in South Korea overnight. 
  • On the positive side for the markets today, yields are pulling back.  The reason is the Treasury could use its $1T general account, Treasury’s rainy day fund equivalent, for bond buybacks.  We previously shared with you that after the initial euphoria on the Treasury’s buyback announcement, the move was faded by smart money.   The reason was that the amount of the buybacks was not significant and there was concern that Treasury Secretary Bessent did not have enough fire power.  In our analysis, if the Treasury is willing to use the general account fund for bond buybacks, the Treasury has enormous firepower to direct the markets. 
  • In our analysis, the harder the Treasury tries to deal with the adverse effect of the $40T national debt without reducing the deficit, the more investors are convinced that the Treasury is trying to debase the dollar and are rushing into gold and bitcoin.  In the long run, this is a big risk for the U.S. stock market that is generally not appreciated by the crowd at this time.  Prudent investors should get ahead of the curve and be very mindful of this risk. 
  • Bessent is saying that an "economic D-Day" is coming for Iran.   In our analysis, prudent investors should get ahead of the risk here that Iran could respond with more attacks on ships or Gulf countries. 
  • In our analysis, while investors need to be mindful of the risks, they should also be open to the tremendous opportunities that the next phase of AI and other innovations will bring to investors. 

Magnificent Seven Money Flows

Most portfolios are now heavily concentrated in the Mag 7 stocks.  For this reason, to get ahead and get an edge, investors need to dig below the surface of the Mag 7 stocks.  It is equally important to rise above the noise of daily news on the Mag 7 stocks.  The best way to get an edge, dig below the surface, and rise above the noise of the daily news is to pay attention to early money flows in the Mag 7 stocks on a daily basis.  When there is significant news in the Mag 7 stocks that rises above the threshold of noise and impacts your entire portfolio, it is covered in the main section above.

In the early trade, money flows are positive in Apple Inc (NASDAQ:AAPL) and NVIDIA Corp (NASDAQ:NVDA).

In the early trade, money flows are neutral in Amazon.com, Inc. (NASDAQ:AMZN), Meta Platforms Inc (NASDAQ:META), and Microsoft Corp (NASDAQ:MSFT).

In the early trade, money flows are negative in Alphabet Inc Class C (NASDAQ:GOOG) 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 (NYSE:GLD).  The most popular ETF for silver is iShares Silver Trust (NYSE:SLV).  The most popular ETF for oil is United States Oil ETF (NYSE:USO).

Bitcoin

Bitcoin (CRYPTO:BTC) is seeing buying.

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.