Semiconductor Mania Grows

Please click here for an enlarged chart of Direxion Daily Semiconductor Bull 3X ETF (NYSE:SOXL).

Note the following:

• The chart shows a 312% gain as of this writing in the premarket in leveraged semiconductor ETF SOXL since the March 30 low.
• The gap up shown this morning on the chart is driven by Advanced Micro Devices Inc (NASDAQ:AMD) earnings.  AMD earnings were below whisper numbers.  Initially, AMD stock dropped after the earnings release, but the dip was aggressively bought as semiconductor mania is in full swing – any semiconductor company that has any news, even bad news, is seeing aggressive buying.  AMD's conference call was extraordinarily bullish.   It is no longer only GPUs for AI.  CPU demand is seeing an extraordinary rise.  Pay attention to this statement from AMD's CEO Lisa Su, "We now expect the server CPU TAM to grow at greater than 35% annually, reaching over $120 billion by 2030.”  The statement from Su is also driving Intel Corp (NASDAQ:INTC) and Arm Holdings PLC – ADR (NASDAQ:ARM) stocks higher.  
• As full disclosure, AMD stock is in our portfolio, long from an average of $205.52.
• Memory and disk drive stocks Micron Technology Inc (NASDAQ:MU), SanDisk Corp (NASDAQ:SNDK), Western Digital Corp (NASDAQ:WDC), and Seagate Technology Holdings PLC (NASDAQ:STX) are seeing extremely aggressive buying.  MU stock is in our portfolio, long from an average of $21.77. 
• Semiconductor mania is now in full swing and has reached pre-2000 crash level by several measures, including fundamental, technical, and quantitative.  The semiconductor index now has a PE of 37.  Does this mean semiconductors are going to crash again?  In our analysis, a major pullback can happen anytime, but the probability of a 2000-style major crash is low due to AI demand.  
• Our portfolios are very heavy in semiconductors.  As full disclosure, VanEck Semiconductor ETF (NASDAQ:SMH) is in our portfolio.
• The plan is to start trade around positions on any major dip in semiconductors.  Trade around positions are a billionaire and hedge fund technique used to dramatically increase returns and reduce risk.
• RSI on the chart shows semiconductors are overbought but have more room to run.
• Starting in 2022, our high conviction call has been a fortune is to be made in AI all the way to 2030.  Now, you need to get ahead in semiconductors – the mistake investors are making is assuming that the present level of demand is going to continue for a very long time.  In our analysis, the demand will start tapering off in 2028.  Sometime before then, it will be important to take more profits and hedge long semiconductor positions.  There will also be a strong opportunity for short selling semiconductors. 
• The U.S. is advancing a proposal for a one page memorandum of understanding with Iran that will open the Strait of Hormuz.  This proposal is generating significant optimism.  As a result, there is aggressive buying in stocks and bonds and aggressive selling in oil.  Aggressive buying in bonds is bringing yields lower.  Yesterday, we shared with readers the chart of 20+ year Treasury Bond ETF (TLT), showing long bonds were in the danger zone.  The U.S. proposal is causing a rally in TLT.
• The U.S. Treasury is offering $125B of Treasury securities to refund $83.3B of privately held Treasury notes maturing on May 15.  In our analysis, this offering is inline with expectations and should not have any impact on the markets even though $125B is a large amount
• ADP is the largest private payroll processor in the country.  ADP uses its data to provide a glimpse of the official jobs report that will be released on Friday at 8:30am ET.  The just released ADP data came stronger than expected.  ADP Employment Change came at 109K vs. 79K consensus.
• In important earnings, Walt Disney Co (NYSE:DIS), Uber Technologies Inc (NYSE:UBER), and Novo Nordisk A/S (NYSE:NVO) are reporting earnings better than whisper numbers.

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 Amazon.com, Inc. (NASDAQ:AMZN), Alphabet Inc Class C (NASDAQ:GOOG), NVIDIA Corp (NASDAQ:NVDA), and Tesla Inc (NASDAQ:TSLA).

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

In the early trade, money flows are negative in Apple Inc (NASDAQ:AAPL) 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).

Oil

API crude inventories came at a draw of 8.1M barrels vs. consensus of a draw of 2.8M barrels.

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.