Important Earnings Ahead

Please click here for an enlarged chart of SPDR S&P 500 ETF Trust (NYSE:SPY) which represents the benchmark stock market index S&P 500 (SPX).

Note the following:

• The chart shows that the stock market is bouncing from the earlier loss.
• On Sunday evening, significant selling came into stock futures on rising oil prices and falling bonds.
• This morning, oil started falling and bonds started rising on unconfirmed reports from Iran that the U.S. is offering a temporary waiver on oil sanctions.  As oil fell and bonds rebounded, significant buying came into stock futures.  As of this writing, there is another unconfirmed report that Iran has agreed to a long term nuclear freeze and conditional transfer of uranium to Russia.  This report is bringing in more buying, especially in semiconductor stocks.
• Investors should keep a close eye on statements from President Trump regarding Iran.  The stock market believes that President Trump is trying hard to find a way to declare victory and extract the U.S. from the Iran war.  The road block is that Iran is not agreeing to open the Strait of Hormuz unless the U.S. gives significant concessions.   In our analysis, the real issue stopping an agreement with Iran is that both President Trump and Iran want to declare victory but neither one wants the other to sound victorious.  
• The bond market is now discounting a 52% probability of a rate hike in 2026.  Only a week ago, prior to hot Producer Price Index and Consumer Price Index, the probability of a rate hike in 2026 was only 24%.  
• Dual mania of extremely aggressive buying of semiconductors and call options by the momo crowd continues.  In our analysis, the dual mania will collide with important earnings ahead.
  • NVIDIA Corp (NASDAQ:NVDA) will report earnings on Wednesday after the close.  NVDA stock has moved higher going into earnings.  Whisper numbers are higher than the consensus.  Stocks move based on the difference between whisper numbers and reported numbers.  Whisper numbers are the numbers analysts share with their best clients and are different from the numbers the same analysts publish for public consumption.  In three of the last four quarters, NVDA stock fell after earnings because earnings were above consensus but below whisper numbers.
  • Important retail earnings are ahead from Lowe’s Companies Inc (NYSE:LOW), Home Depot Inc (NYSE:HD), Walmart Inc (NASDAQ:WMT), and Target Corp (NYSE:TGT).  Walmart earnings are most important as Walmart stock has done well, but it is very expensive, trading at 43 times forward PE.  As full disclosure, WMT is in our portfolio, long from an average of $19.25.  LOW is also in our portfolio and is near the buy zone as of this writing in the premarket.
• Due to the K-shaped economy in which lower and middle income people are hurting, there is significant concern about retailers.  In our analysis, the last quarter was likely fine because tax payers received 18% more in refunds compared to the previous year due to the One Big Beautiful Bill Act.  Historical data shows that most consumers spend their tax refunds.  However projections for this quarter and the rest of the year are a real concern.  

China

China is important because it is the world's second largest economy.  China's economy is weakening.

• Retail sales for April were up 0.2% year-over-year vs. 2.0% consensus.
• Industrial output was up 4.1% year-over-year vs. 5.9% consensus.

Japan

Japan is important because in the carry trade funds have borrowed hundreds of billions of dollars in Japan and invested in the U.S., primarily in the AI trade.  Earlier today, the yield on 10 year Japanese Government Bonds rose to 2.8%, the highest level in 29 years.

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).

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), Microsoft Corp (NASDAQ:MSFT), and Tesla Inc (NASDAQ:TSLA).

In the early trade, money flows are mixed in S&P 500 ETF (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 Depot (BTM) is the largest operator of bitcoin (BTC.USD) ATMs in North America.  Bitcoin Depot has filed for bankruptcy blaming regulations.  

Bitcoin 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.