Tech Rebound

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 has been driving the stock market higher.  SOXL is the momo crowd’s favorite semiconductor ETF.
• The chart shows SOXL fell on Thursday into zone 2 (support).
• The chart shows a large move from the recent attempt to breakout when SOXL traded as high as $302 to the low on Thursday of $168.88. This underscores the volatility.
• The chart shows SOXL is seeing buying this morning and is now above zone 2.  If zone 2 holds, that will be a positive, not only for semiconductors but for the entire stock market.
• RSI on the chart shows SOXL is close to becoming oversold and is primed for a bounce.
• In our analysis, an important observation from the chart is that even on a low liquidity pre-holiday trading session, the volume was higher when SOXL experienced a significant drop. This indicates that when SOXL starts dropping, significant fear develops.  Paradoxically, the presence of this fear can lead to a rally.  
• The buying in SOXL in the early trade shown on the chart is triggered by a rebound in South Korea.  Remember that the South Korean market is home to Samsung Electronics Co Ltd (OTC:SSNLF) and SK Hynix (HXSCL, SKHY). As full disclsoure,  Ishares Msci South Korea ETF (NYSE:EWY) is in our portfolio, long from an average price of $48.60.  As of this writing in the premarket, EWY is trading at $189.63.
• The South Korea market rebounded for two reasons:
  • Samsung will report earnings tomorrow.  True to their pattern, the momo crowd is buying ahead of earnings.  Earnings are always a risk event, both to the upside and the downside.  The momo crowd almost always buys ahead of earnings on hopium that earnings will be better than the consensus and whisper numbers because the momo crowd does not take risk into account.  Smart money seldom buys ahead of earnings because smart money is always concerned about risk.
  • SK Hynix is marketing its listing in the U.S.  SK Hynix plans to offer 17,790,000 shares at about $158.14.  SKHY shares are expected to start trading in the U.S. on Friday.
• Contributing to positive sentiment this morning is that Space Exploration Technologies Corp (NASDAQ:SPCX) will be added to the Nasdaq 100 tomorrow.
• Positive sentiment is also building in Apple Inc (NASDAQ:AAPL) stock on speculation that Apple will introduce a foldable phone.  Of note is that Samsung has had a foldable phone for years.
• Buying in stocks in the early trade is extending beyond tech stocks.  The reason is yields are pulling back after the jobs report came out weaker than expected.
• In our analysis, a key test for the stock market will be what happens to the stock market after the early buying driven by the foregoing reasons is exhausted.  It is common for the stock market to see strong buying after a holiday, only for selling to emerge later. 

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), Meta Platforms Inc (NASDAQ:META), NVIDIA Corp (NASDAQ:NVDA), and Tesla Inc (NASDAQ:TSLA).

In the early trade, money flows are negative in Apple (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 (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.