Big Move 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 is a weekly chart to give you a longer term perspective.
• The chart shows the stock market is like a coiled spring.  History tells us that coiled springs are often harbingers of a big move, but the coiled spring does not give any guidance as to the direction of the move.  
• Often, there is a trigger that starts the move.  Here are the potential near term triggers:
  • President Trump's State of the Union speech tonight.
  • NVIDIA Corp (NASDAQ:NVDA) earnings tomorrow after the regular session close.  This is the most important potential trigger.
  • SaaS stocks have been mercilessly beaten.  Workday Inc (NASDAQ:WDAY), an important SaaS stock, will report earnings after the close today.
  • Among other important SaaS companies, Salesforce Inc (NYSE:CRM) will announce earnings tomorrow after the regular session close and has an investor meeting on Friday.  Intuit Inc (NASDAQ:INTU) will announce earnings Thursday after market.
  • A deal with Iran or the U.S. attacking Iran
• RSI on the chart shows that the stock market has lost its internal momentum.
• Jamie Dimon, CEO of JPMorgan Chase & Co (NYSE:JPM), is the world's smartest banker.  Dimon is warning that many firms are taking undue high risks with credit quality to increase profitability.  He likens it to the period of 2005 – 2007.  As a reference for prudent investors, in 2008 the stock market crashed with S&P 500 losing 50% of its value primarily due to aggressive subprime lending by many firms.  
• Investors continue to shoot first and think later.  As an example, IBM Common Stock (NYSE:IBM) stock lost 13% yesterday after Anthropic introduced a COBOL AI tool that will make it easier to modernize legacy systems that run on COBOL. IBM is already developing its own AI tool for modernizing COBOL based systems.  Investors also ignored that even though mainframe based systems are important for IBM, IBM is now highly dependent on AI and hybrid cloud.
• AI tools are likely to hit IT outsources including those based in India hard.  Examples are Infosys Ltd (NYSE:INFY), Cognizant Technology Solutions Corp (NASDAQ:CTSH), and Accenture Plc (NYSE:ACN).  As full disclosure, we have a short position in INFY.
• The momo crowd is disheartened as one of the popular go-to momo crowd stocks Hims & Hers Health Inc (NYSE:HIMS) gave underwhelming guidance.  HIMS is a telehealth company, and its business took off when it started selling copycat weight loss drugs, rising as high as $72.98.   When HIMS stock was near the highs, momo gurus were pumping hard, sucking in gullible momo crowd investors with targets of $200 – $500 and promoting HIMS as the stock to own forever.  This stock market has been driven up by the momo crowd – disheartening of the momo crowd is not a great development for stock market bulls.  
• Home Depot Inc (NYSE:HD) is an important stock because it is the largest home improvement retailer in the country.  Home Depot earnings often give clues about consumer spending patterns. Home Depot reported earnings better than consensus and whisper numbers.
• In a boost for Advanced Micro Devices Inc (NASDAQ:AMD), Meta Platforms Inc (NASDAQ:META) is agreeing to buy billions of dollars of AMD chips.  The Meta deal shows that customers are trying their best to diversify away from Nvidia, and this has long term implications for Nvidia and the entire stock market.    
• After a study showed that the weight loss drug from Novo Nordisk A/S (NYSE:NVO) was inferior to Eli Lilly And Co (NYSE:LLY) drug, Novo Nordisk will cut the list price of Ozempic and Wegovy by up to 50% in the U.S.  This shows that weight loss drug sales are becoming very price sensitive.
•  

Japan

There is a report that Prime Minister Takaichi met with Bank of Japan (BOJ) Governor Ueda and expressed concern about rate hikes.  Due to the carry trade, it is important for prudent investors to keep an eye on Japan.  In the carry trade, funds have borrowed hundreds of billions of dollars in Japan and invested in the U.S.

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 Microsoft Corp (NASDAQ:MSFT), Alphabet Inc Class C (NASDAQ:GOOG), and Apple Inc (NASDAQ:AAPL).

In the early trade, money flows are neutral in Amazon.com, Inc. (NASDAQ:AMZN).

In the early trade, money flows are negative in Meta Platforms Inc (NASDAQ:META), Nvidia (NVDA), and Tesla Inc (NASDAQ:TSLA).

In the early trade, money flows are positive 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 (USO).

Bitcoin

Bitcoin (CRYPTO: BTC) is seeing selling.  This is further disheartening the momo crowd.  

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.