Tame CPI

Please click here for an enlarged chart of Invesco QQQ Trust Series 1 (NASDAQ:QQQ).SPDR Gold Trust

Note the following:

• The chart shows the rally attempt failed at the top band of zone 1 (support).
• The selling yesterday in QQQ seems measured because blue chip tech stocks mostly held up and non-tech stocks rallied.  However, prudent investors should note that yesterday there was carnage in many of the momo crowd's favorite tech stocks.  Many momo crowd accounts were hit with margin calls exacerbating the selling.  As many of the momo crowd's favorite speculative positions were forcibly liquidated, the margin shake out spilled into gold and silver, leading to more margin calls related to SPDR Gold Trust (NYSE:GLD), iShares Silver Trust (NYSE:SLV), VanEck Gold Miners ETF (NYSE:GDX), and Global X Silver Miners ETF (NYSE:SIL).
• The chart shows buying is coming in today after tame Consumer Price Index (CPI) data.   Here are the details:
  • Headline CPI came at 0.2% vs. 0.3% consensus.
  • Core CPI came at 0.3% vs. 0.3% consensus.
• RSI on the chart shows QQQ is approaching an oversold condition.
• Here is the key question for today: Will the budding rally on tame CPI data turn into a rip roaring rally or fail?   The true nature of the stock market is such that there is no way to answer this question with any confidence at this time.
• Prudent investors should note that over the last eight days, 115 stocks in the S&P 500 have declined more than 7% in one day.  History tells us when this happens a correction often starts.  If CPI data today was hotter, there was a very high probability of a correction starting.  Now, with tamer CPI data, both positive and negative crosscurrents are balancing out at this time.  Wall Street machines will jump on in whichever direction the stock market starts going, exacerbating the move.  
• Optimism is also seeping into the stock market this morning on speculation that President Trump will go soft on China by extending current trade terms and reducing tariffs on metals, including aluminum.
• The chorus that bitcoin is going to zero is growing louder.  Please see the bitcoin section below.

Japan

Prudent investors need to keep an eye on Japan due to funds having borrowed hundreds of billions of dollars in Japan and invested the money in U.S. securities, lately in AI stocks.  Japan's Prime Minister Takaichi indicated that the Bank of Japan (BOJ) may not hike rates in March, but a rate hike may happen later.  In our analysis, this is temporarily positive for the U.S. stock market, especially AI stocks.  

Stocks in Japan continue to outperform stocks in the U.S.  Please see yesterday's Morning Capsule.

Europe

Eurozone Q4 GDP came at 0.3% vs. 0.3% consensus.  GDP indicates strength in industrials, materials, and financials even though Europe is lagging in AI.  Stocks in Europe continue to outperform 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 Apple Inc (NASDAQ:AAPL), NVIDIA Corp (NASDAQ:NVDA), and Microsoft Corp (NASDAQ:MSFT).

In the early trade, money flows are neutral in Amazon.com, Inc. (NASDAQ:AMZN), Alphabet Inc Class C (NASDAQ:GOOG), and Tesla Inc (NASDAQ:TSLA).

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

In the early trade, money flows are positive in SPDR S&P 500 ETF Trust (NYSE:SPY) and Nasdaq 100 ETF (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

OPEC+ is considering increasing oil production in April.

Bitcoin

For the day, tamer CPI is bringing in buying in bitcoin.  Once again proving that bitcoin is a speculative asset and not a hedge or store of value.

The chorus that Bitcoin (CRYPTO: BTC) will go to zero is getting louder.  This is nothing new.  Almost always, investors suffer from recency bias.  Recency bias is particularly strong in bitcoin because bitcoin does not have a fundamental value like earnings.

History shows that every time bitcoin falls below the average price of most holders (excluding bitcoin whales), the chorus of bitcoin going to zero gets louder.  In contrast, every time the price of bitcoin goes above the average price of most holders (excluding bitcoin whales), a chorus that bitcoin is going to $1M gets louder.

Just like bitcoin itself, the available data on bitcoin is manipulated by bitcoin whales.  For this reason, it is impossible to get accurate data.  In our analysis, the average price of most holders excluding bitcoin whales and Strategy (MSTR) is somewhere between $90,000 and $105,000.  The average price of Strategy is $76,038 per bitcoin.

In our analysis, an average bitcoin holder, excluding bitcoin whales and Strategy, is more likely to sell the rallies than buy the dip.  

We have shared with you all along when it was a contrary opinion that bitcoin is not digital gold, is not a store of value, is not a currency, and is not a hedge; bitcoin is simply a speculative asset that is manipulated by bitcoin whales.

Note that bitcoin whales are always acting like smart money does in stocks.

when bitcoin was above $120,000, we shared with you that bitcoin whales were selling bitcoin taking advantage of the strength generated by the enthusiasm of retail investors.  When bitcoin touched $60,000, bitcoin whales stepped in to buy to prop it up.  Bitcoin whales managed to get bitcoin over $70,000 when they sold again.  

It is worth repeating what we have been sharing with you for a long time.  The objective of bitcoin whales is to convert their bitcoins into other assets such as dollar, yen, euro, stocks, gold, commodities, and real estate at the highest possible price over the full cycle.  In contrast, many retail investors have been mistakenly converting their dollars into bitcoin as they have been highly influenced by promoters and influencers who appear to work with bitcoin whales.

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.