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Slew Of New Economic Data Please click here for a chart of VanEck Semiconductor ETF (NASDAQ: SMH). This is an important chart today in view of Arm Holdings American Depositary Shares (NASDAQ: ARM) IPO.
Note the following:
- The chart shows semiconductors are levitating above the support zone.
- RSI on the chart shows that semiconductors are returning from an oversold condition.
- ARM IPO is today. ARM designs the chips that are used by many semiconductor manufacturers and are used in practically every smartphone available today. ARM is priced at $51 per share, raising close to $5B. The IPO was 10 times oversubscribed, which will likely push the stock higher when trading begins.
- In The Arora Report analysis, ARM is not an AI company, but facts do not matter in the stock market when investors are excited. ARM is being marketed as an AI company, and the momo crowd does not know any better.
- How high ARM trades after it opens will be an indication of investor sentiment, especially about AI.
- Semiconductors are the leading sector. How semiconductors perform after ARM IPO starts trading will also be a tell for the AI buying frenzy.
- Other than the ARM IPO, there is plenty of news to keep investors excited about AI. In The Arora Report analysis, the use of generative AI is rapidly expanding but competition is also increasing. The following illustrates the point:
- Amazon.com, Inc. (NASDAQ: AMZN) is launching its generative AI tool to help sellers better describe their goods.
- Adobe Inc (NASDAQ: ADBE) is undercutting the price of generative AI tools for images from OpenAI, the creator of ChatGPT.
- The European Central Bank (ECB) raised interest rates by 25 basis points. Importantly, ECB suggested it may be done raising interest rates.
- In The Arora Report analysis, the indication that ECB may be done raising interest rates is bullish for the stock market.
- In The Arora Report analysis, there is a slew of new economic data that shows the economy is hotter than the consensus.
- Inflation at the producer level is hotter than the consensus.
- Headline PPI came at 0.7% vs. 0.4% consensus. A big contributor is rising energy prices.
- Core PPI came at 0.2% vs. 0.2% consensus, but when trade is excluded, the data is hotter.
- The U.S. economy is about 70% consumer based. Therefore prudent investors pay attention to retail sales. The mighty American consumer continues to spend excessively, often borrowing to spend.
- Retail sales came at 0.6% vs. 0.2% consensus.
- Retail sales ex-auto came at 0.6% vs. 0.4% consensus.
- Overall, the jobs picture is staying strong.
- Weekly initial claims came at 220K vs. 226K consensus.
- Initial claims is a leading indicator and carries heavy weight in our adaptive ZYX Asset Allocation Model with inputs in ten categories. In plain English, adaptiveness means that the model changes itself with market conditions. Please click here to see how this is achieved. One of the reasons behind The Arora Report’s unrivaled performance in both bull and bear markets is the adaptiveness of the model. Most models on Wall Street are static. They work for a while and then stop working when market conditions change.
- Inflation at the producer level is hotter than the consensus.
- Barring a last minute agreement, UAW is likely to announce a strike tonight.
- In The Arora Report analysis, the trading leading to quadruple witching tomorrow is driving stock prices higher this morning. Investors need to remember that Wall Street mechanics play a major part in market movements. It is important for both long term and short term investors to deeply understand Wall Street mechanics. Most of this knowledge is kept secret because of its high value. There are several podcasts in Arora Ambassador Club to help you become well versed in Wall Street mechanics.
- As an actionable item, the sum total of the foregoing is in the protection band, which strikes the optimum balance between various crosscurrents. Please scroll down to see the protection band.
Magnificent Seven Money Flows In the early trade, money flows are positive 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), NVIDIA Corp (NASDAQ: NVDA), and Tesla Inc (NASDAQ: TSLA).
In the early trade, money flows are mixed in SPDR S&P 500 ETF Trust (ARCA:SPY) and Invesco QQQ Trust Series 1 (NASDAQ: QQQ).
Momo Crowd And Smart Money In Stocks The momo crowd is aggressively buying stocks in the early trade. Smart money is