Benzinga - To gain an edge, this is what you need to know today.
Bears Take A Stand Please click here for a chart of Invesco QQQ Trust Series 1 (NASDAQ: QQQ).
Note the following:
- The chart is a monthly chart to give you a long term perspective.
- The chart shows the key resistance line.
- The chart shows that the relentless rise in the stock market this year is being punctuated in August.
- For the bull case, the extent of the ‘sell the news’ reaction to NVIDIA Corp's (NASDAQ: NVDA) extraordinary earnings blowout is troubling. The sell the news reaction is common, but the extent of the selloff on great news is not common.
- Members of The Arora Report had some clues yesterday before the selloff when the momo crowd was aggressively buying stocks, especially tech stocks, before the market open. Here were the important clues from the Morning Capsule:
Investors should be mindful of a potential ‘sell the news’ reaction as the day progresses in spite of the bullishness this morning.Money flows in NVDA were extremely positive in after hours after release of the earnings. However, in the premarket, money flows in NVDA are negative. Money flows after hours were very 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). However, money flows this morning are negative in AAPL and GOOG.
Our very, very short-term early stock market indicator is positive but can quickly turn negative.
- The case that bears are making is that a double top is developing on the chart. The double top is a negative pattern.
- Permabear gurus are out in full force declaring the AI frenzy driven stock market rally is over.
- The momo crowd is not deterred by permabear proclamations. The momo crowd is buying again believing that the NVDA earnings dip is a buying opportunity.
- The chart shows that RSI has pulled back along with the market but is still overbought.
- Investors are waiting for Powell’s speech at Jackson Hole. The speech will start at 10:05am ET.
- Going into the speech, investors are obsessed with R*. R* is a theoretical level indicating a neutral rate. In plain English, a neutral rate is an interest rate that is not restricting or stimulating the economy.
- Since 2009, the Fed’s projections have been a median of 2.5% for the long term policy rate. The concern is that Powell may want a higher policy rate for the long term. As a reference, in the past, Powell has said that he doesn't know what the neutral rate should be.
- 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 Amazon.com, Inc. (NASDAQ: AMZN), Microsoft Corp (NASDAQ: MSFT), Meta Platforms Inc (NASDAQ: META), and Apple Inc (NASDAQ: AAPL).
In the early trade, money flows are negative in Tesla Inc (NASDAQ: TSLA), Alphabet Inc Class C (NASDAQ: GOOG, and NVIDIA Corp (NASDAQ: NVDA).
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 buying stocks in the early trade. Smart money is