Buying In Semiconductors On Iran Ceasefire Soap Opera, Earnings Hopium, And Korea

Buying In Semis

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 that after breaking below the low band of zone 2 (resistance), semiconductors are rising again and approaching the low band of zone 2 again.
• The pattern shown on the chart has two implications:
  • It is a short term bottoming pattern confirmed by heavier volume shown on the chart.
  • Stops have already been hunted, making it easier for SOXL to rise now.
• The true test of the rally in semiconductors will be if SOXL breaks above the high band of zone 2.
• This morning in the early trade, there is aggressive buying in semiconductor stocks on the news that mediators are proposing a 10 day ceasefire between the U.S. and Iran.  We wrote in yesterday’s Morning Capsule before the stock market opened:

Last night, oil was spiking after a series of escalating attacks by the U.S. on Iran and counterattacks by Iran on U.S. allies in the Middle East.  This morning, the situation has calmed down on an Iranian report that mediators are working on a proposal for a 10 day ceasefire.

• The momo gurus’ soap opera continues.  Many momo gurus who never recommended semiconductor stocks until a few months ago and missed the big gains in semiconductors since 2022 are now claiming to be semiconductor experts.  When there is good news related to the Iran conflict, momo gurus urge their followers to buy semiconductors because cessation of hostilities with Iran will be good for semiconductors.  When there is bad news related to the Iran conflict, momo gurus urge their followers to buy semiconductors because the Iran conflict has nothing to do with semiconductors.
• There are two other factors driving buying in semiconductor stocks this morning:
  • Lately semiconductors in the U.S. market have been following the South Korean stock market.  Overnight, Kopsi index in South Korea was up 3.6%.
  • As is the pattern of the momo crowd, there is significant hopium this morning that upcoming semiconductor earnings will be good.   Intel Corp (NASDAQ:INTC) reports on Thursday after the market close.
• Buying in the early trade is especially aggressive in memory stocks and disk drive stocks including Micron Technology Inc (NASDAQ:MU), SK Hynix Inc – ADR (NASDAQ:SKHY), Western Digital Corp (NASDAQ:WDC), and Seagate Technology Holdings PLC (NASDAQ:STX) as well as Roundhill Memory ETF (BATS:DRAM).
• Buying in the early trade is also aggressive in networking stocks such as Marvell (MRVL) and optical stocks, including Corning Inc (NYSE:GLW), Applied Optoelectronics Inc (NASDAQ:AAOI), Coherent Corp (NYSE:COHR), and Lumentum Holdings Inc (NASDAQ:LITE).
• In the middle of the bullishness this morning, prudent investors should note that to persuade Iran to give concessions, President Trump is considering a massive military campaign with Israel against Iran.  In our analysis, if any such campaign occurs, it will likely be short lived as President Trump is under pressure from Republicans to keep an eye on the midterm elections.

China

There are two important pieces of news from China:

• The Chinese government is considering taking measures to boost confidence in the Chinese stock market.
• The Chinese government’s efforts to restrict the export of advanced Chinese AI technology to the West are picking up steam.

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

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

In the early trade, money flows are negative in Apple Inc (NASDAQ: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 (NYSE:GLD).  The most popular ETF for silver is iShares Silver Trust (NYSE:SLV).  The most popular ETF for oil is United States Oil ETF (NYSE:USO).

Bitcoin

Bitcoin (CRYPTO:BTC) is seeing buying.

Arora Protection Band And 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.