Blowout Jobs Report Drives Market To Magnet; Iran Risk Lingers; Bitcoin Whales Step In

Blowout Jobs Report

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 shows the stock market is moving up in the early trade.
• The chart shows the blowout jobs report is driving the stock market to the magnet.
• The chart shows previous attempts to break above the magnet failed.
• Here is the key question: Will the jobs report trigger a breakout above the magnet?
• The jobs report is known as the mother of all reports due to its importance.  Here are the details:
  • Non-farm payrolls came at 130K vs. 68K consensus.
  • Non-farm private payrolls came at 172K vs. 60K consensus.
  • Unemployment rate came at 4.3% vs. 4.4% consensus.
  • Average work week came at 34.3 vs. 34.2 consensus.
  • Average hourly earnings came at 0.4% vs. 0.3% consensus.
• In our analysis, yesterday Kevin Hassett was preparing the markets for a lower number.  As a result, Wall Street was positioned for a weaker jobs number in the range of 20K – 30K.  The initial jump on release of the jobs report may simply be the result of positioning, and there may be  reversal as the day goes by. 
• As of this writing, the stock market is perceiving the strong jobs report as a positive.  However, prudent investors need to keep in mind that there is also a negative.  The strong jobs report will make it difficult for the Fed to cut interest rates.  The momo crowd is expecting several interest rate cuts.  The prevailing wisdom is that politics will prevail over the data and the Fed will cut interest rates irrespective of the data.  In our analysis, if the Fed proceeds as the markets believe, the risk of inflation rising will have to be taken into account by prudent investors.  
• Prudent investors should keep in mind that the Iran risk is increasing.  President Trump is threatening military action if a deal is not reached.  Oil is rising.  The stock market momo crowd is oblivious.  President Trump is saying he may send a second aircraft carrier to Iran.  The U.S. is considering intercepting ships carrying Iranian oil just like the U.S. did with Venezuela.  The strategy was successful in Venezuela.  In our analysis, such a strategy is highly risky in Iran because unlike Venezuela, Iran is likely to retaliate.  Iran could easily block the Strait of Hormuz. The Strait of Hormuz is very narrow and a significant portion of the world's oil is shipped through the strait.
• Among notable earnings, Robinhood Markets Inc (NASDAQ:HOOD) reported less than consensus and whisper numbers.  HOOD has pulled back from $153.86 in October to $76.98 as of this writing in the premarket.  The reason is crypto trading is very profitable for Robinhood.  As cryptos have pulled back, crypto trading volume has dropped.
• Among important earnings Vertiv Holdings Co (NYSE:VRT), Cloudflare Inc (NYSE:NET), Shopify Inc (NASDAQ:SHOP), Generac Holdings Inc (NYSE:GNRC), Diodes Inc (NASDAQ:DIOD) and Lattice Semiconductor Corp (NASDAQ:LSCC) are reporting earnings better than expected.  LYFT Inc (NASDAQ:LYFT), Mattel Inc (NASDAQ:MAT), Zillow Group Inc Class C (NASDAQ:Z), Zillow Group Inc Class A (NASDAQ:ZG), and Astera Labs Inc (NASDAQ:ALAB) are reporting earnings below consensus.  As a full disclosure, we have a short position in Z.
• In other significant news, the FDA has rejected Moderna Inc (NASDAQ:MRNA) flu vaccine.  This is important because the media has been heavily promoting MRNA stock and as a result, MRNA has been one of the best performing stocks this year.
• The airspace over El Paso, Texas has been closed.  The reason is not clear as of this writing.  This may turn out to be important for the markets.

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), 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 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 (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).

The momo crowd was aggressively buying gold ETF (GLD), silver ETF (SLV), VanEck Gold Miners ETF (NYSE:GDX), and Global X Silver Miners ETF (NYSE:SIL) before the jobs report.  The jobs report brought in selling.  Smart money is inactive in the early trade.

Bitcoin

when Bitcoin (CRYPTO: BTC) was hitting $120K and everyone was uber bullish, we were sharing with you that bitcoin whales were persistently selling bitcoin into the strength.  Recently when bitcoin dipped to $60K, bitcoin whales stepped in to support bitcoin.  Bitcoin rallied above $70K after whales stepped in.  The rally over $70K has failed, and bitcoin is trading at $67,494 as of this writing.  Bitcoin whales are stepping in again to support bitcoin from falling.

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.