Putin’s Proposed Trump-Xi Summit In China Could Hurt US Stocks Long Term; Meta And Tesla Earnings Ahead

Big Tech Earnings Ahead

Please click here for an enlarged chart of Direxion Daily Semiconductor Bull 3X ETF (NYSE:SOXL).

Note the following:

• Semiconductors reflect the AI trade, and SOXL is the momo crowd’s favorite.
• The chart shows SOXL last week dropped to near the low band of zone 3 (support).
• On Friday, we wrote:

The chart shows the nine day RSI reached 0.0, the most extreme oversold level RSI can be.  The chart shows that during the period shown on the chart, RSI has never been this low.

• RSI of 0.0 on Friday forecasted a bounce.  This morning in the early trade, as the chart shows, SOXL has rallied from near the bottom band of zone 3.
• To gain a perspective, the semiconductor index (SOX) has lost 15.7% over the last eight days. The last time a similar pattern occurred was in October 2008, when SOX lost 19.8%.  On the following Monday, SOX gained 9.7% as the momo crowd super aggressively bought the dip.  Subsequently, SOX fell much lower.  Keep in mind history does not always repeat itself.
• Momo crowd buying in semiconductors this morning is extremely aggressive.  Momo gurus are spreading the narrative that the semiconductor pullback is over and urging their followers to buy semiconductors aggressively.
• Meta Platforms Inc (NASDAQ:META) and Tesla Inc (NASDAQ:TSLA) kick off big tech earnings on Wednesday.  Meta and Tesla earnings and the stock market’s reaction will be a test for the stock market.
• In our analysis, Meta’s earnings will be especially instructive:  
  • The most important will be Meta’s capital spend projections.
  • The reaction of the AI trade to Meta’s capital spend number will be more instructive than the market’s reaction in META stock.  The reason is that META stock has another major factor in Muse AI agent adaption.  
• The momo crowd is aggressively buying stocks of neoclouds this morning, including CoreWeave Inc (CRWV), Nebius Group NV (NBIS), and IREN Ltd (IREN).  CRWV stock plunged last week on heavy debt concerns.
• Apple Inc (AAPL) is seeing extraordinary demand for its foldable phone.  Apple is important because during the AI trade carnage of the last week, money was flowing out of the AI trade and into the presumed safety of AAPL stock.
• In our analysis, long term investors should pay careful attention to President Putin’s proposal.
  • President Putin is proposing that he, President Trump, and President Xi meet on Chinese soil to decide an end to the Ukraine war on terms favorable to Russia.
  • Ukraine will not be included in the talks.
  • Presumably, the E.U. will not be included in the talks.
  • Such a meeting on Chinese soil will be a big victory for China as it would elevate China’s position in the world. 
  • From an investment perspective if such a meeting were to occur, in the long term it would be negative for the U.S. and, in turn, U.S. stocks.  
  •  If such a meeting were to occur, the actionable items will be:
  • There will be more diversification into gold, commodities, and international stocks. 
• Oil is pulling back on the prospect of President Trump striking a deal with President Putin.

France

After weekend riots, French bonds and stocks are coming under pressure.  France has been overspending on welfare programs, but politically, it is difficult to pull back on government overspending.

In our analysis, prudent investors should pay attention to France because whatever happens in France might be an early indication of things to come in other countries.

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 Amazon.com, Inc. (NASDAQ:AMZN), Alphabet Inc Class C (NASDAQ:GOOG), Meta (META), and NVIDIA Corp (NASDAQ:NVDA).

In the early trade, money flows are neutral in Apple (NASDAQ:AAPL), Microsoft Corp (NASDAQ:MSFT), and Tesla (TSLA).

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

Bitcoin

Bitcoin (CRYPTO: BTC) is range bound.

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. Most recently, we correctly called the rally from recent stock market lows and the 2026 semiconductor decline before a 25% drop in the Semiconductor ETF (SMH). In gold, we bought at an average price near $1,105, close to cycle lows, and took partial profits near $5,400, close to cycle highs. Please click here to get our free forever Generate Wealth Newsletter.

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