Apple—A Safe Haven From The AI Storm?

Bullish Positioning Shaken

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 Friday SOXL fell 24.75% after opening below the low band of zone 3 and continuing to go lower during the day.
• The chart shows SOXL is attempting to bounce this morning but is still well below the low band of zone 3.
• The low band of zone 3 was previously support, but now it is resistance.  Investors should carefully watch today to see if SOXL can rally above the low band of zone 3.
• The chart shows that volume was heavy on the SOXL plunge. There are two different interpretations of the heavy volume:
  • Heavy volume indicates conviction.  If this interpretation is correct, there is more downside.
  • Heavy volume indicates a clearing event, and thus indicates a temporary bottom.
• In our analysis, only time will tell which interpretation is correct.  However, when combined with the positioning, a sequence of over ten negative events, RSI, and forced selling due to margin calls in momo crowd accounts, there is a significantly higher probability that Friday was a clearing event, at least temporarily.
• RSI on the chart shows divergence.  Coming into Friday, the AI trade was hit with a sequence of six new negative events, adding to the prior negative events totaling more than ten.  Even if the stock market was hit with a couple of negative events, the AI trade on Friday would have likely gone higher instead of plunging.  Note that RSI is significantly higher than it was at the recent low, but SOXL made a lower low.  The divergence continues.  For those who want to become exceptional investors, the foregoing is a great illustration of an important Wall Street secret.
• Going forward, front and center are three earnings and results of the midterm elections.
• Here are the key earnings:
  • Money has been flowing out of the AI trade and into Apple Inc (AAPL) stock as many investors see AAPL as a safe stock to weather the AI storm.
  • Advanced Micro Devices, Inc. (AMD) earnings are important given Intel’s earnings.  Intel earnings was one of the negative events confronting the AI trade.  For Intel’s earnings, see Friday’s Morning Capsule.  We will be carefully analyzing AMD earnings to see if the issues are industry wide or Intel specific.
  • Palantir Technologies Inc (PLTR) has done well during the AI trade carnage.  How PLTR stock and the AI react to Palantir earnings will be an important clue looking forward.
• This morning, oil is dropping like a rock and gold is seeing buying on a report that President Trump favors negotiations with Iran over striking Iran.

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), Microsoft Corp (NASDAQ:MSFT), NVIDIA Corp (NASDAQ:NVDA), and Tesla Inc ((NASDAQ: TSLA).

In the early trade, money flows are neutral in Apple ((NASDAQ: AAPL) and Meta Platforms Inc ((NASDAQ: META).

In the early trade, money flows are positive in SPDR S&P 500 ETF Trust (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 (GLD).  The most popular ETF for silver is iShares Silver Trust (SLV).  The most popular ETF for oil is United States Oil ETF (USO).

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.

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.