CSHR

Election Day Crosscurrents

Please click here for an enlarged chart of Invesco QQQ Trust Series 1 (NASDAQ:QQQ).

Note the following:

• The chart shows QQQ dipped into zone 2 (support).
• The chart shows QQQ touched the 200-day moving average.  Prudent investors need to know that a large number of investors have blind faith in the magical power of the 200-day moving average.  Such investors sell on a breach of the 200-day moving average and buy on crossing above the 200-day moving average.  Such investors have not thought through using first principles.  They simply learned the anecdote and continue to adhere to it.  The reality is the 200- day moving average has no inherent magical power.  After all, why not 180 days or 220 days?  The 200-day moving average derives its power from a large number of investors believing in it and acting on it.  Such investors often get whipsawed.
• Yesterday saw a continuation of margin calls from Friday.  These margin calls led to forced selling in tech stocks in momo crowd accounts.
• Historically, margin related forced selling runs its course and when it slows down, tech stocks lift.  In the early trade, tech stocks are lifting in anticipation of forced selling ending.  Prudent investors should carefully watch if tech stocks continue to lift throughout the day.
• Apple Inc (AAPL) is important because AAPL stock had continued to rise during tech stock carnage.  Many investors were simply rushing into AAPL, believing it to be a safe stock.  This morning, AAPL stock is falling after earnings.  Earnings were good, but Apple is seeing margin degradation due to high memory prices.  Some investors who recently bought AAPL, believing it to be a safe stock, are now selling AAPL stock.
• In our analysis, the most important issue facing Apple is AI agents.  Apple derives significant revenue from its App Store, and the App Store is a strong moat.  AI agents can bypass many apps.  In the conference call, Apple was asked the AI agent question, but Apple failed to respond.  This indicates that the AI agent issue for Apple is real and at this time, Apple does not have a solution.  The issue is especially relevant for us because we are long AAPL from an average of $4.68.  AAPL is a very large position in our portfolio.
• On the positive side, in our analysis, Apple has a huge opportunity ahead if Apple can get Siri right and find a good solution for AI agents.
• Palantir Technologies Inc (PLTR) is an important AI software stock.  PLTR stock had been running up during the AI stock carnage.  PLTR reported earnings better than consensus but below whisper numbers.  There are also concerns about deceleration of commercial growth.  PLTR has always derived significant business from the U.S. government.  Bullish investors are betting on commercial growth.  PLTR is in our portfolio, long from an average of $20.15.
• Midterm elections are today.  Historically, it is a clearing event, and stocks rally irrespective of who wins.  This time, there are two complications:
  • The AI trade is in part dependent upon spending on data centers.  There is rising sentiment against data centers.  Election results may have an impact on data centers.
  • The belief a few days ago that the U.S. would attack Iran after the midterm elections has quickly turned into belief that the U.S. and Iran will strike a deal after the election.
• Oil is falling as the narrative of a U.S.-Iran deal takes hold.
• In our analysis, prudent investors need to be careful.  There is no certainty which direction the Iran situation will go.
• There are important earnings from Advanced Micro Devices, Inc. (NASDAQ:AMD) after hours.  AMD earnings will tell if the PC slowdown is an Intel Corp (INTC) specific problem or if AMD is taking share from Intel.  If the answer is that AMD is taking share from Intel and there is no general slowdown in PCs, it has the potential to reignite the AI trade.
• Markets always have crosscurrents, both positive and negative.  On this election day, it is important that investors do not get carried away with a bullish or bearish narrative and take time to understand the crosscurrents.  It is also important for investors to not mix their politics with investing.  
• Even though jobless claims numbers have continued to show a strong employment picture, there is mounting concern about layoffs.  Walt Disney Co (DIS) is planning to achieve 20% cost savings with layoffs.

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

In the early trade, money flows are negative in Apple (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 Nasdaq 100 ETF (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.