Market Character Shift

Please click here for an enlarged chart of ASML Holding NV (NASDAQ:ASML).

Note the following:

• This article is about the big picture, not an individual stock.  The chart of ASML stock is being used to illustrate the point.  Without ASML, the present AI revolution may not have come to pass.
• Dutch company ASML holds a monopoly in extreme ultraviolet lithography machines, which are critical for manufacturing the world’s most advanced semiconductors, including AI chips.  These highly sophisticated machines cost approximately $200 million each, while the latest generation can cost as much as $400 million.  ASML’s monopoly makes it one of the most important companies in the global semiconductor supply chain.
• The chart shows that after earnings ASML stock is trading in a wide range around the top band of zone 2 (support).
• RSI on the chart shows ASML stock is oversold.
• In our analysis, the key observation for prudent investors from the chart is that in spite of great earnings, very bullish commentary, and an oversold condition, ASML stock is not rallying.
• Here are the key points from the bullish commentary:
  • ASML does not expect the planned supply to meet customer demand in both 2027 and 2028.  Some customers are wanting to place orders for 2029 and 2030.
  • ASML is in a position to raise prices.
• ASML earnings are excellent.  Here are the details:
  • Q3 earnings came at euro 12.95 vs. euro 10.78 consensus.
  • Q3 revenues came at euro 11.66B vs. euro 11.62B consensus.  This is a 55.2% year-over-year increase.
  • For Q4, ASML is guiding euro 14.2B – 15.2B vs. euro 14.02B consensus.
• In our analysis, the stock market’s reaction to ASML earnings shows that in this phase of AI, the stock market character is changing.  In spite of great earnings from ASML, semiconductors are seeing selling pressure this morning.  
• Further in our analysis, prudent investors should note that the demand for ASML equipment is coming from semiconductor companies.  The concern among smart money is not the demand from semiconductor companies.  Smart money’s concern is demand from customers of hyperscalers and datacenter companies.
• All of the foregoing is another data point showing the character of the stock market in this next phase of AI is shifting.  All investors should consider developing deeper knowledge of the shift.
• Anthropic’s Investor Day is ahead.  The data from Anthropic’s Investor Day may be market moving.
• The momo crowd was aggressively buying stocks ahead of the release of CPI data.  The momo crowd almost always buys on hopium ahead of key events because the momo crowd focuses on potential rewards and does not take risk into account.  In contrast, smart money tends to trim ahead of key events to reduce risk.
• Consumer Price Index (CPI) squashed the momo crowd’s hopium.  In the early trade, significant selling is coming into the market, especially in AI stocks, after the release of CPI data. CPI came hotter than expected.  Here are the details:
  • Headline CPI came at 0.6% vs. 0.6% consensus.
  • Core CPI came at 0.3% vs. 0.2% consensus.
• The Fed’s Beige Book will be released at 2pm ET and may be market moving.
• Producer Price Index (PPI), retail sales, and initial jobless claims will be released tomorrow at 8:30am ET.

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 Microsoft Corp (NASDAQ:MSFT), Alphabet Inc Class C (NASDAQ:GOOG), and Apple Inc (NASDAQ:AAPL).

In the early trade, money flows are neutral in Amazon.com, Inc. (NASDAQ:AMZN).

In the early trade, money flows are negative in Meta Platforms Inc (NASDAQ:META), NVIDIA Corp (NASDAQ:NVDA), and Tesla Inc (NASDAQ:TSLA).

In the early trade, money flows are negative in S&P 500 ETF (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 (NYSE:USO).

Oil

Oil continues to rise as Houthi’s continue to attack Saudi Arabia.  

Bitcoin

Bitcoin (CRYPTO: BTC) is being sold on hotter CPI.

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 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.