RENEWED AGGRESSIVE BUYING IN AI STOCKS DRIVES THE STOCK MARKET

By Nigam Arora & Dr. Natasha Arora

Editor’s Note:

This is the Afternoon Capsule that was provided before the jobs report was released. The jobs report was released this morning. To see the latest on the jobs report, please see the Morning Capsule that is available to paying members. The Morning Capsule is issued every morning before the market open.

To gain an edge, this is what you need to know now.

Aggressive AI Buying

Please click here for a chart of S&P 500 ETF (SPY) which represents the benchmark stock market index S&P 500 (SPX).

Note the following:

• Much of the stock market’s recent gains are due to aggressive buying fueled by the AI frenzy.
• We previously shared with you that the stock buying AI frenzy was cooling slightly ahead of Apple’s (AAPL) Worldwide Developers Conference next week.
• In the Morning Capsule, we shared with you:

Our very, very short-term early stock market indicator is negative but can quickly turn positive if the AI frenzy picks up steam again.

• The chart shows the reversal in the stock market triggered by the AI frenzy.
• The chart shows when ISM Manufacturing Index was released.
  • ISM Manufacturing Index came at 46.9 vs. 47.1 consensus.  This indicates further contraction.
  • IHS Markit Manufacturing PMI came at 48.4.
• Blind money buying is coming in the afternoon.  Please read the Morning Capsule for details.
• The VUD indicator is the most sensitive measure of net supply demand in real-time. The orange represents net supply and the green represents net demand.
• The VUD indicator turned green, indicating net demand for stocks.
• Investors are waiting for the release of the jobs report Friday at 8:30am ET.
  • Nonfarm Payrolls consensus is 190K.
  • Nonfarm Private Payrolls consensus is 177K.
  • Average hourly earnings consensus is 0.3%.
  • Unemployment rate consensus is 3.5%.
  • Average workweek consensus is 34.4.

Potential After Hour Signals

Signals may be given after hours based on the news that will be released after hours.  The best trades often occur outside regular hours.  The reason is that almost all earnings are outside regular hours.

Buy signals will be in ZYX Buy.  Short signals will be in ZYX Short.

Here is the list:

ASAN
AVGO
CHPT
FIVE
LULU
MDB
ZS
ZUMZ

AVGO is the most important of the after hour earnings today.  AVGO is making custom AI chips.  However, this is a very small part of the business.  Most of the business is low end commodity chips and legacy software business that it acquired. No doubt, like other companies, AVGO will probably talk mostly about AI.  Yesterday, from earnings of C3.ai (AI) and Salesforce (CRM), investors ignored AI talk and focused on projections driving both stocks lower.  Let us see if investors focus on the entire business or just AI today.  

For reference, please click here for a chart of AVGO.  In the interest of full transparency, this is exactly the same chart that was published May 31 in the Morning Capsule.  

Money Flows

The momo crowd money flows since the Morning Capsule are 🔒 (To see the locked content, please take a 30 day free trial).

Smart money flows since the Morning Capsule are 🔒.

Short squeeze money flows are 🔒.

A Special Note To New Subscribers

Note the smart money behavior.  Smart money tends to sell into strength on strong up days.

New subscribers should consider adopting smart money’s way of investing and trading.

Sentiment

Sentiment is 🔒.

Sentiment is a contrary indicator at extremes.  In plain English, this means that when sentiment becomes extremely positive it is time to sell and when sentiment becomes extremely negative it is time to buy.

Close

There appear to be buy on close orders.

There is merit to watching the pattern of market on close orders as they represent the day’s dominant net cumulative activity by many professionals and funds.

Gold

The momo crowd money flows in gold are 🔒 since the Morning Capsule.

Smart money flows are 🔒 in gold since the Morning Capsule.

Oil

EIA crude oil inventories came at a build of 4.5M barrels.

The momo crowd money flows in oil are 🔒 since the Morning Capsule.

Smart money flows in oil are 🔒 since the Morning Capsule.

Buy Zones And Buy Now Ratings

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Nigam Arora

Nigam Arora is known for his accurate stock market calls. Nigam is a distinguished master of the macro. He is a popular columnist with over 100 million page views, an engineer, and nuclear physicist by background. Nigam has founded two Inc. 500 fastest growing companies and has been involved in over 50 entrepreneurial ventures. He is the developer of Theory ZYX of Successful Change Management and is the author of the book on Theory ZYX, as well as the developer of the ZYX Change Method for Investing.

See also  BUYING IN THE STOCK MARKET ON TAMER PPI AND ECB SIGNAL

Dr. Natasha Arora

Dr. Natasha Arora has significant expertise in investment analysis especially biotech, healthcare, and technology. Natasha is a graduate of Harvard Medical School followed by a postdoc at MIT. She has published several peer reviewed research papers in top science journals.