If conventional wisdom is to be believed, the smart money is going loco by buying Facebook and Intel and not Amazon.

Is it true? Let’s explore with the help of a chart.


Please click here for the chart of segmented money flows in 11 popular tech stocks. Please note the following:

• Smart money flows — those of professional investors — were positive going into Facebook FB earnings, which the company reported after the close of trading Tuesday. This was in the face of a lot of headwinds, pessimism from analysts and extremely negative sentiment. Based on the headwinds, the momo (momentum) crowd appeared to be right as momo crowd money flows were extremely negative going into the earnings.

• After the earnings release, during the conference call, Facebook’s stock first dipped before bouncing. During the dip, smart money flows were extremely positive while momo crowd money flows were extremely negative.

• The chart shows overall smart money flows in Facebook are mildly positive and momo crowd money flows are extremely negative.

• The behavior of the smart money and the mono crowd is similar in Intel INTC. Of interest is the news that Samsung SSNLF is cutting capital expenditures and declaring the semiconductor boom over. Both Intel and Samsung are large semiconductor vendors.

• The chart shows smart money flows in Amazon AMZN are neutral, even though analysts are not cutting their targets like they are on Facebook.

• Smart money flows are neutral on Tesla TSLA,  Microsoft MSFT and Alibaba BABA.

• Momo crowd money flows are extremely negative in AMD AMD.

• The chart shows the momo crowd is acting like a yo-yo in Netflix NFLX,  Nvidia NVDA and Amazon.

• Smart money flows are mildly positive in Google GOOG  GOOGL, +3.23%

• Smart money flows are neutral in Apple AAPL.

• In contrast, momo crowd money flows are positive in Apple. Please see “Why Nov. 1 is the make-or-break day for the stock market.”

Going on Facebook and Intel

Why is the smart money buying Intel and Facebook and not Amazon? Well, what is the common link? The answer lies in valuations. Both Facebook and Intel have relatively low valuations while Amazon has a very high valuation…Read more at MarketWatch.


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