STOCK MARKET REVERSES ON CHATGPT AND AUCTION EXCITEMENT

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

Stock Market Reversal

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:

• In the Morning Capsule, we shared with you that Microsoft (MSFT) had moved down on poor earnings.
• The momo crowd is already latching on to the potential artificial intelligence (AI) frenzy.  They are excited about ChatGPT.
• On Monday, OpenAI, the maker of ChatGPT, confirmed that Microsoft would be making an additional multi-billion dollar investment.
• Investors are excited about AI, so they bought the dip in Microsoft stock, ignoring the pain in terms of earnings and slower growth that Microsoft has admitted that it expects.  The excitement spilled over into the rest of the market.
• The chart shows SPY moving up after the Microsoft trigger.
• The trigger was Microsoft stock moving above the opening range.
• The investors’ excitement was further fueled by a stellar Treasury auction.
• The chart shows when the Treasury auction results were announced.  Here are the results:
  • $43B 5-year Treasury note auction
  • High yield: 3.530% (When-Issued: 3.554%)
  • Bid-to-cover: 2.64
  • Indirect bid: 75.7%
  • Direct bid: 15.4%
  • To understand how to interpret Treasury auction results, please listen to the podcast titled “Treasury Auction Data: Ignore The Most Popular.”
• Now that the stock market direction has reversed, investors continue to buy on hope and excitement.
• 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 is mixed since the regular session open.
• We are seeing big money jumping on to the bandwagon of immaculate landing.  More on this important subject later.
• There are important earnings from Tesla (TSLA) and IBM (IBM) after the close on Wednesday.

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 sell 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 data showed crude oil inventory build of 0.533M 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.

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.