Nov. 1 is a make-or-break day for the U.S. stock market.
How so? Let’s first build the necessary background by reading “Here are the six things that could ignite a rally in the stock market” and “This money-flow chart shows that Amazon and Netflix are in dangerous territory.” Here’s a chart to get us going.
Please click here for a chart of Apple AAPL, +0.43% stock compared with Amazon AMZN, -1.63% the First Trust Dow Jones Internet Index Fund ETF FDN, +0.42% the Dow Jones Industrial Average DJIA, +0.75% the S&P 500 ETF SPY, +0.69% and Nasdaq 100 ETF QQQ, +0.56% Please note the following:
• Apple stock has held up well against Amazon stock.
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Apple will report earnings Nov. 1 after the close of trading. The whisper numbers for Apple are higher than the consensus numbers. Stocks move based on the difference between the whisper numbers and the reported numbers.
Apple is the last domino standing. Its FAANG brethren have all crashed, even the mighty Amazon, which has slumped about 25% from all-time highs. Apple’s decline is more in line with that of the S&P 500.
Will Apple fall? If it does, watch out below — but this warning has to be tempered because of the six factors that can ignite a rally. Those factors are listed in the link above.
Prudent investors who want an edge and lower their risk find that segmented money flows are the best tool to give them the edge. For months when popular tech stocks were levitating, The Arora Report has been sharing with you that the smart money was consistently selling into the strength while the momo (momentum) crowd was aggressively buying at highly elevated prices.
Interestingly, as popular tech stocks have fallen, the smart money is mostly inactive and at times a light buyer. But the momo crowd is aggressively selling into the drop. The Arora Report had been cautioning against over-concentration in tech when tech was near its highs. For two classic examples, take a look at the charts of AMD AMD, +0.30% and Nvidia NVDA, +3.61% In both cases, the momo crowd has suffered massive losses but the smart money made out like a bandit.
Disclosure: Subscribers to The Arora Report may have positions in the securities mentioned in this article or may take positions at any time. Nigam Arora is an investor, engineer and nuclear physicist by background who has founded two Inc. 500 fastest-growing companies. He is the founder of The Arora Report, which publishes four newsletters. Nigam can be reached at Nigam@TheAroraReport.com.