Is A War Imminent? Concerns Overshadow Strong Meta, Tesla Earnings

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Crosscurrents In The Market

Please click here for an enlarged chart of United States Oil ETF (NYSE:USO)/a>.

Note the following:

li>The chart shows that oil ETF USO is rising today./li> li>The chart shows that oil ETF USO is threatening to break above zone 1 (resistance)./li> li>The chart shows oil ETF USO is now higher than it was at the time of peak Iran fear in May. Prudent investors should note a divergence in that the Iran fear is only a small fraction of what it was back in May, but oil ETF USO is now higher than it was in May./li> li>There are three reasons for the move up in oil this morning:

li>Iran’s Islamic Revolutionary Guard Corps (IRGC) spokesman Hossein Mohebi is saying that IRGC is shifting to an "offensive and asymmetrical" defense doctrine. In plain English this means that Iran will proactively attack U.S. bases, other countries, and oil tankers in its defense./li> li>IRGC has attacked four ships engaged in oil transfer in the Gulf. Three other ships caught fire when they hit mines./li> li>There are reports that the U.S. and Israel are ready with plans to strike Iran after the midterm elections./li> /ul> /li> li>Concern is also mounting that the U.S. is in the process of giving Russia what Russia wants without any concessions from Russia on Ukraine.

li>Hours after a three hour meeting with U.S. envoy Steve Witkoff in which President Putin apparently showed willingness to resume peace talks, Russia launched a massive missile attack on Ukraine's capital Kyiv./li> /ul> /li> li>Concern is also mounting of a potential Democratic sweep in the midterm election./li> li>Two of the Mag7, Meta Platforms Inc (META) and Tesla Inc (TSLA) reported excellent earnings.  Wall Street positioning was for the market, especially the AI trade, to go up on good earnings from Meta and Tesla.  Instead, in the premarket, there is aggressive selling in AI stocks.  VanEck Semiconductor ETF (SMH) is down 3.22% and Invesco QQQ Trust Series 1 (QQQ) is down 1.54% as of this writing in the premarket./li> li>Momo gurus are out in full force repeating the tired narrative that oil has nothing to do with the AI trade. Momo gurus are urging their followers to aggressively buy the weakness in the AI trade. As the day progresses, prudent investors should watch which one of the two scenarios materializes – momo gurus succeeding or momo accounts being hit with margin calls./li> li>In the early trade, money is flowing out of the AI trade into the safety of U.S. Treasuries and the Japanese yields. /li> li>Prudent investors should also note what appears to be an anomaly on the surface – money is flowing out of gold and silver this morning.  Normally when fear rises, money flows into gold and silver.  In our analysis, the reason for money flowing out of gold and silver is that smart money is getting ahead of the momo crowd being forced to sell gold and silver if they receive margin calls.  Of note, the momo crowd was an extremely aggressive buyer of gold over $5000 and silver over $100.  As a reference, gold is trading at $4097 and silver is trading at $55.93 as of this writing.  /li> li>strong>From the time everyone was super bullish on AI stocks, our call has been that several AI stocks would experience 30% – 50% drops.

li>Many of the stocks that ran up on the AI mania have experienced significant drops.  As examples, CoreWeave Inc (CRWV) is down 67.6%, Applied Optoelectronics Inc (AAOI) is down 67.2%, Cerebras Systems Inc (CBRS) is down 63.2%, Nlight Inc (LASR) is down 56.3%, and Innodata Inc (INOD) is down 50.2% as of this writing in the premarket./li> li>A popular theme has been to aggressively buy memory and disk drive stocks.  Western Digital Corp (WDC) is down 49.3%, SanDisk Corp (SNDK) is down 41.0%, Seagate Technology Holdings PLC (STX) is down 36.3%, SK Hynix Inc – ADR (SKHY) is down 31.0%, and Micron Technology Inc (MU) is down 27.0% as of this writing in the premarket./li> /ul> /li> li>Initial jobless claims came at 194K vs. 200K consensus. This indicates the jobs picture is staying strong, at least for the time being./li>

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 neutral in Apple Inc (AAPL).

In the early trade, money flows are negative in Amazon.com, Inc. (NASDAQ:AMZN)/a>, NVIDIA Corp (NASDAQ:NVDA)/a>, Microsoft Corp (NASDAQ:MSFT)/a>, Alphabet Inc Class C (NASDAQ:GOOG)/a>, Meta (NASDAQ:META)/a>, and Tesla (NASDAQ:TSLA)/a>.

In the early trade, money flows are negative in SPDR S&P 500 ETF Trust (NYSE:SPY)/a> and Nasdaq 100 ETF (NASDAQ:QQQ)/a>.

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 (NYSE:GLD)/a>. The most popular ETF for silver is iShares Silver Trust (NYSE:SLV)/a>. The most popular ETF for oil is United States Oil ETF (USO).

Bitcoin

Bitcoin (CRYPTO: BTC) is seeing selling.

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 get 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.