U.S. PCE data and Nvidia earnings due tomorrow
U.S. PCE inflation data, personal income and spending, GDP and durable orders are scheduled for tomorrow, while Nvidia earnings are due after the close.
Key Data Ahead Please click here for an enlarged chart of Invesco QQQ Trust Series 1 (NASDAQ: QQQ ).
Note the following: The chart shows that QQQ did not reach the low band of zone 1 (resistance) before pulling back.
The chart shows that this morning QQQ is rallying.
Buying in QQQ this morning is almost exclusively coming from the momo crowd.
The momo crowd is repeating its pattern of buying before key events.
Two key events are ahead: PCE, the Fed’s favorite inflation gauge, will be released tomorrow at 8:30am ET.
In addition, personal income and spending, GDP, and durable orders will also be released.
Nvidia earnings will be released after the regular session close tomorrow.
Prudent investors should be highly cognizant of the sharp contrast between the momo crowd and smart money.
The momo crowd almost always aggressively buys before key events.
A key event poses risk to the downside and reward to the upside.
Since the momo crowd does not take risk into account, their logic of buying before the key event is that there may be a potential reward.
On the other hand, smart money focuses on both risk and reward.
For this reason, smart money typically does not buy before a key event.
We previously wrote about the U.S.
Treasury bond buyback program.
Legendary investor Stanley Druckenmiller is publicly criticizing Treasury Secretary Bessent’s expansion of Treasury buybacks of long bonds.
In our analysis, we agree with Druckenmiller and prudent investors should pay attention to the following: The Treasury appears to be moving beyond its traditional role of maintaining orderly markets.
There is no evidence of Treasury market stress that would normally justify this type of intervention.
Higher long term yields are sending an important message about persistent inflation, very large federal deficits, rapidly rising federal debt, and enormous government interest expense.
The bond market is one of the few remaining forces capable of imposing discipline on fiscal policy.
There is also a credibility risk.
If the Treasury begins buying bonds because yields are considered too high, investors may reasonably ask where the intervention ends if yields continue rising.
That could ultimately require increasingly large purchases and undermine confidence in Treasury debt management.
Bond buybacks cannot solve a fiscal problem.
Sustainable downward pressure on long term interest rates ultimately requires lower deficits and greater confidence in the long term trajectory of U.S. government finances.
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 positive in Amazon.com, Inc. (NASDAQ: AMZN ), Alphabet Inc Class C (NASDAQ: GOOG ), Meta Platforms Inc (NASDAQ: META ), NVIDIA Corp (NASDAQ: NVDA ), and Tesla Inc (NASDAQ: TSLA ) In the early trade, money flows are neutral in Apple Inc (NASDAQ: AAPL ).
In the early trade, money flows are negative in Microsoft Corp (NASDAQ: MSFT ).
In the early trade, money flows are positive in SPDR S&P 500 ETF Trust (NYSE: SPY ) and Nasdaq 100 ETF (QQQ).
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 ).
The most popular ETF for silver is iShares Silver Trust (SLV).
The most popular ETF for oil is United States Oil ETF (USO).