The article discusses the upcoming earnings release for Micron Technology and its potential impact on the broader market, specifically the AI trade. The author notes that Micron stock fell 41% following its last earnings report, despite beating consensus estimates for earnings, revenue, and guidance. The author suggests that the drop was driven by the "momo crowd"—investors who aggressively buy call options and are heavily margined—who were forced to liquidate positions after the earnings release.
The author highlights that the momo crowd is now using AI agents to make trading decisions, which they argue is amplifying their behavior and making it more difficult for institutional investors to trade based on deep analysis. The article states that if Micron stock breaks out above a specific zone, the AI trade and the stock market could move higher. Conversely, if Micron drops, the author suggests the momo crowd will likely cushion the fall with aggressive buying.
Regarding the broader economy, the article cites data from the Bureau of Economic Analysis. It notes that Personal Spending increased by 0.9% versus a consensus of 0.7%, while Personal Income increased by 0.2% versus a consensus of 0.4%. The article also reports on the Personal Consumption Expenditures (PCE) price index, which serves as the Federal Reserve's preferred inflation gauge. Headline PCE came in at 0.3% versus a consensus of 0.4%, and Core PCE was 0.2% versus a consensus of 0.3%. The article also cites the ADP National Employment Report, which showed a change of 90,000 versus a consensus of 58,000.
Finally, the article provides an overview of early trade money flows for the Magnificent Seven stocks. It notes positive flows for Apple, Amazon, Alphabet, NVIDIA, and Microsoft, while flows were negative for Meta and Tesla. The article also mentions that money flows were positive for the SPDR S&P 500 ETF Trust (SPY) and the Invesco QQQ Trust Series 1 (QQQ).
