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Why Money Flow Matters, and Banks Are on the Move Again for Earnings
Staying on script, we’ve started this earnings cycle with a strong showing of bank and financial reports into this week. Money flows into financials and then into big tech as we start each earnings reporting cycle — more on that below!. Let's take a look at how financials are doing!
Come join me as we dive in and see what is moving!
Plus, as always, we have stocks popping and dropping so come find out what is moving this morning as I look for stocks and do some live premarket analysis on SPX, SPY, NDX, QQQ, Russell, IWM and other stocks that are potential plays for the day.
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Why Learning and Spotting Money FLows Is Crucial
Earnings season is one of the most critical times for traders, providing insights into how companies have performed over the past quarter and offering clues about the future.
But beyond earnings beats or misses, one key factor that drives market movements during this time is money flow — how capital rotates between different sectors, particularly financials and big tech. Understanding these flows can give traders an edge in positioning for potential market moves.
Financials Lead the Way
The cycle of money flow during earnings season typically starts with the financial sector. Major banks are among the first to report earnings each quarter, setting the tone for how other sectors may perform. Institutional investors often shift capital into financial stocks ahead of earnings season in anticipation of strong performance, especially when the economic backdrop supports lending and consumer spending.
For traders, this is the first signal to watch.
When financials begin to report, any significant beats or misses can drive early market reactions. If banks report stronger-than-expected results, money often flows into the sector, pushing stock prices higher. Traders looking for short-term opportunities may find financials a profitable sector to focus on during the first wave of earnings reports.
Then as financial earnings wrap up, attention quickly shifts to big tech.
Historically, the largest tech companies — often referred to as the Magnificent 7 (Meta, Amazon, Microsoft, Apple, Alphabet, Nvidia and Tesla) — dominate the second phase of earnings season.
Money starts flowing out of financials and into these high-growth tech stocks, as investors anticipate strong results from companies that are typically more resilient in a variety of market conditions.
This shift is important for traders to understand. Tech stocks tend to be more volatile during earnings season, but they can also provide some of the largest short-term gains when earnings exceed expectations. Traders should pay close attention to how financials perform early in the season, as strong results there often mean that institutional money is ready to rotate into tech.
Post-Earnings Rotation
Once tech earnings are reported, the cycle doesn’t stop.
After the big names have had their moment, money often flows out of tech and into other sectors, depending on where the opportunities lie. This dispersion phase can be harder to predict, but sectors like Consumer Goods, Industrials, and even energy can see a surge in capital as investors seek to diversify and balance their portfolios.
For traders, this is a critical time to watch for emerging trends.
If a particular sector has underperformed earlier in the year but shows signs of life during earnings, that’s often where capital flows next. Recognizing these patterns allows traders to get ahead of the market and position for the next wave of moves.
Understanding how money flows during earnings season can provide valuable insights for traders.
By recognizing the cyclical rotation from financials to big tech and beyond, traders can position themselves to capitalize on market shifts and improve their chances of success during one of the most volatile periods of the quarter.
Today’s Daily Chart Setup: Nova Ltd (NVMI)
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