Treasury Secretary’s Memo to Market Bears: Drop Dead.
The short setup into the FOMC decision last week was one of the best I’ve ever seen: during an ominous time of the year where crashes occur, the stock market was being pushed closer to the edge by 10yr US Treasury bond rates rising in response to pressure on the Bank of Japan (BOJ) to hike rates and in response to pressure on the Japanese Ministry of Finance (MOF) to sell dollar assets to buy yen in order to stop yen weakness. I had been on the lookout for a rate hike by a foreign monetary authority that would cause the initial break in the market which could lead to a crash just like the 1987 and 1929 crashes, both of which had foreign bank rate hikes as the catalysts. The BOJ was the obvious candidate for a hike as their currency was in free fall, and their domestic population was clamoring for authorities to stop the pain. The MOF would normally intervene in the FX market by selling US Treasuries to buy yen, but that option was off the table as Scott Bessent can’t have rates in the US rise. I thought the BOJ would be forced to hike, which would pull money out of US assets and into Japan. I laid out my reasoning for a low risk short and was short the SPY from just above $740. Instead of a BOJ hike, what we got was a coordinated intervention between the US and Japan with Scott Bessent as the front man, complete with a full media appearance tour and planted photos of Bessent’s memo pad detailing his secret plan to buy yen for $5-$10B. Bessent’s move was a masterful stroke that averted a crisis in the stock market by offering Japan a reprieve without requiring them to either hike rates or sell Treasuries. The very public announcement that the US will not allow the yen to weaken further was enough to put the squeeze on shorts like me (fortunately, I followed my plan to cover and took a 2.5% loss). Bessent’s public statement in support of the yen is enough to take any notion of shorting this market off the table for now, but it also revealed the Achilles heel of the entire global financial system: the yen carry trade. We caught a glimpse of the importance of the yen carry exactly 2 years ago when the BOJ was forced to raise rates off the zero bound to 0.25%. On August 5, 2024 the SPX gapped down, and a full blown melt down was a real concern. The BOJ helped calm the panic by promising not to raise rates again any time soon. The panic level was high enough for Jamie Dimon to release an absurd statement that most of the yen carry trade had been unwound, and there was no reason to be concerned about a market melt down. Jamie is too smart to think that’s true so it’s obvious he was being compelled to sooth the highly leveraged speculative community and their brokers and to convince them to ease off the short yen covering and margin calls. The dire situation of a yen carry unwind was allowed to grow acute in August 2024, but Bessent was taking no chances this time around in 2026 and preemptively intervened before the stock market could weaken. In doing so, he revealed the lynch pin to the asset price bubble we now find ourselves in, and while he may have relieved the pressure building up to that point, neither he nor the BOJ did anything to alter the underlying dynamics of the situation. While Bessent may have altered the path we are taking, I don’t think he was able to change the ultimate destination at which we will eventually arrive: a significantly lower stock market. I think this short squeeze will buy enough time for Wall Street to get out two more big IPOs: OpenAI and Anthropic. One of the greats, Paul Tudor Jones, lays out his case for why those IPOs will likely signal the top in the market. I’m not as smart or as rich as PTJ, so I’ll just adopt his opinion until he changes it. I won’t have a chance at getting anywhere near as rich as PTJ if I dig my heels in on the short side. I’m still bearish, but I’ve got very little trading inventory left to sell and way too much cash if this is the start of a melt up into the IPOs. As bearish as I’ve grown the past month, I managed to resist the temptation to prematurely sell what few longs I’ve got until the time was right. FTK was an easy ride until the recent sell off from $27 to $22, but I reviewed my trade plan when the temptation to bail out of the trade seemed to be on the verge of overpowering my holding discipline. It was a gamble holding over earnings, but I figured the odds were on my side based on the monthly chart and the acceleration in business described on its last report. The bet paid off. DAC was another great win that I locked in this week. With these two trading positions moved out of inventory, I’ve only got a little bit of ATUSF, NTR, XOM, and CVX left in long inventory. I’ve still got a large chunk of the gold miners as long term position trades I put on in 2023. My trades in FTK and DAC are a reminder to myself that my process works. I have a strict set of criteria for putting on longs and sticking to that discipline has been profitable all year. I’ll only buy stocks when I get the setup I’m looking for, like FTK at $18, DAC at $100, MT at $34, ATUSF at $20, XOM at $120, or CVX at $156. If you look at those on a chart, you can see the tight price structure I am looking for. If
Continue Reading -->Nvidia: The Force Awakens
What a week! We had a light jobs report. SanDisk (SNDK) and Western Digital (WDC) hit me where it hurt (my account). And SpaceX delivered its first earnings report as a public company. So let’s jump into what you need to know right now, including the earnings season boom, Nvidia’s (NVDA) monster comeback… and even how Caterpillar (CAT) turned into an AI stock.Earnings Season Has Been Awesome. But Not for SanDisk.Q2 earning season has been ridiculously strong, according to FactSet data. 86% of reporting companies have beaten EPS estimates, the highest percentage since Q2 2021. And earnings are coming in a ridiculous 29.2% above expectations, the highest since at least 2008. Excluding Alphabet (GOOGL) and Amazon’s (AMZN) large one-time investment gains, earnings would still be 10.9% above estimates. Earnings growth is tracking at a whopping 32.0% excluding GOOGL and AMZN. Unfortunately, our biggest, brightest shining star SanDisk (SNDK) got taken to the woodshed. The flash memory maker delivered a strong report, but its guidance disappointed and the stock got smacked around. The same happened with Western Digital (WDC). Now SanDisk is almost 50% off its highs! But fun fact: SanDisk is still the #1 stock in the S&P 500 index this year: Get JR Romero’s latest take on SanDisk here.Meet the Guidance MonsterLast Friday, I said power management semiconductor stock Monolithic Power (MPWR) may be the new SanDisk. And I bought the stock on Monday. SanDisk and Western Digital’s (WDC) guidance disappointments took them out of a unique category of AI stock I call “Guidance Monsters.” These are the AI stocks that deliver revenue guidance so strong that even the biggest bulls can’t believe it. Monolithic Power is seeing wild demand from data center clients. And last week, its Q3 revenue guidance came in 17% above consensus. You have to think that the company plans to handily beat that guidance. See the lines going up and to the right? Those are consensus earnings estimates:This is exactly what you want to see with high-octane growth stocks. Note: I also own SanDisk and Western Digital, so I didn’t have a bang-up week on the AI front.The Nvidia Value Trap Debate Ends for NowI’ve been suggesting Nvidia might be a value trap based on its cheap valuation. That was dead wrong because the stock just woke up:This week, the stock got a nice boost when Elon Musk said SpaceX (SPCX) will exclusively buy Nvidia chips over AI chipmakers like AMD (AMD). I’ve been wondering myself where Nvidia could find its next big customer, and SpaceX may be just that. I have my doubts about how soon we’ll see fully operational data centers in space, but SpaceX’s capex spending is going through the roof. JP Morgan said “we now project capex of nearly $200B in both 2027 & 2028.” A decent chunk of that will flow through to Nvidia.It’s Gonna Be Another Busy Week for AIWhile most big companies have reported, multiple key AI/semiconductor names will report earnings next week, including: Tuesday: Lumentum Holdings (LITE), CoreWeave (CRWV), Super Micro (SMCI)Wednesday: Cisco (CSCO), Coherent (COHR), Cerebras Systems (CBRS)Thursday: Applied Materials (AMAT) So we’ll have even more inputs to help us deal with the ultimate question: Will the spending ever stop? Everyone from Alphabet (GOOGL) to Meta (META) to Amazon (AMZN) to SpaceX is throwing wild amounts of money at AI infrastructure projects. Heck, Caterpillar (CAT) raised guidance because of AI data center buildouts. So maybe we’ll add CAT to our list of AI stocks… Here’s the full calendar for next week:Traders Are… Confused?The AAII Sentiment Survey shows that investor sentiment is just all over the place week to week. 37.0% of investors are bullish, which is right in-line with the long-term average of 37.5%. This follows two straight weeks of bearish readings.This continues the trend of there being no real trend from week to week. Meanwhile, CNN’s Fear & Greed Index popped to 63/100, signifying modest Greed: Of course, if the market dips 2% next week, sentiment will swing back bearish in the blink of an eye. So it’s getting harder and harder to make sense of sentiment data, because there’s never any sustained string of positive or negative readings. Oh well… Have a great weekend!
Continue Reading -->SanDisk: Extreme Buy Point Revealed
JR Romero is always active trading AI stocks. Especially SanDisk (SNDK). Get his “back up the truck level” in today’s video: Note: the video embedded here starts at the 14-minute mark so you can get the skinny on SanDisk right away. Rewind to the beginning to get the team’s take on SpaceX (SPCX). We also go over: Whether the SpaceX rally is a one-hit wonder The ridiculousness of leveraged ETFs Where Nvidia (NVDA) is going next If it’s time to jump on Palantir (PLTR), which had a fantastic earnings report Why JR is so bullish on Instacart (CART) And more!
Continue Reading -->Shorting a Vulnerable Market
One of the most profitable beliefs about the stock market that I’ve adopted is that there exists a distinction between the real world company and the common shares of that company. I like to think of these two, distinct entities as being tethered, sometimes loosely, and sometimes strongly together. At times when the tether between the company and its traded shares is too loose, the price of the shares can travel very far away from the actual value of the company. I think we are approaching a point in time when the tether between the shares and the company is stretched to the max on the upside. A snapback of price down to true value is quickly coming. One of the more prominent metrics that most traders will be familiar with is the Schiller PE which has only been higher than the current level of 40x for several months in the year 2000 before the .com crash. It would be improper speculation to simply take this as a reason by itself to be bearish on the market. Proper speculation requires one to dig deeper and to look for a reason why the market would be vulnerable now. I think that reason is that passive investing is about to see a big slowdown in inflows. As tech companies work AI into their workflows, they are seeing just how many employees they need to keep the same level of output. Big corporations have been, for months now, burning through compute tokens as they let their employees run unconstrained with AI to see how much they can produce. The employees that can produce the most output, document it, and present it to management get to keep their jobs. This has been going on since this Spring. As CFOs get back from the lazy days of summer, they will be planning their budgets for next year. The inflation that has caused all of us to figure out how to do the same with less is now biting corporations as well. The belt tightening always hits them last because they have so much money that they can resist the inflation for longer than individuals. It’s these employees that are getting let go that will cause a slowdown in inflows to passive ETFs in retirement accounts; no more job, no more contributions every paycheck. Mike Green has been publicly vocal for 6 years now that passive investing has an outsized influence on the price of the index as it plows money indiscriminately into the largest market cap companies. This is exactly why SpaceX needed to get a huge valuation on a tiny sliver of shares that are allowed to be traded and why the rules are being changed to allow these shares to be included in a large index like the S&P 500 far quicker than has customarily been allowed. Wall Street needs these shares to get inclusion so the price will be supported. We’ve gotten to the point in this cycle where professionals on Wall Street are gaming the system right out in the open for all to see. Signals like this indicate we are very close to the end of the up cycle in asset prices. Another cycle that seems to be coming to an end is the credit cycle. Michael Howell has been making the podcast rounds lately telling us that the 65 month credit cycle is due to peak imminently. I’ve attempted to read his book, Capital Wars, but it’s far too complex in it’s entirety for me to fully grasp. All I need to know is that when excess reserves in the banking system fall below a certain dollar amount at the end of the credit cycle, we get a liquidity crisis, and asset prices fall. We know we are nearing the end of the credit cycle because the first warnings that private credit was in trouble came when Tricolor defaulted. Private credit funds have been gating their products for months now. The combination of a slowing passive inflow and an ending credit cycle leave the market vulnerable. We saw the first hint of that this week with the FOMC decision to hold and the response in the market was a hard sell to the lows of the week. We’ve got expanding new 52 week lows as the market has been stuck in a range for 2.5 months. My bet is that this range resolves to the downside. I think the market is vulnerable, and I see a low risk opportunity to short in a good, low risk location, with the added benefit of a potential autumn crash whose signs I’ve been watching for several weeks now. Here’s my trade plan for shorting the SPY. I’ve left plenty of room for a logical stop for the usual coordinated market intervention by the Fed and BOJ that could spike the SPY up to $750. That gives about 2.5% of risk at current prices around $740, but the reward is two times that risk if the SPY can get down anywhere near the 200dma on a good sell move down. That’s my plan on the large portion of a short position, but I do want to see if this $760 is the real top, so I’d like to keep a small short on unless and until $757 is breached on the upside. That’s not a great risk to reward if my profit target is $700 so I’ll keep that portion of the position to maximum 1/3rd (in other words, only $33 of every $100 bet would have the higher $757 stop). There are more indications that this range could resolve to the downside like heavy volume on the last good sell move and weak volume on the subsequent rally to here. There are also increasingly more frequent volume increases on red days lately. All these elements combine to give me enough evidence to hypothesize that shares are moving to weak hands. The odd part about being short the market is that my
Continue Reading -->The Next AI Chip King?
What a week! Microsoft (MSFT) and Amazon (AMZN) dropped beautiful earnings reports. Kevin Warsh delivered a short and sweet FOMC statement. And hedge fund Situational Awareness choke on leveraged AI stock bets before a rescue by Ken Griffin’s Citadel. Now let’s drill down for the most interesting things happening in markets now. We go over what’s been an awesome earnings season, a candidate for the next AI chip King, and 2 semiconductor stocks that appear to on the edge of greatness… or failureEarnings Season Has Been Awesome27% of S&P 500 companies have reported, according to FactSet.And the numbers are pretty dang amazing.86% of companies reported positive EPS surprises. And 80% beat revenue forecasts.The strongest numbers are coming from the financials, tech, and energy. And utilities are lagging.Q2 EPS growth is tracking at 37.9%, the highest growth rate since Q3 2021, which had the benefit of an easy year-over-year comp from the pandemic:That 37.9% number was boosted by a $98 billion one-time gain by Alphabet (GOOGL). Excluding that, earnings growth is still tracking at 25.9%, which is still spectactular. Plus that 25.9% was calculated before this week’s beats by Microsoft (MSFT), Amazon (AMZN), Apple (AAPL), Seagate (STX), Lam Research (LRCX) and Monolithic Power (MPWR). And odds are we’ll see positive earnings surprises from Palantir (PLTR), AMD (AMD), SanDisk (SNDK), and Western Digital (WDC) next week.Interestingly, the data shows that the market is not reacting well to reports. This goes for companies that beat AND companies that miss. So Microsoft and Amazon’s booms this week were exceptions to the rule!We May Have a New AI Semiconductor KingI’ve heard of the company Monolithic Power (MPWR), but never paid any attention to it. Until I saw its earnings report on Thursday, July 30. MPWR reported $980.6 million in sales, 9% above consensus. EPS was 11% above estimates. And revenue guidance for next quarter was 17% above expectations, which reminds me of SanDisk since it came public again last year, and Nvidia in 2023. Look at how fast analyst estimates are rising:Again, just like prior boom periods for SanDisk and Nvidia. And what does Monolithic Power do? It designs and develops power management solutions that go into everything from AI GPUs and TPUs to batteries to robots. And it’s seeing booming demand for AI data center and server applications. With a $72 billion market cap, this isn’t exactly a top-secret micro cap, but there’s surprisingly little discussion about it. So put Monolithic Power stock on the radar. It could be the next SanDisk, and it’s at the top of my personal watchlist. Related: check out JR Romero’s Greatest Hits: SanDisk Edition.The Nvidia Value Trap Debate ContinuesLast week, I suggested Nvidia might be a value trap at 21X forward earnings. Well, now it’s trading at 20X forward earnings, even with Microsoft (MSFT) and Amazon (AMZN) showing huge cloud and AI growth.This is Nvidia’s cheapest valuation in decades. The problem remains the same. Nvidia is so well-known that it’s hard to deliver a major positive surprise. And major AI infrastructure tech buyers like Alphabet and Amazon have made major strides in developing chips in house. Which means more competition for Nvidia’s high-priced GPUs. Plus from a basic market mechanics perspective, attention and money has shifted to the memory/storage names, which are posting much bigger earnings beats and upside guidance. Sure those stocks are more volatile, but that’s where the momentum money goes when the market is in a good mood,SK Hynix Is in for a FightKorean memory superpower SK Hynix (SKHY) made a huge splash when it listed in the US on Friday, July 10. The $26.5 billion deal priced at $149 per share, and the stock hit $194.80 on July 14, its 3rd day of trading. On July 29, it hit a low of $124.80 after an Earnings Miss. It’s since rebounded to $149+. But now the fight begins. 2026’s other two big IPOs have been messes. SpaceX (SPCX), which also made a high on its third day of trading, is down over 60% from its peak. (FYI: SpaceX delivers its first earnings report on Tuesday, August 4 after the close) Cerebras Systems (CBRS) made itsarecord high on its May 14 IPO day, and has since dropped about 50%. And aside from sagging sentiment towards these mega-issues, traders are concerned about Chinese memory giant CMXT disrupting the likes of SK Hynix, Micron, and Samsung.Traders Are… Bearish?The AAII Sentiment Survey shows that the topsy-turvey downside action in tech stocks may be impacting the mood. Just 31% of surveyed investors are bullish, which is the second straight week of below-average bullishness.So it looks like the crowd is leaning bearish. The tricky thing with sentiment data is that it’s lagging, and AAII tends to bounce around from week-to-week. However, if we get another below-average reading next week, that could signify real negativity. Meanwhile, CNN’s Fear & Greed Index is at 38/100, signifying modest Fear.
Continue Reading -->JR Romero’s Greatest Hits: SanDisk Edition
JR Romero is always active trading AI stocks. And he’s always focused on flash memory maker SanDisk (SNDK). So we’re going over some of JR’s biggest calls on this leading stock.#1: JR Predicts SanDisk $1,000On February 11, 2026, JR appeared on one of our live streams. SanDisk was trading at $570 at the time. And JR predicted the stock would hit $1,000. Here’s the video: SanDisk hit $1,000 on April 24. So JR nailed SanDisk for a 75% gain. Then, JR upped the ante…2. JR Predicts SanDisk $1,298On April 24, the day SanDisk hit $1,000+, JR predicted the stock would hit $1,298. We recorded a video, but accidentally erased it! But you can see the time-stamped blog post above. SanDisk hit JR’s $1,298 target on May 5. JR didn’t stop there.3. JR Predicts SanDisk $2,000On May 29, when SanDisk was trading around $1,694, JR Romero pulled another huge forecast out of his hat. He said SanDisk could hit $2,000+.SanDisk would proceed to smash the $2,000 barrier on June 12, 2026. Would JR have yet another SanDisk forecast? Yes…4. JR Predicts SanDisk $2,700This one is up in the air. On July 14, we went live with JR to discuss the AI stock universe. SanDisk was trading at $1,757. And JR said it could go to $2,700. That’s a gain of nearly $1,000 per share. Since then, SanDisk has declined to about $1,232 as AI-levered semiconductor stocks sold off. So far, JR has nailed 3 out of 4 major SanDisk predictions in 2026.Will he ultimately be proven right on this fourth SanDisk prediction? Time will tell!
Continue Reading -->24 AI Stocks Explained in Plain English
Updated July 29, 2026 using data from Koyfin. This is an educational overview, not a big list of stocks to buy right now. Always do your own research or talk to a financial advisor before buying anything. People talk about AI stocks all the time, and the media’s obsessed. So it’s easy to want to start buying these wild stocks, even if you don’t know what they actually do. That’s why we’re breaking down 24 key AI stocks in plain English. Take your time reading this. There’s a lot of ground to cover since the AI supply chain is absurdly complex. Building and running applications like ChatGPT, Claude, Gemini, and Grok takes a massive supply chain: chips, cloud computing, software, networking, cooling, and of course, electricity. That’s why everything from GPU makers to memory producers to nuclear power companies gets lumped into the “AI stocks” category. Below are 24 companies across that entire chain, grouped by what they actually do, explained without the jargon (or at least minimizing it). We’ve also included some helpful stats for each one like the current stock price, market cap, recent performance, distance from its 52-week high, the average Wall Street price target, and short interest. These numbers were last updated on July 29, 2026, so keep that in mind. 🧠 Part 1: The Chipmakers (the “brains” of AI) These companies make the physical processors that train and run AI models. Without them, there’s no AI boom. 1. Nvidia (NVDA) Nvidia is pretty much THE flagship AI name. This Mag 7 name makes the GPUs (graphics processing units) that have become the industry standard for training and running AI models like ChatGPT. Originally built to power graphics in high-powered gaming PCs, these chips turned out to be awesome at AI math. Nvidia is the single most important hardware company in the AI world right now, and most of the biggest AI buildouts run on its chips. 📊 Stock Price: $194.13 | Market Cap: $4.70T | 1-Mo performance: -0.4% | YTD Performance: +4.2% | Below 52-Wk High: -17.9% | Analyst Target: $302.83 (+56% implied return) | Short Interest: 1.3% 2. Advanced Micro Devices (AMD) AMD is Nvidia’s main rival in AI chips, just as it is in PC GPUs. AMD makes its own line of AI accelerators (called Instinct) and has landed major deals, including a huge multi-year agreement to supply GPUs to Meta (META). AMD isn’t likely to dethrone Nvidia anytime soon, but it gives big tech companies a second supplier so they’re not fully dependent on one vendor. 📊 Stock Price: $444.05 | Market Cap: $724.1B | 1-Mo performance: -17.7% | YTD Performance: +107.3% | Below 52-Wk High: -24.1% | Analyst Target: $575.49 (+30% implied return) | Short Interest: 2.6% 3. Broadcom (AVGO) Broadcom doesn’t sell off-the-shelf chips. It’s best known for making Google’s TPU processors, and also co-designs custom AI chips for other customers like Meta, and OpenAI. This lets those companies get chips tailor-made for their own AI workloads instead of using general-purpose GPUs. Broadcom’s AI chip and networking business has grown explosively, and management has talked about reaching $100 billion in annual AI-related revenue. 📊 Stock Price: $380.02 | Market Cap: $1.81T | 1-Mo performance: +2.0% | YTD Performance: +10.2% | Below 52-Wk High: -23.2% | Analyst Target: $527.00 (+39% implied return) | Short Interest: 1.5% 4. Taiwan Semiconductor Manufacturing Company (TSM) TSMC doesn’t design chips. It manufactures them for everyone else, including Nvidia, AMD, Apple, and Broadcom. If you own an AI chip, there’s a good chance TSMC physically made it. That makes TSMC one of the most important, and most geographically concentrated, companies in the entire AI supply chain, since nearly all of its advanced manufacturing happens in Taiwan. However, TSMC is looking to make inroads in the US. 📊 Stock Price: $385.75 | Market Cap: $1.79T | 1-Mo performance: -15.2% | YTD Performance: +27.5% | Below 52-Wk High: -19.5% | Analyst Target: N/A | Short Interest: N/A 5. ASML Holding (ASML) ASML makes the extraordinarily complex (and pricey!) machines that TSMC and other chipmakers need to actually print circuits onto silicon (called EUV lithography). Nobody else on Earth makes machines capable of this at scale, which gives ASML a near-monopoly on the equipment behind the most advanced chips. News reports indicate China is entering the same market, but is way behind ASML in terms of technology. 📊 Stock Price: $1,583.21 | Market Cap: $607.5B | 1-Mo performance: -15.8% | YTD Performance: +48.6% | Below 52-Wk High: -20.8% | Analyst Target: N/A | Short Interest: N/A 6. Micron Technology (MU) Micron makes memory chips (DRAM and, increasingly, high-bandwidth memory or “HBM”) that sit right next to AI processors and feed them data fast enough to keep up. Demand for its newest memory has been so strong that Micron has reportedly sold out its 2026 HBM supply through long-term contracts. Memory used to be thought of as a boring, cyclical business, like potatoes or soybeans. Now it’s a high-growth piece of the AI puzzle. And the debate is raging over whether AI has turned memory into a secular growth sector. 📊 Stock Price: $772.02 | Market Cap: $871.9B | 1-Mo performance: -32.6% | YTD Performance: +170.6% | Below 52-Wk High: -38.5% | Analyst Target: $1,507.38 (+95% implied return) | Short Interest: 2.8% 7. Marvell Technology (MRVL) Like Broadcom, Marvell designs custom AI chips for big cloud companies (its biggest customer is reportedly Amazon) and makes chips that help data move between AI processors. It’s grown fast and joined the S&P 500 in 2026, but it also trades at a very high valuation relative to its earnings, meaning investors are pricing in a lot of future growth. 📊 Stock Price: $171.02 | Market Cap: $149.8B | 1-Mo performance: -38.4% | YTD Performance: +101.5% | Below 52-Wk High: -48.2% | Analyst Target: $256.91 (+50% implied return) | Short Interest: 3.9% 💾 Part 2: The Storage Makers (where all this AI data actually lives) Training and running AI takes a ridiculous amount
Continue Reading -->SpaceX: I Changed My Mind
ATTN: Sami Abusaad and James Rich Young’s next Pristine Mentorship is on the calendar for October through December 2026. Sami pulled off a beautiful short in SpaceX (SPCX) from $154.89. But now he’s looking to play it long. Yes, long: Sami also explains: The meaning of the QQQ’s big rounding top What it would take for QQQ to break down for real Why the price action is more important than any moving average A railroad name ready to soar The buy setups in Bitcoin and Ethereum How Tesla (TSLA) stock looks right now And MORE!
Continue Reading -->The 2 Ugliest Charts in the World
What a week! Alphabet (GOOGL) failed on earnings and there’s no peace in the Middle East. So let’s go over: The 2 ugliest charts in the world Why it’s hard to be an AI hyperscaler right now Why Nvidia may be a value trap Where sentiment sits Let’s go. Ugliest Chart in the World #1 SpaceX (SPCX) was hot for 4 days. Now it’s been cut in half. We identified $150 as an obvious line in the sand. And SpaceX just cut through it like a knife through butter: And let’s give credit to Sami Abusaad! He got short at $154.89 and has been riding it down the whole way. So why is this stock getting dumped? Because the more the stock drops, the more attention is paid to the danger on the horizon (insider lockup expirations). That’s created a race to the exits. Meanwhile, Wall Street banks (many of whom earned paid big fat IPO underwriting fees from SpaceX) love the stock. According to Koyfin, the average analyst target price is $236.71: So they think SpaceX will double. Do you? Now let’s talk about its twin… Ugliest Chart in the World #2 This is Oracle (ORCL) over the past year. Oracle has a major problem. It’s a hyperscaler with potential credit problems. While other AI stocks like Microsoft has heaps of recurring revenue and free cash flow to reinvest in capital expenditures, Oracle does not. Just so you understand the difference in scale here, Microsoft generated almost $73 billion in free cash flow over the past 12 months. Oracle (ORCL) had NEGATIVE free cash flow of almost $24 billion. So it has to borrow tons of debt to power its AI dreams. Maybe too much. It’s Hard Out Here for a Hyperscaler The AI market remains split between “haves” and “have nots.” The AI hyperscalers are most certainly have-nots in 2026, given these performance numbers: Alphabet (GOOGL): +2.8% Amazon (AMZN): +2.3% Meta (META): -7.9% Microsoft (MSFT): -19% Oracle (ORCL): -36% Meanwhile, the VanEck Semiconductor ETF (SMH) is up a whopping 61%. This makes sense because the hyperscaler buildout is a wholesale transfer of cash flow to the likes of Nvidia (NVDA), AMD (AMD), ASML (ASML), Micron (MU), SanDisk (SNDK), etc. Think of it this way. Google sucks up money selling ads. Then that money goes straight to hardware and chips from the likes of Nvidia, AMD, Micron, Dell, etc. Which flows down to networking gear, semiconductor equipment, etc. At some point the trend reverses, but for now – hardware looks like easy money. Especially when we have Alphabet raising its capex forecast. And Meta, Microsoft, and Amazon might do the same when they report earnings this week. Is Nvidia a Value Trap? Many traders and investors are zeroing in on Nvidia’s (NVDA) valuation. The stock is now trading at 21x forward earnings, which looks cheap for the flagship AI chip name: But I wonder if Nvidia is a value trap. As in, it looks cheap but goes nowhere. I see Nvidia’s biggest challenge as a lack of sex appeal relative to other places within the AI landscape. Right now, the market is excited about the memory and storage names, because that’s where the biggest supply-demand imbalance is. On Thursday’s earnings call, Intel (INTC) CEO Lip-Bu Tan said “…memory has become the big supply constraint challenge.” Yes, Nvidia is most likely still supply-constrained. Just not at the level of a Micron (MU) or SanDisk (SNDK). But we’ll know for sure this coming week. If we see Meta, Microsoft, and Amazon signal higher capex spending and Nvidia does nothing, then maybe the thrill really is gone. We’ll see. In the meantime, I recommend watching this interview with Cerebras (CBRS) CEO Andrew Feldman, who shares some interesting points about the AI chip universe. He discusses why Nvidia’s CUDA platform may be losing its competitive moat, though you should obviously take that with a massive grain of salt: Investors Are Bearish… for Now The AAII Sentiment Survey shows that just 29.6% of investors are bullish. This is well below the 37.5% long-term average. And it’s a massive decline from last week’s 44.9% reading (above average bullishness). So are investors bearish? Kind of. These sentiment surveys have been topsy-turvy all year, so we never get any sustained bullishness or bearishness. That reduces the predictive power of these numbers, which wasn’t all that great to begin with (outside of real extremes). Meanwhile, the CNN Fear & Greed Index is at 41, which is slightly fearful. Add it up and it looks like investors are far from euphoric. But they’re not down in the dumps either.
Continue Reading -->The First Step to a Crash
I’m naturally inclined to be bearish. I have been since my formative years in the market during the 2008 GFC. There are only two, maybe three times in a career where it pays to be bearish. This may be one of them. Last week I detailed the steps to a possible stock market crash this October. We just got the first step in that sequence: an initial break in the Dow Jones Industrial Average from the summer rally trend. The reason for this break is that something appears to be going wrong in the Iran situation. The US 10y yield is approaching 20 year highs, crude oil is abundant yet going higher in price, and gold, the best barometer for global base money, is sinking. As more global money gets burned up securing crude oil, there is less available to roll over the massive amount of debt that’s been built up since 2020. If central banks don’t start printing, base money doesn’t grow, and asset prices fall as there is no money to bid higher for financial assets. An exchange with Senator Kennedy and Secretary Hegseth this week should give the market a reason to sell more as it prices in a deteriorating situation in Iran. Senator Kennedy, usually with an unperturbed and jovial demeanor, seems flustered to a degree I’ve never seen him before. He thinks the situation is getting serious, and that “we are down to it”. I’ll bet he just received a briefing telling him the supply chain breakdown we’ve been hearing about since March is coming soon unless we commit ground troops to go into Pickaxe Mountain, destroy centrifuges, and end the conflict. With the House passing a resolution to limit Trump’s ability to escalate further, I think the market has more downside in the near future to price in a possible worst case scenario of a supply chain breakdown if the US doesn’t send in ground troops. This is a situation with no good outcome, and it’s starting to resemble Britain’s Suez crisis. I’ve been in about 70% cash since March, and now I wish my cash position was even bigger. I’ve got about 15% in gold miners and 7.5% in energy, shipping, and fertilizer stocks. Right now, I wish I’d bought more of the “conflict” stocks such as $XOM, $NTR, and $DAC earlier this year, and I wish I’d sold more of the gold miners in March. My portfolio seems to be in the same situation as the US in Iran: no good outcome in sight. I’m too long and too short at the same time. I can’t sell what I’ve got that is going down, and I can’t buy more of what I’ve got that is going up. The only way out of this situation for me is to either get shorter or get longer. There’s no way I’m getting longer with a market setup this bad fundamentally, so I’m sticking to my plan I detailed last week of waiting for a confirmation of a bear market with a failure of the $DJIA to get back above this initial break level of $51,850 if bulls attempt a rally back in the next couple weeks, then, and only then, shorting the $SPY and/ or $QQQ. It’s not just the US in Iran that is worrying the market. The Yen keeps getting weaker with a clean break above $160. The Bank of Japan won’t tolerate too weak of a Yen for much longer. An emergency rate hike by the BOJ would weaken the dollar, and that would slow the capital inflows into the USA that have been flowing into financial markets. The stock market needs foreign capital inflows to sustain these lofty valuations. Stock valuations are too high to find any meaningful support from value investors, and passive investors won’t help the situation if concern about lower prices causes them to stop retirement inflows. There are dozens of reasons to be bearish, but the market simply has not cared about any of them as long as excess liquidity was finding it’s way into stocks. The SpaceX IPO was very large and took up a lot of balance sheet capacity (i.e. liquidity) that is now needed to support stock prices. It’s been my view that the professionals on Wall Street had the resolve to forge together a market for two more big IPOs: Anthropic and OpenAI, and that would signal an intermediate top in the market. Scrapping those IPO’s would be an even more bearish indicator that the pros on the Street don’t want to even try because they see a bear market ahead. Bear markets are extremely difficult to navigate because they require you to constantly think negatively, to think about what can go wrong. This goes against our human nature to always improve, to think about what can go right. I’m far more introverted than the average trader (an extreme INTP on Jung’s psychological type, and a Type Five on the enneagram), and as a result, I’ve spent more time analyzing my own mental activity than the average trader. I’ve come to understand how being so bearish since the QE era began in 2012 cost me so much. It was really just a pessimistic world view that made me see only the reasons the markets should go down. Around March of 2020, I began to understand the benefits of shifting my mindset to a more productive, positive, and optimistic one. I began to see clearly that it wasn’t pessimists that got rich trading in the markets. The bearish arguments seemed so smart, so correct, but they just didn’t matter. Other guys were getting rich by being bullish, and I was stuck in a negative mental state with more desire for wealth than talent in attaining it. For me, finding success in the markets was a choice. It was a choice to do the work to be bullish on something. That happened to be gold, and that choice changed my trajectory in a big
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