Heroic Lifesaver

$NVIDIA(NVDA.US)

I like to look at Nvidia every time I look at the market for general direction and then compare to others like SMH or specific names like Micron, Sandisk (memory) and Alab/COHR/AAOI (networking) to have a rough idea where capital is flowing.

At the moment, capital is flowing to healthcare and financials. So the market is defensive as well as anticipating growth. Those are also names that have gone down a lot so it can be taken as a broadening of breadth and henceforth bullish. This can be taken as the thesis if tech picks up in the next few weeks while the names mentioned above holds or moves up as well.

Otherwise capital is just moving around. On a side note, July has been historically strong and markets tend to stall around here during mid term (like what we are seeing now) and then pick up towards the end of the year.

@Bridge Buzz SG

You can never predict the market. Learn to keep it simple. Listen to price NOT noise or narratives. The trend is your friend. When supports hold, stay. If it goes, trim. Know your levels. Stay safe.

Meta’s power move Part 2

$Meta Platforms(META.US)

Continued from Part 1.

You look for ‘mercenaries’ who offer you what you need and strike deals with them. He did this by buying compute from Nebius, Coreweave and even Google.

It’s like amassing a huge army knowing it carries a huge advantage. Rather than commit to recruiting at large costs, he let these mercenaries shoulder the costs yet enabling him to use them.

Now after securing all these supplies and hoarding them, what is next?

Now think. Is it really smart to flood the market with supply when you will be affected by that as well? What he is doing is ‘asserting control’. When you have a precious commodity which is in demand (Think OPEC for oil), the market is at your behest. You CONTROL supply and henceforth price.

You want to build more compute? Flood the market with supply and suppress the market and buy cheap. You still benefit from selling and yet build infra for the future.

You want to constrict supply? Curtail selling and jack prices up when demand is going up. Your profit margins go up.

The only way to do this is when you have a majority share in that commodity.

Now think again. Is Zuckerberg a novice who ‘overbuys’ compute and now needs to sell excess supply? Or is he positioning as a huge AI compute provider in an upcoming world where AI is everywhere and compute is through the roof?

Look at all the hyperscalers’ reports. They are free. Look at the trend. Do they look like cutting back? The upcoming earnings will reveal more.

But having said all these, the technicals are stretched and caution still prevails.

But narratives are narratives. Look beyond the noise. The price and data sets usually are more indicative.

Thanks for reading. Hope that helps and stay safe!

Meta’s power move - Part 1

If I may chip in (pun intended) on $Meta Platforms(META.US) recent move, this is a shrewd power play by Zuckerberg and what top CEOs do to keep their companies at the top.

He knows AI is going to be big and only get bigger and compute (and especially power) are going to be bottlenecks.

Gathering from his moves, he knows he is in an AI arms race against some of the top minds in the business with deep pockets. You need the best strategies utilising your companies’ best advantages to stay ahead.

He controls a huge audience via social media and has one of the deepest advertising reach as well as mindshare. When he changes his companies name to pivot to AI, it was deliberate.

What he does with his cash trove is equally important. Does he go all out and use all that to build? Or think like a military general? You never commit all your forces. So what do you do?

[To be continued in Part 2]

$Sandisk(SNDK.US)

Sandisk has phenomenal fundamentals sitting on a goldmine within the AI space called memory. However a phenomenal company is not always a great buy. Value within the appropriate time is what makes investors money.

Having said that, Sandisk is looking pretty stretched on technicals. However the selloff has been pretty overdone. I have a feeling she still has some fuel left to make another run at ATH. Sentiment is everything at these levels.

@Bridge Buzz SG

I am cautious into these valuations. However, it looks like the selloff which I believe was partly due to the Bloomberg narrative on Meta’s venture into leasing out non utilised compute capacity has been overdone. There are some bargains out there.

$Applied Optoelectronics(AAOI.US)

I am bullish long term on networking for AI which I believe is crucial and key for AI to scale and the focus has obviously switched from copper to optics with credo taking steps to pivot towards optics itself when copper is its strength. Not to say copper will be obsolete as they are still useful in short distances etc. However with CPO being the way forward, optics are here to stay and any dip is a good opportunity IMHO.

@Bridge Buzz SG

Imagine A buying coffee beans from B and C for itself and then decide to sell the same coffee beans to others when it realised it actually can make money from the beans that it does not need (for now). Suddenly A is worth more than B and C? Haha….the market is irrational.

$ExxonMobil(XOM.US)

Another defensive hedge designed to buffer my portfolio, XOM makes up the energy (specific to oil) component with Gold and Silver as the precious metals select.

Also taking a hit after the peace deal firmed up and oil prices turned south, however, XOM has formed a three wave pullback from its peak and has been hovering above its daily 200MA for a few days.

@Bridge Buzz SG

I believe the markets are still winding down from the middle east peace deal and as such ‘safe havens’ such as precious metals and oil stocks are being sold to buy back risk assets into the end of the quarter.

$SPDR Gold Shares(GLD.US)

As mentioned last week, Gold is my defensive hedge for a high beta tech portfolio in a barbell kind of approach along with other so called hedges such as income yield (I use sukuk instead of bonds for shariah compliance) and conventional energy (I lump traditional oil such as XOM and CVX here which tracks crude oil closer vs GEV and BE which are outright AI energy plays and hence are placed in my tech portfolio).

GLD is now hovering above a confluence of two AVWAPs as well as into a fifth wave of the C of a three wave pullback structure. I don’t know what narrative is coming up but price seems to be telling a story on its own and is indicating a rebound is coming up. Price action will tell if it is a B wave or a fifth wave rally to new highs.

@Bridge Buzz SG

AI continues to lead the way in the markets and obviously the headlines and narratives remains fixated on that. Dips keep being bought so trend remains upwards.

$NVIDIA(NVDA.US)- Doji at support

Last week, I mentioned 190 as critical support and how important it is to note how price reacts there.

Price came to within a whisker of that on Friday and reached a low of 191.22 on Friday. Two important supports cluster there - the daily 200MA and an AVWAP.

Friday’s price action formed a doji just above them and premarket price indicates a green open and a rebound at hand. Price needs to rebound strongly from here and preferably with volume and a mini 5 wave pattern for a sustainable bounce. A green candle and strong closing above Friday’s high of 195.55 would constitute a morning star and give the bulls hope.

@Bridge Buzz SG

The AI cycle is still in its early innings so despite all the clamours for a bubble, I believe it still has a long runway ahead. However, valuations are getting a bit steep so when a big pullback happens, expect good discounts.

$Sandisk(SNDK.US)

Micron and Sandisk are so intertwined that if one sneezes the other catches a cold to put it cliche wise. Even though, it was Micron’s results that caught the eye, Sandisk put in an equally impressive run that was nothing short of breathtaking.

As breathtaking as it was, it did not manage to take out its all time high. And volume was pretty meek in all honesty.

Micron managed to eke out an ATH but its volume was also rather meek for such an awesome result. The resulting candles look like those at the end of a move and memory might be about to take a breather.

@Bridge Buzz SG

No surprises that Apple is doing what it did. Raise prices and pass on the cost to consumers whilst trying to maintain their profit margins.

$Micron Tech(MU.US)

What a result from Micron! We all know memory is critical for AI and how it has always been cyclical prior to this. In fact, some analysts are still stating that in their research. This as well as the progression of AI should put that to bed.

AI is here to stay and memory will only get more scarce unless manufacturers find a way to use less for more. Even with that, the important providers will still be able to control price and innovate with research and development.

@Bridge Buzz SG

Wow what a result by Micron and like clockwork, AI which has taken a pounding the last few days are flying again. Looks like the rally might still have legs.