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Good morning partner,
Few things to cover this morning:
Yesterday’s Session
After an entire risk-off day, we seem to be headed back into the tech concentration trade, as all the AI-related stocks led the market higher yesterday while the rest of the market (seen in the RSP) only went up by 0.4%.
Essentially, half of the market refused to play along, but that doesn’t really matter in a market that is as concentrated as this one is right now.
It simply means expectations and money is splashing around in one single sector, while other areas of the market are still uncertain about their future finances and growth.
Let’s take a look at the day’s leaders and laggers:
Technology, Cyclicals, Comms.
Remove technology, and you have a pretty flat market hence why the RSP was flattish.
What’s interesting is what actually declined, as these are areas related to the farther end of the AI bullwhip.
These were: Energy, Materials, Healthcare.
Just know that a single Trump comment, like Intel yesterday, can shift the sentiment around technology.
But,
Other areas, the ones in red yesterday, are only exposed to how much revenue AI brings in to justify their massive capex investments.
This means the AI trade may start unwinding as revenue targets are missed, ROI schedules on capex get pushed way back, and the productivity question blurs.
We covered this in depth yesterday inside Offside Premium by the way.
The Iran Front
Nuclear talks become the center for the Iran-US MOU signing. It’s clear by now that Iran doesn’t want to budge on giving up their nuclear power to the US.
Trump specifically said that if Israel decided to attack Iran, he would “back them.”
Doesn’t sound like things are de-escalating as they had been previously advertised.
Keep an eye out on the oil and currency markets, especially as the Dollar is flirting with $101.
News
Trump tells ASML China may have the top chip-making tool now, threatening the company’s moat and market positioning and also boosting our sentiment around the China trade.
Hormuz Traffic fails to recover even during the MOU talks, as shipowners cite safety concerns around crossing the Strait.
Excess Liquidity measures continue to decline into negative territory as yields rise and the dollar pushes past $100. The language from the Fed yesterday won’t ease this trend but rather create headwinds for equities and other assets.
Robinhood hits 50,000 users on its new agentic trading and financial management service offering. This positions the company as the most advanced fintech and brokerage platform in the market, I’m still liking this to go higher.
Movers & ES Levels
Take Two Interactive 📈 Jumped by 5% after announcing GTA VI preorders are open to the public, I had given you this play before the numbers even began floating, liking this stock toward $300 or so.
Enphase Energy 📈 Added 10% to its price after announcing an exclusive commercial solar product in the US, where solar energy is now more dominant than coal.
Accenture 📉 Plunged by 18% as the slowing AI revenue starts to hit those in the bullwhip effect we covered for you, now shown in cybersecurity.
Kroger 📉 Fell by 8.5% even after a somewhat strong earnings result as the company quoted inflationary pressures as a headwind for future business, this is no Target (TGT), but I am liking the price here for a potential watchlist addition.
Now let’s get into some ES levels for today.
What can I say? We remained range bound inside the levels given yesterday of $7,575 and $7,550 most of the day. Deviations were very small and short-lived, so I remain lenient on these levels for today as well.
Bulls want to clear that $7,575 hurdle and see us to $7,600 or above. Ultimately, they can lean on $7,550 for a more probable support and look to $7,500 to a high-probability rebound setup here.
Bears want to see $7,520 give them a clean break toward $7,500 where the bulls will step in to battle it out.
Who wins depends on how the tape is constructed, my guess is we see buyers step in first so expect consolidation, only to then show who’s hand is trapped at $7,500 to get flushed up/down.
Keep in mind equities markets are closed in the US today, but futures will still trade
Portfolio
I have initiated the Offside Portfolio for paid members, but you will receive daily updates on my positions after I decide to buy or sell.
Like yesterday, when I alerted of my Alibaba and Microsoft buying. Later next week (markets are closed today), the auction may be favorable to execute my weekly DCA into one of these names as well.
So keep notifications on, and consider joining us on the other side as I will post my deep dive research on these watchlist names:
Lululemon (LULU)
Uber (UBER)
Pagaya Technologies (PGY)
Cognizant (CTSH)
Nintendo (NTDOY)
Tractor Supply Co. (TSCO)
Here’s my current pitch deck on Uber for starters, get familiar with my thesis before I drop the entire deep dive in Offside Premium. ⬇
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