https://preview.redd.it/ueka5y8l15th1.png?width=1393&format=png&auto=webp&s=08b093edb5a07eb5ed1eb0f55aa41b6b7504d96f

$CCJ has fallen out of the uptrend channel (blue) and has lost both the moving averages as it has filled all these gap moves (yellow boxes). We have a pretty significant downtrend (dotted line) and it would be easy to identify this as consolidation / flag and pole pattern. The reason I’m hesitant to do so is because I want to see how it reacts at earnings, the vertical line on 10/30.

I’d be most interested in seeing the response against that downtrend and the two price levels at $85 and $78. The only way down on a poor report is to to a seven-handle and we can watch for a breakout if we are closer to the downtrend and have the appropriate momentum.

https://preview.redd.it/h2n1btgo15th1.png?width=1410&format=png&auto=webp&s=b1e7a3c16ff34c9cb41345da94317ba8fa0ed9fa

This one becomes increasingly interesting when you juxtapose the $XLE YTD performance against it. The market’s best sector has not brought this name with it - could it catch up? I'm not going to force this one but it is on my radar. There's probably some Canada stuff happening or something else that I'm not paying attention to. Mid-terms might have something to say in all of this as well.

Anyone have any insight?

Hope the week has gone well for you all. It’s been a busy one for me and I apologize for not being able to get the TIC Talks set up. Next week will likely be better.

Sector Refresher

https://preview.redd.it/bof08iw4f4th1.png?width=1272&format=png&auto=webp&s=37fb5232360a29bc74d5f9372a448b0e9d9aa470

I come back to this table every so often just to get an idea of what’s what. I tend to believe in the catch-up trade when it comes to the end of the year and, well, here we are. We can see pretty clearly that Discretionary, Utilities, Communications, Financials, Real Estate, and Staples have significantly underperformed the market. This certainly doesn’t mean the top performers will all come tumbling down - that would be very bad for the health of the overall market - but these pockets of relative underperformance can help us sift through some sand to see if we find something worth looking at further.

Digging into possibilities in those six sectors is something I can do over the next few weeks. I almost always end up spending too much time in Health Care, but something tells me I'll be looking for opportunities in Financials this year to finish things out. The credit conversation feels overdone, but I need to look into that later. I skipped Energy because the supply shock made sense for that being at the top.

Something weird happened in my brain when I saw the table and I went down that rabbithole instead. If Tech is doing so relatively well, how does Big Tech (ie the Mag 7) compare to the sector?

https://preview.redd.it/exd30jg8f4th1.png?width=1415&format=png&auto=webp&s=f4f660bfc83028026543256cc39acde63bbd0e82

So here we have a jumbled mess, but one that I hope I can walk you through. The main chart is $XLK, the entire Tech Sector showing a YTD performance of +38.79%. Using the color key on the left, you can see the Mag 7 names plotted against the Tech Sector. The three names we want to particularly pay attention to in this exercise are $AAPL, $NVDA, and $MSFT since they are the ones in the $XLK itself. $AAPL and $NVDA aren’t lagging too far behind the sector as a whole but $MSFT sure is.

https://preview.redd.it/jr0s4p1cf4th1.png?width=1415&format=png&auto=webp&s=da6dfaba9821f246ef6c380eabc3f4ba172d495c

If we were to take the summer gap (yellow box) out of $MSFT’s YTD chart, the name would be in a pretty clean uptrend channel from April and we would be right in the thick of that channel. That green gap seems to have been bypassed - if there are any further downdrafts, we can expect the name to find rest here, at worst, as a cushion for the fall. The nature of this uptrend channel in juxtaposition with relative performance implies that the name will continue to drift higher to close out the year.

I don’t think I’d be adding it here, but a small little drift down on a bad day would not be a bad thing for you to nibble on if you’re interested in building a position to take advantage of a longer-term thesis related to Azure or SaaS recovery. You won’t see the meteoric gains you would have caught if you bought in July, but I can see ATHs by EOY. If you were to ask me which Big Tech name looks good for the rest of the year, I think I just laid out the case for $MSFT.

I also find it interesting that $AMZN and $GOOGL are right there with it in YTD performance - that’s all the hyperscalers hanging out right there around +8%. You might be able to get away with picking any of the three and you’ll have a Merry Christmas, but $AMZN are $GOOGL are in sectors mired in their own challenges right now. That hyperscaler thought brought me to this:

https://preview.redd.it/kxx82ysjf4th1.png?width=1415&format=png&auto=webp&s=eca00af0a73cdfc5b71c4a19e617a18b653f6bac

A few rows down on market cap within $XLK would be $AVGO. I don’t have an explanation for what is happening here, but you can see how poorly it has performed compared to the sector and other chipmakers. It might be able to whipsaw its way back but I’m not adding to what I already have here. I’ll just wait because, for now, I just don’t get it. I'll find solace in knowing that it is only slightly behind the hyperscalers in general, so perhaps a move in those tides will rise all these ships to end the year.

$LOW

https://preview.redd.it/6ufkfjnmf4th1.png?width=1418&format=png&auto=webp&s=ce7685b0d62f932ae4614e7bf48270be86a261e6

Brutal. Looks like Lowe’s has completed a three-year round trip. In a rate-sensitive environment, you can see why a name like this isn’t performing well. Folks aren’t renovating, they’re not taking loans out to renovate at these rates, and there have been a ton of macroeconomic headwinds from tariffs to weakened consumers. The company has undertaken reforms over the last decade, improving operations and passing savings on to their customers. If you’re willing to stomach things out, the recovery will be led by reports of improved returns on those reforms.

The macroeconomic environment may have masked that ROIC, making expanding margins potentially a catalyst for recovery. I think the short-term moving average has a little bit of a ways to go, so a speedy recovery is not likely. Once we see it round out around the $200 level, the oversold conditions should have ended and that’s when the move back to $200 can get started. That’s when I’d expect it to become rangebound on the upper end at $240. 

The consolidation in that range would indicate the potential for a re-run toward those ATHs, but that only happens when the narrative shifts toward an uptick in renovations because people are happy with their current mortgages. We would see concurrent decreases in home sale prices and home sales to strengthen that narrative. Over time, that helps rates as homebuying demand cools further and further drives the potential for the renovation market. The overall flywheel is driven by things like wage growth and inflation, so it is not as easy as it is to write down. 

I’ve seen this movie before with this name. This was one of the strongest recoveries during the pandemic as people upgraded the homes they were trapped within. The drawdown came hard and is right to where we are today. For all intents and purposes, we have been rangebound since then and I can see an easy trade develop here once it is rangebound again. I just need to know that the knife has finished falling because getting down to $140ish would not surprise me at all. That would represent a true cutting in half from the last highs that served as a triple-top. 

$???

https://preview.redd.it/cs6afg9pf4th1.png?width=1429&format=png&auto=webp&s=9ed4f32cb4f90de50e585dad1c432a845d8c5979

Every so often I chart something fully knowing I won’t make a trade, so skip this section if that’s what you’re hunting. I’m really just looking to see if my reads are intact, so I’ve removed the ticker name, price, volume levels, and RSI in the hopes that this one is not identifiable. It also keeps us away from the financials and the narrative of the thesis, so it’s really just about the chart.

Note the timeline - about 3 years with a very strong uptrend channel identified in blue. Every so often, we see periods of excitement that causes it to gap up, but those gaps also fill down in an orderly fashion (yellow boxes). Using three of the relative tops of downtrends, we can create different downtrend channels to get an idea of whether this is healthy consolidation or problematic.

After slipping the moving averages (short-term in orange and long-term in teal), we also slipped Price Level 1 to fall to Current Price Level. Price Level 2 is not far away and could be a next stop if the steepest downtrend line holds. We are almost in correction territory over the last 6 months but are still within the uptrend channel and have yet to enter oversold conditions. The last time that happened was in late April and price slipped from Price Level 1 to Price Level 2; that is about the same amount that it would drop from the Current Price Level to Price Level 3 at the bottom of the uptrend channel.

That’s basically what I am watching for - slightly more oversold conditions should create a little bit more of a slide, maybe even all the way down to Price Level 4 or Price Level 5 if the momentum is completely lost. I don’t think it is going that far, likely settling down somewhere between Price Level 2 and Price Level 3 within this uptrend channel. That’s when the recovery can be counted on and the trade would be initiated if there was one.

I’ll come back to this in a few weeks when the gap between the moving averages should still be widening and the progress the short-term average made in closing the gap since July will be lost. The theoretical trade would be from somewhere between Price Level 3 and 4 with a recovery back to Price Level 1 and higher into the channel. 

Here is today's discussion prompt, brought to you by the incredibly distracted mind of OGM:

What’s a company you think is quietly getting better?

Not necessarily a company with a soaring stock price or some flashy new product. Maybe management is making small improvements, the business is becoming more efficient, the balance sheet is getting healthier, or they’re quietly building something that hasn't gotten much attention yet.

The Zuck has struck! Shares of $MDB are down bigly as their CEO has decided to leave and join $META to head up their Enterprise Platform. Great hire for $META as they establish themselves as an infrastructure company and a blow to a really solid company that has aligned itself to an important role as a database provider.

TJ talks about MLE - model, leadership, and execution. $MDB had all of those but might have just lost one of those. Or maybe not - a founder and previous CEO sits on the board and another previous CEO was brought back.

My play is watch share price and see if it languishes here. It will pop back at earnings when they say good stuff or recover before then and I’ll miss out. No need to rush but it could be interesting - I’ll add it to a watchlist.

ETA: Can't make this stuff up - $MDB's Investor Day presentation is tomorrow! So this feels a bit more coordinated than I previously thought - take the hit today, recover by end of the week. I'll sit out, I don't want to chase news items at that cadence but will watch with interest nonetheless.

Here is today’s discussion prompt, brought to you by the mildly obsessive mind of OGM:

What’s a stock you keep coming back to even though you haven’t convinced yourself to buy it?

You search the ticker, read the earnings report, hear someone make the bull case, tell yourself to take a closer look.

And then you don’t buy it - why not?

Here is today’s discussion prompt, brought to you by the discerning mind of OGM:

What’s a company you think is an excellent business but a bad investment at today’s price?

It can be a company you love, a company you already own, or one you would happily buy at the right price.
What’s keeping you from buying it - or adding more- today?

Here is today’s discussion prompt, brought to you by the curious mind of OGM:

What’s a company you think has unusually strong pricing power?

Some companies can raise prices and barely lose a customer. Others raise prices and immediately start watching customers disappear.

What’s a company where you think the customer has very little choice but to keep paying? And what gives the company that power?

Here is today's discussion prompt, brought to you by the wayward thoughts of OGM:

Would you rather own a company growing sales at 25% with mediocre margins or one growing 10% with fantastic margins?

The difference is that one company doesn't keep as much of its revenue as profit as the other one. There is a tradeoff, usually, and here are some examples of each to help you frame your answer:

Fast growth / lower margins: $AMZN, $UBER, $RDDT

Slower growth / higher margins: $V, $VRSK, $WM

In fairness to most portfolios, there is likely a mix of both. At least, I think there should be!

Here is today's discussion prompt, brought to you by the appreciative mind of OGM:

What’s one company where you think the competitive advantage is genuinely difficult to replicate?

Some people call it a moat and others call them a monopoly. Could be a brand, network effect, distribution, switching costs, scale, intellectual property, whatever. Tell us what makes that company so great and why no other company will come and take their lunch.

Here is today's discussion prompt, brought to you by the wandering consciousness of OGM:

What was your first stock purchase and why?

We always remember our first. What did you like about it enough to take that jump into this world of investing?

Here is today's discussion prompt, brought to you by the unsupervised brain of OGM:

What's a stock you used to really like but don't feel the same way about anymore?

Maybe the business changed or management left or the valuation just got stupid. Or maybe you learned something you didn't know along the way.

Where has your mind been changed?

If you’ve been around here, you know I’ve shared this trade before. My central thesis with the airlines is simple - they are trading vehicles. They have outsized moves tied to external factors that we can keep track of. The easiest one? Oil.

https://preview.redd.it/qzpz3ps88zmh1.png?width=1340&format=png&auto=webp&s=ff8d1bff339e8ea25d26fbe2b04ab892ff7ee08b

It’s a no-doy kind of thing. As oil prices rise, investors rightfully question profit margins for the carriers as a primary input cost has increased. The impact on shares when oil prices (gold line) rise is so obvious in the chart above and we are entering another timeframe in which the gap has widened. 

It isn’t difficult to point to the end of February to see the bifurcation taking place with the start of the conflict in Iran. As the conflict in Iran seemingly calmed down in June, we see the inverse relationship between $DAL and oil prices playing out again. The ceasefire agreement was signed on June 17th, a 60-day promise to halt military operations while negotiating peace and a nuclear arms deal. But as the trust of that MOU dwindled, oil started to go up and $DAL started to go down. As tensions rose again this weekend, we can see the same thing is happening again.

https://preview.redd.it/t3sbg78a8zmh1.png?width=1340&format=png&auto=webp&s=61f474830f52993468fc937536b8f25eca26eed6

When we zoom out, we can see that $DAL has been in a steady uptrend channel (blue) since the Liberation Day reset in April 2025. But this move in oil has pushed it out of the channel and all the way down to the long-term moving average (teal line) and created a ~14% gap with the short-term moving average (orange line) that is still firmly in the uptrend channel despite heading into oversold territory with the fear related to oil prices.

The set up for the trade over the next few days is to watch and see what the narrative is with the escalation of conflict in conjunction with the technical recovery off of the long-term SMA. If it doesn’t hold, we can expect a further drop to at least $75; the more likely scenario is that it will start climbing back toward $80 and entering the uptrend channel over time and drifting toward the short-term SMA. 

Critical to all of this is whether oil ticks up toward $100 again. That’s something I want to wait for as well - if we see oil stabilizing but $DAL is still falling, I’d be comfortably scaling in and getting more aggressive when oil reverses lower and $DAL confirms the move with a bounce. 

I’m not willing or able to time this outright, so I’ll take a look at the options chain tomorrow to juxtapose how far I can go out for expiration and the premium I’ll be paying to get a breakeven between the moving averages, hopefully between $80 and $85. I’ll compare that premium with what I’m willing to deploy into this right now and if the easier move is just to snag a few shares and spin them out at the end of the year, that’s not a bad thing to consider either. The chart will tell us if we can move on it because we have the entirety of that uptrend channel to fill and live within.

Here is today's discussion prompt, brought to you by the wayward thoughts of OGM:

What's the most boring company you own or follow that you actually think is a great business?

Try to share the stocks that most folks wouldn't be interested in hearing more about at the cocktail party because they just aren't that sexy.

Last week, $META agreed to an $18 billion settlement with dozens of US states in order to resolve a trial that claimed Facebook and Instagram intentionally designed addictive features that harmed the mental health of children. For a company that rarely settles in court, I found this fascinating not necessarily because of the amount, but because of the underlying message.

Why would their leadership suddenly decide to capitulate after years of pugnacious behavior? 

Tinfoil time, but I think it is because they are willing to take a hit to their ad business if it means they can land a hit on YouTube and TikTok as well. This is a company that has evolved from being a digital yearbook to a communications platform to an advertisement business. And this settlement, along with the call to action with the other social media giants, effectively will reduce TAM in ads.

You know what it doesn’t impact, though?

AI. This settlement doesn’t impact the AI vision Zuck has stumbled upon for the next evolution of this company. This has been happening for a while, but I think the settlement signals that we can turn the page and see that the advertisement cash cow might be the mature part of the business that sustains them while AI is what creates growth. 

$META has accumulated one of the world's greatest cash-generating machines, and Zuck increasingly appears willing to spend that cash machine's output to build the next cash machine. They are eating their past to propel their future. 

First it was the acquisition of all the hardware needed to build AI infrastructure. Then it was the AI hiring spree, bringing in people like Matt Deitke, Andrew Tulloch, and Ruoming Pang. The fact that I can name the names of software engineers as if they are athletes because of the size of their compensation packages is notable, isn’t it? Then it was the recent bit about renting AI compute out.

It has been a clunky transition but it is a clear and obvious transition nonetheless. The reason this is important to me is that the fundamentals for an AI company are really different than a social media platform that relies on advertising. It’s why $SPCX can talk about orbital compute and Grok and people understand a potential growth story alongside rockets and Starlink.

https://preview.redd.it/tjfprjovxrmh1.png?width=2288&format=png&auto=webp&s=170137218c58552c579b6428e5b2c47eca8dddc1

We can see the very clear downtrend the name has been in since last summer (dotted line). There has been a pretty steady stream of headwinds - the lawsuit, capex concerns, culture war stuff - but we can see that it is sort of tightening up here in this range after an upward trend channel that has been established for over three years broke down. The Death Cross happened in November when the short-term moving average (orange line) dove beneath the long-term (teal line); the gap between the two has remained consistent since March and currently is 4%ish. 

We seem to be finding rest right now here in the low $570s but I want to keep an eye on what happens when it butts up against the downtrend line. A true breakout back toward $650 requires a push through the short-term average, long-term average, and the downtrend line, so we can monitor accordingly because we want to see if it has turned momentum around, generally, to start moving toward ATHs again. I can’t say that’s quite happening right now but I know what has to happen in order for me to comfortably do so and buy accordingly.

We’ll see.

Here is today's discussion prompt, brought to you by the delirious mind of OGM:

Share a stock story that you're interested in following this week.

It could be something you already own, something you're thinking about buying, or just a company or industry you're curious about.

Let's see how the story develops.

Some big names reporting, even more than the ones in the title. Let's see if we can keep discussion here overnight and see how things go tomorrow. Here we go!

$NVDA

• Earnings per share: $2.22 adjusted vs. $2.10 estimated
• Revenue: $96.22 billion vs. $92.17 billion estimated, up 106% YoY
• Guidance: $108 billion vs. $104 billion estimated

$CRWD

• Earnings per share: $0.31 adjusted vs. $0.29 estimated
• Revenue: $1.47 billion vs. $1.44 billion estimated, up 26% YoY
• Guidance: $5.99 billion vs. $5.93 billion estimated

$CRM

• Earnings per share: $5.90 adjusted vs. $3.27 estimated ($3.37 when investment gains are removed)
• Revenue: $11.35 billion vs. $11.32 billion estimated, up 10.8% YoY
• Guidance: $46.1 billion vs. $45.8 billion estimated

$P

• Earnings per share: $0.70 adjusted vs. $0.58 estimated
• Revenue: $1.19 billion vs. $1.09 billion estimated, up 38% YoY
• Guidance: $5.03 billion vs. $4.51 billion estimated

$OKTA

• Earnings per share: $1.05 adjusted vs. $0.96 estimated
• Revenue: $805 million vs. $792 million estimated, up 11% YoY
• Guidance: $813 million vs. $808 million estimated

https://preview.redd.it/fx4ohhvtqrlh1.png?width=1407&format=png&auto=webp&s=1b76b023617146d6a466a709cce50f80f223f700

Neat little thing I’m seeing here with $NU. The long-term moving average (teal line) is about to take a nosedive over the next month; it is currently calculated with prices up to that January date and we can see a majority of the share price has been under that teal line since the last days of February. As that data gets washed out, the weight of lower price action (like in May and June) increases, causing the teal line to come down. Simultaneously, the shorter-term moving average (orange line) is about to pull up; it is being calculated up to that June date and we can see that there are a handful of days the stock has been under the line. The weight of the August rise increases, yanking that orange up.

The combination of those two moves gives us a Golden Cross, likely to occur here in the low $14 range. I’ve shared that what that tends to do is bring about additional buying, a spike driven by trades chasing this indication that short-term momentum is stronger than long-term performance. It is an inexact science but I tend to say that people use it because it works?

Anyway, that surge in buying is what we’re seeking. I looked for the confluence of volume that was above-or-near the average (dashed line along the volume chart) and when RSI was over 60 (dashed line along the RSI chart). Those are the circled items on the price chart - given I’m eyeballing the “at-or-near the average volume” part, please show some grace. 

Note the price action’s outsized nature on those dates. Nothing unexpected, this is sort of a “no duh” thing to point out. Also note the length of most of those time-frames, usually lasting three-to-five days. We are currently just about in the early stage of that time-frame right now, the last circle. Juxtaposing that against the new uptrend channel (grey) established off of the 52WL’s in June, I reckon we may see a push through, if not to the top of, this channel. 

That’s exactly what it did in the previous uptrend channel (blue). We can see how it pushed through or up to the top of that blue channel in those circles, the only difference between the two of them being the overbought nature of the stock at the time. When it was truly overbought (September), it got out of the channel; when it reached there but turned around, it just got to the top of it (January). 

Snap back to where we are today. RSI has a way to go before it can be considered oversold, sitting right above 60 today. Given that we are sort of in the middle of this channel, unlike in January when we were at the bottom when the confluence occurred, it would seem that this time around it is likely we will break out of this channel similar to what happened in September.

I prefer to chart at the end of the day when I have the full volume data before me because a lot of this is a moot point if we don’t pick up volume today. I’ll call that an anomaly for now as it seems to be a sleepy day waiting in anticipation for $NVDA. And $CRM. And $CRWD. 

Yea, I can give volume a pass today but we’ll see.

The internal market rotations will continue in this huge week of happenings: Bessent’s moves, $NVDA earnings, and Warsh in Jackson Hole. When there is so much stuff happening at that macro level, the volatility overall will be hard to navigate. The easier path is to maintain a list of interests and see if opportunities come, especially in this calm before the storm.

Bessent’s moves sent a clear signal that the market matters to the Administration. From now until the elections, I feel we will see the market propped up to continue humming along. There will be volatility here and there but for every -5% day, there will be three +2% days. There are people that will be making money off of the volatility because they are positioned to do so. 

I’m not one of those people and that’s ok. I will stay in my lane and be guarded accordingly.

Warsh will be more of a wild card but he has proven to be able to obfuscate. Although his commentary on the overall picture of the economy will matter, I can guess that he isn’t going to give much meat to chew on while also ensuring his comments are rosy enough to keep the narrative of a decent economy also humming along.

The market doesn't necessarily need the underlying economy to feel good to consumers if the headlines remain favorable over the long haul. These wildcards are what I’m thinking about as we look to the end of the year and position accordingly. I am feeling a sense of a political and cultural slogfight on our hands and those things can end up in a ton of uncertainty. The market may not do as well in the run-up to the election if uncertainty is in the cards, so I am thinking about getting very “safe” as we approach mid-October. That’s usually when a majority of the races are close enough to call and we can assess uncertainty risk at that time.

$NVDA

But the other big dog is the driver of everything this market has stood on for the last few years: $NVDA. Four times a year, we are all forced to listen to what this company has to say because they give us a clue of the growth narrative that is keeping this economy afloat.

All the spending we have been hearing about lately should mean we hear a raise in the guide here. I want to listen to how Huang handles Rubin Ultra and how he plans to extend conversations of the half-trillion dollar financing announcement he spearheaded. This company is so large that I’m not sure what narratives can potentially make a meaningful move. When people throw price targets out there, I immediately calculate the market cap; at $247, $NVDA would be a $6-trillion company.

The Dutch East India Company, which revolutionized corporate structure and global capitalism, peaked at ~$8-trillion (inflation-adjusted). So $NVDA can, for all intents and purposes, get to $6-trillion, it is not outlandish. It’s only a 15% move to the upside and obviously not something I would consider any time soon, but the pull toward that number, should growth numbers and demand prove to continue relevant, is not unfathomable.

https://preview.redd.it/3qhg81gtallh1.png?width=2290&format=png&auto=webp&s=aaed2997442fe4a31b23485709bb52c8a6fbbad2

That’s why I feel this chart is so important. $NVDA has traded in this range between $180 and $230 for a year. There was a buying spike in May and again in August - the May move was completely given back and the August move would do so if we kissed the long-term moving average (teal line). That would mean the name has broken through the short-term moving average (orange line) and a $206ish support level. 

Given my expectations for a raise in guidance, I don’t think all of that is going to happen. We are well within a three-year uptrend channel (blue) and seem to have found rest in orbit around the short-term moving average. We might see a quick dip to $200, but I feel like that’s a line in the sand at this point. So the last three months seem to be consolidation.

How boring, but we’ll probably just stay in that channel. That’s critical, though, because of the implication for everything else that hinges in this market.

$HOOD

The recent crypto-based rise is another step in the name recovering from being cut in more-than-half since October. We can see a new uptrend channel (grey) having developed since the bottom in late March / early April. The short-term SMA (orange line) has a strong pull on this name, as we can see it sort of serve as center of gravity for this thing to swing around.

https://preview.redd.it/agxh19etbllh1.png?width=2290&format=png&auto=webp&s=54cc6077242b8728925c38a106faf31e9c86b77c

So that’s what I am watching for - how far (hopefully above) the 50-day is this going to go? Because the farther it gets, the harder it will snap back. The orange line is going to be moving up very quickly, so the gap against the current price won’t look as bad next week. I’m balancing that with the newly grey channel and the downward trend dotted lines that connect the high to a series of rising relative lower-highs (purple, gold, black). Each of those dotted lines represents a snapshot and changes over time that document what looks to be a bearish-to-bullish reversal. The lower-highs aren’t going to be lower for much longer.

Through September and most of October, the pink downtrend could end up being a similar barrier, but we are projecting a lot more at this point because it has not met another point in price action since November. I am watching the interaction between the upward trend channel, the pink downward trend line, and the $113 pivot level. If it share price leaves the channel during the time period of that green circle, I’m likely to trim. We can already see the RSI is approaching 70, where the name almost routinely comes back from and dips afterward. If it can stay in the channel, the pink dotted line is likely to change when we find a spot for it to land on. Staying in the channel also prevents the RSI from exploding into overbought territory too soon.

The other thing I’m thinking about is the CLARITY Act vote currently set for 9/15. If the Senate is able to pass it and then reconcile with the House version, the President will be signing green candles for crypto names shortly thereafter. My calls don’t expire until February, so I want to keep an eye on all of these factors to determine when it will be time to let some go, sooner rather than later. It helps that this vote also just-so-happens to be during my green circle. I hope I can catch some exit liquidity here before the “sell the news” and I like that the rise has continued slower than it was previously running.

$APP

The number of questions I get about this one is amazing. We can see that the name has become oversold (RSI at 30 this month) to correspond with this precipitous post-earnings dropoff. It is tempting here, seemingly having found a bottom right around $300. Of course it can go down further with more bad news or a market event, but the selling spike seems to have ended and there seems to be buyers here.

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The mile-wide gap is what is interesting to me. We could theoretically take a flyer on it recovering to the upper $300s, but we won’t know when that move has started. That’s where we can keep an eye on volume spikes and maybe an RSI on the way to 40 to see if that recovery is on the way. 

The revenue miss from the earnings call was problematic but the reason they gave was even moreso. The indication from management was that their model didn’t improve to the degree that it normally does in this past quarter. A large part of this company’s growth has been their continual model improvement and this is basically the first quarter in three years where the model didn’t improve materially enough to have an impact on the quarterly results. Is this the exception or is their growth engine - an improving model - slowing down? A new model came out right after their quarter ended, so will that one show the improvement we are used to? 

This clearly matters to the market. Their report indicated $1.9-billion in revenue, a 53% YoY growth. Net income and EBITDA are also up over 50% and FCF hit more than $850-million. There is no doubt that this is a great business. But if there is a vulnerability in their growth, you can see what happens to the share price. I hate to say that we need to wait, but that’s what I plan to do. This could all come to a quick end in the next call when they share how their model has once again improved materially and made the business better, just like it used to do in the good ol’ days.

Great, I can probably catch it on the rise back up given we have a clue how far it can go, so it’s on my watchlist because it is such an obvious recovery story back toward $390. I just don’t want to put capital into a recovery before the evidence of it happening has arrived. When the buying improves, we’ll see it in volume, RSI, and share price improvement. That might be enough to see if we can scalp value, but what I’m sort of hoping for is that it languishes down here for a while and I can pick up some before their next opportunity to share how their model is improving things.

That could be in the next call or it could be on their Product Blog, where they announce their new offerings and there hasn’t been anything posted in 6 months. That’s indicative of the problem identified on the call - there haven’t been improvements like they have previously implemented. But could improvements be announced on this blog or elsewhere before the next call where they give the real numbers?

That’s an arbitrage gap we may uncover with appropriate clues that just haven’t come yet. We’ll see - we know what to be on the lookout for.

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I wrote about $ALNT a few months back and it has had a nice pop after the earnings call. We are roughly 25% above that short-term moving average (orange line) and 50% above the long-term moving average (teal line). In-so-doing we have smashed out of this long-term uptrend channel. This is potentially in overvalued territory and I’m weary of this purple gap putting some downside pressure to fill a gap. The yellow gap did as much in the opposite direction, but there may be some gravitational pullback to $100. Here’s what I mean:

• It is likely to return to this previous high as it continues to rise  
• It can fill this gap (purple), which is behavior that it has previously exhibited
• It can regress toward the short-term moving average like it has a few times throughout the summer

The reality is that this name became harder and harder for me to keep track of. There is very little coverage or information for me to consume and I became increasingly reliant on dwindling resources. It is being priced to perfection and I am struggling to verify my thesis and justify a P/E in the 60s. That is a lot of turns of EPS improvement that is needed for this little tiny company. That’s ok, there are other options out there that are more likely to compound.

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Here is one of those options as $HOOD exhibits some fun flagpole and pennant stuff and we could be in our new flagpole (grey uptrend channels). I’m sure the pole will thin out over time as things tighten up, but the quarter wasn’t really bad enough to warrant the drawdown and that is likely why it has recovered accordingly. If I am seeing this correctly, the short-term moving average (orange line) should have an upward rise in about two weeks, leaving the late June prices and July rise to be much more impactful on the calculation.

I guess I am betting that it will pull the share price up with it into this new flagpole. I picked up some $50 calls that expire in January with breakevens in this gap between the current price and the short-term SMA. I’m highly unlikely to be patient enough to wait that entire time, so we’ll see how things shake out. I don’t have long-term conviction here but see it as a trade given the quarter and the catalyst of event contracts during the upcoming football and European soccer seasons.

https://preview.redd.it/u5kbwq979mih1.png?width=1444&format=png&auto=webp&s=fa5bbf2d80f29ce036393f0483b028aba17fb03d

This is what price discovery looks like and I feel comfortable adding a little bit here as a placeholder while we figure out this volatility. My eye is seeing a series of lower highs converging with what could be a series of rising lows that are holding. As markets have unwound leverage, I don’t mind this entry point. I wanted to be a part of this bottleneck and chose to go here instead of $MU because the P/E is better and I wouldn’t mind a little bit more international exposure.

All in all, these are just a little easier to follow than Allient.  

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This has been on my radar for a bit during this downtrend and I took a quick position today before $CEG reports tomorrow morning. I think the correction has been overdone, generally, but wanted to take a placeholder position in $VST to add to the position I already have in $CEG. We can see that it has fallen basically to 52WLs around here at $140. 

But the moving averages are telling an interesting story. The long-term line (teal) will continue to decline as it digests the downtrend that started in October. The more-recent rangebound choppiness between $140 and $160 dollars allows the short-term moving average to find rest around where it is now. The short-term moving average will be above the long-term moving average accordingly, so we have the makings of a Golden Cross by virtue of the long-term momentum being so poor.

https://preview.redd.it/psmigp129mhh1.png?width=1926&format=png&auto=webp&s=4e7370d136cf7ed14d8cc98650d7046fabf1620d

When we look at the competition that has already reported, we can see just how far behind $VST is. $NEE and $AEP have performed leaps and bounds better this year with $SO splitting the difference. $NRG and $VST are way down, having corrected during the timespan. So a general catch-up trade is worth noting. 

https://preview.redd.it/1zyvnin59mhh1.png?width=1926&format=png&auto=webp&s=3126d25d726d7de7500d6381eab552485fed4e33

Let’s compare with $CEG as well (purple line), also experiencing corrective behavior. But we also see a relative underperformance of $VST combined with the added wrinkle that $CEG is performing in line with $VST’s moving averages. The bet, then, is that whatever happens to $CEG after earnings should allow for some sort of reaction to $VST in the same direction. There may be space for greater upside given the underperformance and there may be less space for downside given how far $VST has come down.

A reversion to the moving averages, supported by that correlation to $CEG, seems like it could be in order when combined with the general nature of the catch-up trade. The numbers have to be good. $NEE, $AEP, and $SO all beat on EPS while $NRG missed and in the last quarter, $VST was a double-beat and affirming guidance. If they do that again, this could be the bottom. We'll see.