Technical market analyst | High quality charts | Long Term Investor | Free Market Economist | Masters in Business | Not financial advice
Joined December 2023
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Welcome to Chart Wave Investing
Our passion is combining fundamental analysis with technical charts to give you a complete picture of what you are buying and when the best time may be to do so. We launched our substack, where you'll find:
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$SE
A frustrating one after seeing a nice bounce earlier in the year, but the fundamentals and technical setup has not changed
Still bullish
With all the focus on AI, big tech, Capex, and the cost of capital; there are opportunities in other sectors of the market that we have been focusing on. Below is one of our favorites and a position we have been sizing up on
$LMND: consolidating at the 0.618 fib level and weekly 200WMA. Revenue growth was +79% YoY, gross profit was +76%, customers grew +23%, and first positive EBITDA expected in Q4.
We laid out our short-term price forecast for the market. We showed all the technicals that we were seeing that pointed towards selling. Now with $GOOG and $AMZN missing earnings, we are likely see our forecast play out.
For the last several weeks, we have been talking about the biggest bear case being inflation remaining sticky while earnings ease
With $GOOG and $AMZN missing earnings and the markets giving it a very negative reaction, we seem to be trending towards the bear case we laid out. This is exactly why we said we are cautiously bullish moving forward and our short-term forecast was down.
So what needs to happen? Well $NVDA needs a strong beat and raise. $SPCX gave a tremendous earnings report which bolstered the markets for a short amount of time. So earnings are driving a part of the market. $AAPL earnings do not hold as much weight in terms of influence over the AI trade due to their distance from the capex cycle.
The market sentiment is bearish, and $GOOG and $AMZN missing earnings adds some tangible news for the bears to cling too. Recent FOMC highlighted that inflation remains sticky and the current geopolitical landscape remains fluid.
Yields falling could be seen as some relief, but if it is due to investors selling equities and buying up bonds, we may see some more downside in the equity markets.
Credit markets seem to be stable as credit spreads are remaining relatively tight. Our stance right now is short-term we will see some selling, (we laid out our targets and forecasts in our newsletter) and then from there we will need $NVDA to deliver strong earnings and guidance.
The weekly 200WMA for $GOOG is right around $250.
Keep an eye on that level
Capex is not slowing down and the demand for capital continues
$META offered equity to raise money and now $MSFT is looking at the bond market to raise money
Investment grade corporate bonds remain healthy and credit spreads remain tight
BREAKING: Microsoft, $MSFT, is launching a 10-part high-grade bond offering for the first time since 2017 to help fund its massive AI investments, per Bloomberg.
The bonds will have maturities ranging from 2 to 40 years, with proceeds used for general corporate purposes, including capital expenditures.
AI-related borrowing continues to surge.
A couple things we are noticing
First, in our Sunday Market Pulse, we laid out our case that there will be individual sectors within the AI trade that will suffer a bear market. We are seeing that within the neocloud/data center niche right now. If this persists, where one little part of the AI trade takes the brunt of the selling, then the market can remain resilient. However, earnings are going to have to continue to deliver. $GOOG miss and negative reaction from investors is not a pattern the bulls want to see going into the rest of the hyperscalers
Which brings me to our second point. The market is currently rewarding a clean earnings release with strong guidance and punishing those in which there is a miss or any sort of shown weakness
Paying close attention to your holdings and their balance sheets and fundamentals is going to be extra important as we move forward
This market is being very selective with how they react to earnings. The market seems to be holding missed earnings accountable and is rewarding double beats
Chart Wave Investing retweeted
$IREN just secured $363M in financing backed by GPUs already generating revenue under multi-year customer contracts.
Pretty interesting considering all the concerns around AI lending because IREN can now borrow against existing infrastructure to fund its next buildout without having to issue more shares.
$OSCR
Quietly has been one of the more resilient names in the market
No changes to our long-term price targets
$HOOD earnings recap with technical analysis
$LMND
Price has been consolidating around the 0.5 and 0.618 fib level for several weeks now
Bulls are really relying on earnings to be the catalyst to turn this thing around
$NFLX
As negative as sentiment and price action has been, it looks like the technicals want this thing to turn around
Price has reached the 0.618 fib level where there is a volume POC and bullish divergence on the RSI
$BE
And just like that, price has jumped 15% in two days
$BE
TTM look promising. Dilution is typically a factor in high growth, capital intensive industries, but the fact the net income, revenue, and FCF are overall trending positive, this is the fundamentals that is needed to survive the current narrative and negative sentiment going around the current AI trade
$BE also sits in a unique position where they can provide power in such a short amount of time, which is a massive advantage in the current data center sentiment where delays and approvals are likely to be present in the construction process.
With that said, we are eyes on the $BE chart. Currently, with the rejection of the weekly 50WMA, we are looking at a potential ABC correction that will want to test the weekly 200WMA.
Out strategy is to likely start a small position under $200, and DCA as we make our way down, if that happens. If we hit the 200WMA, or 0.786 and find support, this is where we will size up our position substantially. But current market environment is likely to bring down all names associated with data centers and/or neoclouds. If those names can withstand the negative sentiment, then we can potentially see a strong rally as investors will be betting on the massive demand for compute to ultimately outweighs the short-term negative FCF and financing struggles.
