Transcription
The opportunities to make money from this market are only going to increase as volatility is officially back. We started this AI portfolio a couple of weeks ago when the stock market had a 5% dip to the 48 EMA. I will go over some of the details of this portfolio, show you how I'm investing in this market. But I also want to share an insane data point about the month of July that we could potentially use to extract an opportunity here. And we also have to talk about what the Fed just did because the new Fed had their first FOMC last week and they absolutely shocked the market. And based on what they said, I expect volatility to increase before and after every FOMC now, even more so than under Jerome Powell. And although I'm expecting July to be a pretty decent month, as it is the best month in the stock market historically, I do think that in the late summer up until the election, up until the midterm election, we could see a big drop that will provide an even better opportunity to build something like this and capture even greater returns.
So, let's first go over the major news from the Fed really quick and then I want to talk about the SpaceX IPO as it's down 18% from highs. When I'm going to start investing in this IPO and then I'll share with you some of my favorite stocks to invest in as well as trade setups right now. But as always, if you want to get the most up-to-date information as to what I'm doing with my portfolios, what positions I'm taking, the percentage of my portfolio that those positions are, as well as trade live with me every single morning at market open, sign up to the academy. Link is in the description below. Let's get started.
So, the new Fed just shocked the market. Now, here are the major points of what they said and what they did, but they basically left the rates unchanged. Nobody thought that this was a surprise here. This is exactly what the market expected. However, it was interpreted as a hawkish hold, which is why we saw the S&P 500 and the NASDAQ drop over 1% on FOMC day. Now, what they said is that the inflation is above the Fed's target of 2%. And Kevin Worsh basically iterated that we will correct the mistakes made in inflation control over the past 5 years, saying that Jerome Powell's Fed has not really been effective at bringing the Fed's inflation, bringing inflation back down to the Fed's target of 2%. One of the points that caught the most attention from the market was that he said there's no more forward interest rate guidance or communication. The Fed is not going to communicate what they are likely to do in the coming meetings. So the market and the people that that track this stuff, they're essentially going to be in the dark. This right here is going to create more volatility because the, it's not like the market is not going to try to react to what they think the Fed is going to do. They're just going to have less information to interpret what the Fed is going to do, thereby making wild assumptions all across the board and naturally increasing the volatility around these events. One interesting thing that he said that differs from Jerome Powell drastically is that he said stock market conditions will be a key factor in Fed decision-making. Remember Jerome Powell kept reiterating that him and the Fed, they don't look at the stock market at all. They don't consider the stock market. Kevin War said stock market conditions will be a consideration. He also said 2% inflation target not changing. And there was a lot of disarray among the Fed members. Only one Fed official saw a cut. Nine saw at least one hike with six seeing more than one hike and the other eight saw no change with Kevin Worsh abstaining. So it's an extremely divided Fed. The conclusion, as I said, is that less guidance means more volatility since there are more unknowns and more room for interpretation. Now, obviously things can change, but right now under Kevin Walsh, who's supposed to be the most Trump friendly Fed that that they could have picked, the base case is at least one hike by December with no cuts in sight until next year. Now, if oil continues to drop, as we saw oil go from 110 to $77 a barrel, if it continues to drop and there's actually an agreement signed between Iran and the US, which keeps going back and forth, and it has an effect on inflation, on PPI, on CPI, on PCE, then things could potentially change. But right now, it's not looking good for a cut of interest rates by end of this year.
All right, let's talk about the SpaceX IPO. I wouldn't even bother talking about the Iran US agreement because it's an on again off again situation as of the time of this recording. There were meetings to be held, but apparently the Iranians walked out of those meetings and there was no agreement that was signed. So before I go into some of my favorite stocks and trade setups right now, I do want to talk about the SpaceX IPO and give you my plan on that. So the SpaceX IPO uh is now down 18% from highs. Remember, it opened up at $150, currently trading at $185. So, still a significant premium from where it opened. But remember, we have a bunch of unlock periods. So, for those that don't understand, shares are locked until certain dates. And on those dates, a certain percentage of shares are released into the market. And if consumers don't buy up all of those shares that are released into the market, then that has the potential to suppress prices. And that's why every single major American IPO that was released saw a huge year 1 max draw down with the average being 55% down. So late July, early August, 20% of locked shares unlock on the second trading day following the release of Q2 2026 results. An additional 10% unlocks conditionally if the stock is trading 30% or more above the 135 IPO price. And then you see here all of the dates following where 7% of shares will be unlocked at each of these dates. So a ton of shares are going to be unlocked within the next few months. Now every single IPO, as I said, follows the same playbook. SpaceX will not be an exception. Now, we'll talk about a late summer pre-election drop, not only on SpaceX, but in terms of the market in general. But these lock up dates line up with what I'm expecting, at least for now. And by that time, hopefully, we'll already have a 100 day moving average at least. And my suggestion is to open up these moving averages, the 100 day, 200 day moving averages. And you will likely be able to buy the IPO at or below these moving averages. And depending on what SpaceX does in terms of their earnings calls, I will be investing in SpaceX and dollar cost averaging at these different moving averages or even below depending on the situation there. Obviously, I'll have more for you at that time, but right now I have I see no reason to touch this. So, pay attention to these lock up dates and moving averages when we have enough data to produce actual 50, 100, 200 day moving averages.
All right, so let's talk about June July seasonality. Talk about that July opportunity that I mentioned at the beginning of the video and then I will get into some of my favorite setups right now. So after June 22nd to the end of July, the market is typically bullish. This is the best time for the stock market. So not only corroborated here, you could see the S&P 500 typical return for July is 2.53%. The NASDAQ is 3.83%, even more than what we see in the holiday months. And if you look here at the last 10 July, I believe this is from Heisenberg on on X. But if you look at the last 10 July, you can see that every single July in the last 10 Julies was an up month. Now, it doesn't mean that what follows the July isn't a drop. More on that later. And the data that I wanted to share with you here, you could see that if you bought QQQ at the close of June 22nd every year for the last 15 years, here's the return going forward. 93% positive with an average return or a median return of 4.7%. If this was a sports bet or if this was a casino game, you would bet the house on this. Now, that's not financial advice, but for sure you do have to take it seriously with such good odds. And I will definitely be formulating a trade based on this data and then matching that up with what I see in terms of the technicals. Now during midterm years we typically see a slowdown after July to October and the average drop is 17 to 19% before a postelection rally. So if you look here the summer slump Q2 and Q3 the steepest declines in market bottoms generally materialize during these summer months as uncertainty peaks over impending election shifting policies and changing presidential approval ratings. So, not only do we have the midterms, but we also have the Iran war, which as I said, the agreement hasn't been signed as of the time of this recording, and we also have new Fed policy. So, after July, I will likely be putting on a hedge on QQQ, potentially the semis.
Now, I want to reiterate that I believe that the market is going a lot higher. Even more money is going to be spent on capex. So, if you look here, the capex for big tech, the forecast was $750 billion for 2026. Right now, we're on track to spend $84 billion. Both Evercore and Bank of America placed 2027 capex in excess of a trillion, and it doesn't look like the spending is going to stop anytime soon. Now, I get the question a lot about people asking me, isn't it risky to invest in AI stocks or AI companies? And the answer is yes, of course, because you are investing in a super cycle. And while someone can certainly stick to the traditional companies, the mega caps that are doing the spending, these stocks are likely not going to catch a bid right now because they are the ones doing the spending. So if we take a look at Amazon for instance on Alphascope, shout out to Alphascope, in my opinion, the best fundamental analysis tool in the market. And we take a look at free cash flow. You could see that Amazon's free cash flow for the last quarter was actually negative. Even though it generated a healthy gross profit, its gross profit margin was at an all-time high. Its net income was at an all-time high, and it produced cash from operations. What was expensive was the fact that it spent $44 billion in capex just last quarter, hence making their cash flows actually negative. If you look at Microsoft, similar boat, cash from operations, all-time high, gross profit all-time high. But if you look at their free cash flow, at least it wasn't negative, but it was 15 billion, which is poultry compared to what they generated a few quarters ago. And that's because their capex was at the highest at 31 billion. And if you want access to Alphascope, by the way, only $19 a month, about 17 and change or 16 and change if you buy the full year. I cannot live without this tool for investing. It makes things so much easier. So yes, investing in AI companies obviously they are growing at a large clip and you cannot look at traditional metrics such as PE ratio or even price to sales right like if I look at a coherent which is one of the stocks that I'm invested in it's a photonic stock I cannot look at price to sales I cannot look at the PE ratio here I have to look at things such as what is their backlog what is their revenue growth rate what is their expected earnings in a few years based on things such as forecasts on their earnings calls, on analyst estimates, and also a lot of these stocks have a higher beta, meaning they fluctuate a lot more. But I already gave you pointers in video after video about how to separate a portfolio for the AI buildout. And obviously, how much you allocate towards that is based on your personal situation, your risk tolerance, your age, etc. But you don't have to invest in the AI buildout if you don't have a higher risk tolerance or a pension for risk for a certain percentage of your net worth. But as I said, I bought these just a couple of weeks ago and on Bloom Energy for instance, I'm up 32%. On Intel, I'm up 16%. Coreweave, I'm up almost 13%. Vertive, I'm up almost 13%. And this is just a portfolio that I started publicly for the Discord. So, while there's nothing wrong with investing in the traditional companies, you are not going to squeeze the most out of the AI buildout. And in terms of when to exit, pay attention to earnings and capex. These are going to be your first signals. So the first signal that one of these major hyperscalers says we're cutting back on spending in my opinion that is the time to start exiting the AI buildout. Now I think we're far away from that as I showed you the estimates for next year are over a trillion dollars spending on capex and that money is going to these AI buildout stocks. But the minute that one of these companies says, "We're done spending," that will likely trigger a pretty big sell-off in my opinion, and it's very unlikely. But if one of the major hyperscalers misses earnings, then the narrative that these companies spend so much cash that they could spend whatever they want, that goes out the window because now they're generating less. So those are the two signs that I will be looking at for the hyperscalers. And at that point, in my opinion, it's time to start exiting the AI buildout and letting the dust settle. And as I said, this is a stayhed environment. I already talked about how to hedge, but even in my portfolio here, the small portfolio that I share publicly, you could see that I have a QQQ put for October. And it's for about 5% of the portfolio. But until then, all of this money is going to be spent on photonics, on power, on CPUs. And it's your job to identify the companies that are the beneficiaries of that. Lucky for you, I already compiled a list of AI buildout stocks. The free PDF is in the description below. So, make sure you go there and get the free PDF detailing each of these stocks in each of these AI buildout subcategories because there's a ton. Semis, memory and storage, photonics, data centers, power applications, networking, and then ancillary stuff like space, robotics, drones, rare earths. Now, not each of these stocks is going to moon in my opinion, and some are more risky than others. Like I think a momentum or coherent are less risky than a AAOI and certainly less volatile than an AAOI and stocks like CN have seen a major pullback.
So some of my favorite setups right now if you bought Coreweave from the last video you're up about 23% already but Cororee is about to join the NASDAQ 100. It's going to be in QQQ. But not only do we have a break and retest of this trend line and a 95% runway to get back to all-time highs. Like I said, it's going to be added into the QQQ. It boasts a massive hundred billion backlog. And a hundred billion backlog when your market cap is 64 billion is unreal. 36% of that backlog is expected to materialize within the next 24 months and 75% to convert directly into revenue over the next four years. Major deals with Meta, Anthropic, as well as a deep strategic alliance with Nvidia. 112% up year-over-year on revenues. Another stock that I gave you in the last video was Hood. Hood is one that I'm extremely bullish on as well because Hood is a rule of 40 monster. So, the rule of 40 is basically revenue growth rate plus margins. And you can see here that their growth rate is 15% year-over-year in terms of revenue. And their margins came in at a 50% adjusted EBIT. So, if you add those two numbers, you get a rule of 40 scorecard of 65% which not many businesses can actually generate. They recently also cut 10% of its workforce. So cutting costs while volume accelerates as their equity volumes are up 75% year-over-year. Their platform assets 377 billion up 48% year-over-year. Gross profit margin around 80%. And from a technical perspective, it busted through two major trend lines. We were already up 46% on our Robin Hood position as we got in at $74. But I do think that Robin Hood does have quite a bit left to go. And I do think it can hit all-time highs within the next couple of years. Intel was another stock that I shared with you, told you that I'm looking for a breakout of this bull flag here. It did, as a matter of fact, break out as Intel is looking to expand its foundry business and become the TSMC of CPUs. Now, the TAM or total total addressable market for the foundry business is $360 billion, and Intel only generated $5.4 $4 billion in recent quarterly revenue, but their foundry isn't even fully developed yet. They they don't have they're not at full capacity to be a full fabrication plant that's to come in the next few years. So, they are just getting started with this. Not to mention the US government is invested in Intel as well. But if you take a look at TSMC, their market cap is 2.4 trillion. Now, I'm not saying that Intel is going to be able to match TSMC's capacity immediately, but just to show you what the potential is for Intel if and when they do become a full-fledged foundry. I talked about the power. Power is one of the major constraints for AI. It is one of the major bottlenecks other than memory and CPUs. From a value perspective, I think CEG is the best power company, but it just doesn't have the momentum that a Vertive has, for instance, or a Bloom Energy, which is our best performing AI stock in our portfolio. Both of those we bought at the 48 EMA. And then for a pure play, there's T1 Energy, which is one of Leopold's biggest holdings, still currently trading at around $9. T1 Energy is still a very very young company. So it's in the beginning stages showing what it can do and it's on the verge of scaling. So the G1 Dallas facility, the solar modules, it's a 5 gigawatt facility that is fully operational and they generated positive adjusted profitability 177.65 million versus 95.47 million consensus. And big funds such as Leopold situational awareness, they're banking on T1 energy to solve the grid power constraints currently bottlenecking massive data center clusters. And June was a big month for T1 energy as essentially the acquisition of core power transitioned them from a single threaded solar component manufacturer into a comprehensive energy storage and grid balancing ecosystem. You can read more about this on your own, but the expectation here is that their backlog continues to grow as their capabilities grow. Now, if we do get a pullback, DRAM will be an ETF that I'm definitely looking at here. I did miss the opportunity to buy it at the 21 EMA when we had that drop, even though it was on my radar. I might start dollar cost averaging on a pullback to the nine or the 21 EMAs. And if we do get a a major drop before the midterms, then I may go in heavier. But this is basically the memory ETF that holds a lot of the well-known memory stocks. From a trade perspective, I'm definitely looking at Quantum here. Quantum is not something that I'm personally investing in heavily, but I do follow its trends, and when we do get pullbacks, I do trade them. But you can see here that we broke out of this major downtrend, tested the 48 EMA. And whether you call this an inverse head and shoulders or a rounding bottom, I do think that a trade here on QBTS could be lucrative. And I mentioned Broadcom on this drop to 370, but Broadcom fundamentally and technically is one of the best mega cap stocks in my opinion right now. All-time high revenue, EBA all-time high free cash flow, earnings per share, all-time high cash from operations, gross profit, net income, return on invested capital, an excellent 20% here, price earnings growth of.5, forward PE of 21. And although just like the Nvidia versus AMD back in the day, I do think that Marll, which is a direct competitor to Broadcom, does have more of a runway to double as Broadcom is already a $2 trillion company. And if you take a look at Marll, I think Marll will eventually become a trillion dollar company. It's currently sitting at 271 billion. So from a traditional standpoint, Marll does not have the data set, the fundamental data set that Broadcom does have. It is more expensive than Broadcom is, but from a price momentum standpoint, it definitely has the opportunity to double, if not triple, whereas I think that's going to be a lot harder for a $2 trillion company at the moment. And then in terms of the mega caps, my favorite one out of all of them is definitely Google because Google is not constrained by the same capex that the other companies are dealing with. Plus, Google has its own cloud, which is the fastest growing cloud of the big three of Microsoft, Amazon, and Google. Not only that, but they create their own chips with the Tensor chips. And they have a $462 billion cloud backlog. Record gross profit, record net income, record EBA, record earnings per share, which would have been even higher if they were able to scale and unlock some of that revenue from the backlog. Still positive in terms of free cash flow, although they are spending more money than ever. But at a 15% discount, they were trading 24 forward earnings. and I think they're in a much better position than say a Microsoft or a Meta even though I do think those companies are investable. But right now out of the Mag 7, Google would probably be be my favorite.
So there you have it guys. I do think that we are going to see more volatility from Fed events this year because of the lack of transparency that the Fed just committed to. Just based on data, I am expecting a decent July. But I do think there is a major chance and opportunity for a drop before the midterms after July and I would likely take on a bigger hedge because of that. Obviously, I'm not Nostradamus. I can't predict the future. Trading is just about probabilities and managing your risk. I'm actually hoping that we do see a significant drop because I do want to get in on more of those AI buildout stocks at a better price and I will continue to update the portfolio. If you want to trade live with me every single morning at market open, you want my analysis, you want my thesis on all the stocks that I'm looking at, that I'm investing in, that I'm trading in, if you want to follow the AI portfolio, if you want to follow the hedges, sign up. Link is in the description below. Make sure you get yourself an Alphascope subscription as well. I personally can't live without it. Subscribe to the channel. Hit that notification bell. Stay safe out there, traders. This