Transcription
If you're on social media all day, or you're looking at an intraday chart all day, you would think that the world was ending, right? Is this the end? Is this where the bubble finally bursts? Oh my god, things are so crazy.
But then, if you just take a look at the S&P 500 chart, you'll see that, wait a minute, we were only down a half percent today. The day before, a quarter of a percent. The day before, a half a percent. We haven't even had a minus 1% day. The last minus 1% day in the S&P 500 was actually August 1st. So, this begs the question, is this the beginning of the bubble burst? Why are people freaking out like this?
Well, it's because it's obvious that things are overvalued by traditional metrics. So, in this video, we're going to talk about the state of the market currently, because a lot of people, for some reason, are panicking. Is this finally the popping of the bubble, or a nothing burger? And don't worry, I'm not going to keep you tied up. It, in my opinion, is just seasonality. This is not the popping of the bubble.
However, there is something that I do want to talk about in this video as well, before I give you the top five stocks to buy right now, or the top five setups that I'm looking at, because there are a lot of opportunities in my opinion here. Just like when I told you last week that Marll was the most, or one of the most underrated chip plays in my opinion. Bought leaps on Marll, those leaps are now up 37%, and since last week, Marll is up 12%. So, there are definitely opportunities in the market. However, as I said before, you have to be more selective.
So, before I get into that, there is a concern about the, what I'm calling the AI Ponzi scheme. It is really just a form of circular profits, and it is something that we definitely have to talk about, because this is something that we've actually seen in bubbles before. In the dot-com bubble, we saw this a lot, where bigger companies were just throwing money at startups, and then startups would then use that money and buy stuff from the big companies. We are seeing that. That is not a myth, and it is something that we have to discuss. So, like I said, I'm not going to hold you hostage. Let's get right into it.
State of the market currently. To me, this right here just looks like a typical pullback. There is nothing structurally here that has changed. Obviously, we did not get a pullback in August, and it looks like all of September we did not get a pullback. But the last two weeks of September are historically weak, leading into October, and this is obviously post-FOMC, post-rate cut, which was the most priced-in rate cut, at least in, in terms of modern times. So, this right here is very normal in my opinion.
Now, the good news is that when May, June, July, August, and September have been green, we have never had a red November. We have had a red October though. Now, here's why I don't think this is the bursting of the bubble. Like I said, people are still too scared. You could see that just a couple of pullback days, and people are already freaking out. We are not at irrational exuberance yet, despite being at high valuations.
I posted this on X. Follow me on X and Instagram for free trading and finance content. But I said, "We are definitely in a stock market bubble. We are not at the peak euphoria yet." How easy it is to forget what peak euphoria looks like. So, if you remember in 2021, millions of dollars were spent on JPEGs of monkeys. Sounds crazy to think of now, but you guys know that was true. Millions of people were sitting at home, and they became day traders. We even saw TikTok after TikTok telling us how easy trading was. Millions of people thought GameStop and AMC were generational companies.
Now, I'm old enough to remember the year 2000, because I am now in my mid-40s. And in the year 2000, I remember people were quitting their jobs because they decided to day trade. E*TRADE had just come out with their $9.99 a trade, which at the time was insane. I know in today's market where we have free trading on Public, on Robinhood, on Webull, $9.99 a trade was crazy. Before that, you used to have to call up your broker at the bank, and they would charge you hundreds of dollars per trade. And it was, it coincided with how much stock you were buying, right? But E*TRADE came out and said, "No matter how many trades, $9.99. No matter how many shares, $9.99 a trade." And I remember people quit their jobs in order to sit home and day trade. And all they were doing were buying internet stocks, anything with the .com name. News media even encouraged investment in risky stocks. And here's what was crazy. There were even articles that suggested rethinking the idea of profits, meaning, do we even have to care about company profits anymore? Maybe this is a new world where earnings and profits don't matter. That is what peak euphoria looks like. And although we are at a crazy forward PE for the S&P 500, this is not what peak euphoria looks like. If you even recall in the dot-com bubble, we had years of these crazy forward PEs, right? Not a short time.
But there's definitely something under the hood that is concerning, guys. We are seeing this infinite money glitch, the circular profit system where Oracle says that they're going to commit money to OpenAI, right? OpenAI uses that money to pay Oracle. Oracle runs on Nvidia GPUs. So, they then pay Nvidia and buy all these GPUs from Nvidia. And then Nvidia says that they're investing in OpenAI. I know that it's, this is a bit reductive, but it is, you know, OpenAI isn't really making money right now. Obviously, Nvidia is making money, Oracle is making money. But it seems like these large companies are investing in these AI startups. And these AI startups then have to use that money to uh buy equipment and stuff from companies like Nvidia. And we saw a very similar thing in the dot-com bubble. Company A would invest in Company B. Company B then would commit to purchasing Company A's products. Both of these companies have a perceived growth, but they are really just uh changing hands.
Now, I'm not saying that, you know, OpenAI is a, you know, akin to some startup that isn't going to make money. But we are definitely at the stage where there are companies, there's Perplexity, there's OpenAI. These are not private companies, and they are being invested in by large companies, and that money is then being used to buy products and services from said large companies. But I personally don't think it's to the same extent that we saw in the dot-com bubble, but it is definitely bubble-like territory, that's for sure.
All right, so with that said, what are the top five stocks to buy now, or the top opportunities in the market that I'm looking at? Now, this is going to be a mix of investing as well as trading opportunities.
Now, firstly, let's talk about Amazon. Amazon is one of the stocks that is actually down year to date. It is, it is not up year to date, and right now you can get Amazon at a 10% from all-time high discount. But if we take a look at my analysis on Amazon from the Traveling Trader Academy, by the way, sign up if you want access to all of my analysis, and I go live every single morning at market open. We are dealing with a company that is cheaper than it normally is historically. Forward PE of 28.4. Its 10-year average is 40, and the S&P 500 growth peer median is 32. So, it is trading even below the median of S&P growth companies. Its EV to EBITDA is currently 16.7, below Microsoft's 25 and below Amazon's 5-year average of 20. Now, EBITDA growth just for AWS is projected to be 25% in 2025. Every one of its reported sectors are growing. You can see here, growth in North America is 10%, international 9%. AWS is growing at almost 20%. Operating cash flows growing from 46.8 in 2021 to 121.1 billion in 2024.
Now, there was some bad news regarding FTC litigation against uh some Prime practices, and also the H1 visa, H1B visa hysteria, which, you know, they're all going to be replaced by robots. Anyway, all kidding aside, I think Amazon is a pretty good value here for the long term. Now, there is also potentially a swing trade here on Amazon, depending on what happens to the rest of the market. But I do think Amazon will eventually get back to all-time highs by end of the year.
Now, one thing you can do here is sell the 200 puts on Amazon, for instance, expiring December. And this is if you wanted to own 100 shares. You could sell the 200 puts for $6.10. Meaning, if you are assigned 100 shares of Amazon, you would actually buy them at $193.90. That is insane, right? Right now, Amazon's trading, as at the time of this recording, at 218. So, if you were assigned, you would be assigned Amazon at 11% lower than where it trades currently. And from all-time high, we're talking about a 20% discount.
I would talk about Tesla, but you guys are sick of me talking about this over months. I gave you guys Tesla in the 200s. I told you guys if it breaks out of this pennant, watch out for it to get to 420. It is now trading at 424. I mean, what, you know, what is there left? I think it's, it's pretty obvious that Tesla is going to get to all-time highs by the end of the year.
Now, Marll is one that I sent in the Traveling Trader Academy last week, and I still think Marll is one of the best opportunities in the semiconductor industry here. Now, I have leaps on Marll. So, this is a long-term investment. This is not a swing trade in my opinion. But Marll is trading at a cheaper than average 22 PE. When I saw this, I couldn't believe it. Projected growth revenue is remarkable, as analysts expect Marll technology to rise in revenue by almost 20%. An improvement versus 20.9% annual growth for the past 5 years. Now, if Marll can improve its operating margins, and they are improving, going from deep in the negative uh to about break even, but if they can improve this, then I think there's a lot of room for growth in Marll. And you can see their their quarterly revenue just rising steadily here. And just today, a bunch of its executives, including the CEO, made some pretty decent-sized purchases on their own stock.
Holy. Just took a look at ASML. This. I've been giving you guys this one in the 600s. No excuse. Currently trading at 950. We won't even go over that one.
All right. If we take a look at Ethereum here, and you might be asking yourself, why are you talking about a crypto? Well, because there are some stocks that are associated with Ethereum. And right here, you can see Ethereum having major resistance at 4,000. This is multi-year resistance at 4,000. Broke above it, now retesting it as support. If Ethereum can hold this level here and not drop below 3,300, then I think there is an opportunity in BMR, Bitmine Immersion Technologies. This is Tom Lee's Ethereum fund. Right now, we are in this weekly gap here, this weekly imbalance. And you could see that it is making higher highs and higher lows. And if Ethereum can find support there and can rally from there, I think this stock, currently priced at 49, can get to 72.
Now, for me, this is not a long-term hold. Meaning, I'm not going to buy BMR, large amounts of it, and be comfortable. You know, if you ask me, would you buy BMR and not look at it for 10 or 15 years? Probably not. But not for me, right? If you feel that, that's perfectly fine. But I do think that there can be a lucrative swing trade here if ETH can find support. And I think that it can potentially get to that 72 level again.
Next up is the Chinese e-commerce company. This is Jing-Dong. I'm not kidding. That's what JD stands for, Jingdong. So, Jingdong. We absolutely killed this one on short-term calls a few days ago, and I also sent out an alert for a long-term buy. Now, I'm not a huge buyer of Chinese stocks. I don't believe in investing in. What the hell? I don't believe in investing in a landscape where the government has total control over the corporations. Right? We saw what happened to Alibaba a few years ago with Jack Ma when he spoke out against the Chinese banks. His company was basically sliced up into pieces, and he was disappeared for a year.
But I do think there is an interesting opportunity in China. I do think that China has a lot of money on the sidelines where investors are just now starting to um get attracted to the market, right? So, you could see what happened with Alibaba here. Alibaba looking like a huge rounding bottom here that honestly looks like it might go back to all-time highs in a year or two, maybe even shorter than that, right? But JD, if you are going to trust the the numbers that are reported, PE ratio is nine. Forward PE is 10. This is back when I was looking at it. Price is a bit higher now. Price to sales is only 0.3. Forward price to sales is 0.25. Quarterly revenues are $50 billion. What's insane is that the quarterly revenues of 50 billion, the entire market cap of JD is 50 billion. I don't know what company I, I don't remember the last time I saw a company that makes quarterly revenues equal to its market cap, right? Plus, if we take a look at the technicals, it broke out of this descending channel pattern, which is part of the reason why I swing traded it with uh with shares. I mean, sorry, with options, but I also own the shares. And if this follows something similar to Alibaba, we could see this start to round out heading towards the $60 mark.
Like I said, depending on how bullish you are on China, how much you're comfort, how comfortable you are keeping emerging market stocks in your portfolio, I don't know the amount that that is appropriate for you, but for me, this is a long-term hold with a small piece of my portfolio.
And last on the list here is AMD. Now, AMD might also have a swing trade for those of you traders out there. AMD might also have a swing trade as it broke out of this downtrend, the short downtrend that it started since the highs in August, and is currently resting at this major support level. There could be a trade for it to break out once again to the 170s. However, from an investment standpoint, AMD is more impressive than it was back here in 2024. It continues to win contract after contract. And you can see here that they're aiming for 4% of the chip market by 2030. And they're looking to increase their annual revenue from 20 from 6.3 billion to 20 billion. If AI is a real thing, and AMD continues to improve its chip design and chip manufacturing, they will continue to gain more market share simply because Nvidia cannot fill the demand void. They can't. And secondly, AMD is a uh cheaper alternative to Nvidia, right? So, not only is there a cost benefit, but also just the fact that they can potentially fill the void. Also, remember that not everyone can afford Nvidia chips, right? AMD is going to be suitable for a lot of small players who are trying to leverage AI but cannot afford the Nvidia chips. So, there is a lot of reason to like AMD. And like I said, I think you have a better chance of doubling your money with AMD. That was certainly true when we were buying it down in the low 100s. Uh, a better chance of doubling your money than you do with Nvidia.
Now, if you are going to swing trade it again, depending on what the market does here on seasonality, but if it holds this support level, you can certainly take a swing trade to to uh just for it to get back to its recent highs in August. The only thing is, there does appear to be somewhat of a head and shoulders here, but head and shoulders are not the end-all be-all. You remember me pointing out the head and shoulders on XLK, which is the S&P 500 tech sector, and that trade that I actually took ended up failing. So, head and shoulders is not the end-all be-all.
And I just want to shout out a couple of members, man, in the Traveling Trader Academy. MOD is a LEAP specialist. Basically, anything that I send a thesis out on, he devises his own LEAPS for. You can see LEAPS on AMD, on Google, on Apple, on Nvidia, on TSM. LEAPS are a great way to replace. It's, it's a stock replacement strategy, but it's a great way to jump into long-term positions without having to put in the capital for 100 shares. And you could see just absolutely making a killing here. Unlocked the infinite money glitch here. And we have traders who have accounts of all sizes, as well as different styles, right? Some people do really like the short-term plays. Here's, here are the CoreWeave calls that we sent out. Some people are just buying LEAPS. Some people are just into investing. And shout out to Saki, who has had their best month trading so far. 61% month to date. Honestly, September was an amazing swing trading month. So was August. And shout out to the futures traders in the group as well.
So, come join us. We have something for everybody. I believe it's the only group that trades futures, options, does LEAPS, as well as long-term analysis and macros. So, if you want to trade live with me every single day, link is in the description below. If you're only interested in long-term, that option is there as well.
Hopefully, I shed some light. Let me know down below what you think. Is this the start of the pop of the bubble? Do you think that the party has a lot more left to go? Are you hoping that the market drops so that you can buy stuff? If you are, what are you looking to buy? Subscribe to the channel. Hit that notification bell. Stay safe out there, traders. Please.