The TML Talk | January 29th, 2025

Market Overview

• Indexes and General Market Trend:
  • The NASDAQ has shown resilience by closing above key moving averages after a shakeout, indicating strong buying interest despite tech sector news.
  • The Dow is outperforming due to less exposure to the affected tech stocks, suggesting a shift towards industrials.
  • The S&P 500 has a mixed bag but is generally holding up, with broader market support.
  • The Russell 2000 remains the laggard but has potential for recovery if leadership in other indices continues.
• Current Market Status:
  • The market is navigating through earnings season, with tech stocks like Tesla in focus, alongside sector rotation into industrials and nuclear energy.
  • Leadership is broadening, with sectors like software, semiconductors, and energy showing strength or potential.

Key Lessons & Quotes

• “Watch the leaders; they’ll tell you what’s important to know. As more information comes out about what’s going on, leaders will give you that insight. For example, how important the H100 chips are in training AI versus the lower power H800 chips used to run it – that’s the kind of thing leaders clarify.”
• “Leadership from one cycle rarely leads the next. The majority of leaders from one cycle will almost never lead the next; it’s very few high-quality companies that will lead cycle after cycle after cycle. This was true during the internet boom when the technology grew and matured; companies that were the biggest thing for a year either got sucked up or went out of business.”
• “It’s always tough to tell. In retrospect, it makes sense that a ton of money went into software and tech, but at the time, it’s tough to predict all these things. That’s why I always go right back to watching the leaders, because they’ll tell you what’s important to know.”

Actionable Takeaways

• Monitor Industry Group Rotation: Pay attention to how leadership shifts from one sector to another, like from tech to industrials, as seen with the Dow outperforming amidst the Deep Seek news.
• Earnings Season Caution: Manage positions around earnings with a focus on technical signals rather than just the earnings results, reflecting the discussion on Tesla’s earnings and the general approach to earnings season.

Stock Mentions and Commentary

Technology and Software

• $DOCU: Exhibits early strength, showing potential for a breakout if volume supports. Not immediately actionable but worth watching for further confirmation.
• $APP: Demonstrates a consolidation pivot with positive action post-Deep Seek news. Caution advised due to volatility, suggesting buying on strength with volume confirmation.
• $RBRK: Strong relative strength with a cup-shaped base post-high volume, indicating potential leadership if tech rebounds.
• $SNOW: Weekly chart shows bullish signals with relative strength new highs before price, suggesting consolidation before a potential upward move.
• $TEAM: Similar cup pattern to SNOW, with moving averages aligning for a possible breakout. Tightening weekly action is encouraging.
• $ZM: Off the bottom with signs of accumulation, potentially benefiting from cheaper AI implementation.
• $CRWD: Strong breakout in cybersecurity with significant volume, could continue leading if tech recovers.

Nuclear and Energy Stocks:

• $RKLB: Noted for resilience, grouped with nuclear stocks due to infrastructure themes, pulling back to support levels but maintaining an optimistic outlook.
• $NNE: Shows resilience post-Deep Seek, pulling back but still holding up, suggesting interest in nuclear energy infrastructure.
• $OKLO: Like NNE, it has volume support indicating continued interest in nuclear energy.
• $SMR: Identified as the weaker performer among nuclear stocks, suggesting a cautious or wait-and-see approach.

Other Key Stocks and ETFs:

• $TSLA: Post-earnings, at a critical juncture with a declining tops trend line to monitor. Immediate moves will depend on volume and price action.
• $BABA: Close to lows but with breakout potential if it can clear resistance, especially with AI developments in play.
• $NFLX: Posted strong results post-earnings, kicking off the big tech earnings season on a high note. Constructive follow-through action today reinforces its leadership.