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june 28 report

Defensive, not bearish

Nick Schmidt

Where we are

Right now I am not concerned much with which direction we go next. The past week has naturally taken me out of positions and reducing exposure. If we correct lower, or break out and trend higher, adding/reducing exposure takes care of itself.

My main focus is that this current market environment is rough. Chop is always more dangerous than actually crashing because everything looks like opportunity when its not.

I shared some stats yesterday below. June has had almost 50% of days with big overnight gaps. The average range in the market as more than doubled while at the same time going nowhere. This is where progress is given back and the most important chart for me is my equity curve.

Themes

The most important groups still remain Semis + AI Infra stocks like Neoclouds, however they've shown the biggest weakness last week and look like they need time to setup again.

The recent RS has been in Cybersecurity + Healthcare.

We also saw rotation into Software again. There are good looking stocks in Software I would buy but the group as a whole is what I consider junk off the bottom and likely only takes the baton while Semis + AI Infra rest.

Cybersecurity / HACK$98.65
Cybersecurity
MA4W·10W·30W

Constructive chart near highs. This is a healthy looking group. It trades organized and tight.

Software / IGV$88.20
Software
MA4W·10W·30W

Compare this to Cybersecurity above, this chart is wide & loose, near lows, sloppy.

My plan for the week

Overall because of how choppy and difficult this environment is I am not looking to be aggressive until that begins to change. The current groups showing RS are not the quality growth groups I want to build a position in.

I am focused mainly on Cybersecurity stocks this week for potential swings but will be more aggressive to take profits off the table.

The overall focus for me remains the Semiconductor and Neocloud leaders. Ideally they rebuild bases and allow new A+ entries over the next few weeks.

I am not bearish, I think the market is going to likely resolve higher and continue its uptrend, but right now the no direction, high volatility, big overnight gaps, and chopping my account -6% off highs has me focused on preservation both financially and mentally for when the market becomes easy again like April/May.

Current Holdings

30% invested|70% cash
MU10%
+173.86%
Avg $413.47Last $1132.33
INTC20%
+10.01%
Avg $116.64Last $128.32

Position Notes

MU10% position
MA4W·10W·30W
Continues to ride the 4-week. This is guidance for the whole AI infra and semis trade. Original plan has been the 4-week on a closing basis to exit. I may give this an opportunity to base sideways.
INTC20% position
MA4W·10W·30W
So far it successfully retested its pivot. If it can hold again this week that is more confirmation this deserves top focus. Willing to let it shakeout below 125 pivot during the day but want it to close above.

My Focus

5 charts
TER$436.86
Foundries & Semicap
MA4W·10W·30W
TER stands out a lot to me because its also a Robotics play. Retesting its base pivot and 4-week.
DDOG$239.77
Software
MA4W·10W·30W
The $200 level here was its prior ATH which it is still above. Sign of strength. This is one of the more actionable looking names as it has been in a fairly tight range sideways building a little base.
FROG$87.58
Software
MA4W·10W·30W
Similar to BB this broke out last week on big volume out of its 3 week tight range. Retest of $85 pivot would offer an opportunity to get involved.
CRWD$701.09
Cybersecurity
MA4W·10W·30W
4 week base with fairly tight closes last 3 weeks. 3 quarters accelerating sales. One of the most actionable cybersecurity names.
OKTA$124.28
Cybersecurity
MA4W·10W·30W
Big push to highs and 4 weeks sideways building a nice base.

Notable Charts

21 charts
Software
A stocks group is responsible for 50% of its move. Software as a whole as I showed above is a weak group but is seeing rotation again. My opinion is that the group may take the baton while Semis consolidate.

Below are the top leading stocks in the group I would focus on. I would treat them as more of swings than positions.
BAND$56.90
Software
MA4W·10W·30W
One of the strongest stocks in the group. Still near highs and on the 10-week. Looks like its base building, could use the 10-week as a guide to manage risk.
BB$11.40
Software
MA4W·10W·30W
Another leader in the group. Strong just broke to new highs. This week the 4-week will cross above its 3 week tight area it broke above, and any weakness we see that pulls in to the rising 4-week could be an opportunity.
TWLO$191.57
Software
MA4W·10W·30W
Failed breakout that came back into its base. As long as the base lows which it bounced at last week hold then this is constructively basing.
AI Hyperscalers
DELL$399.49
AI Hyperscalers
MA4W·10W·30W
Big RS trading tight near highs. I got stopped out last week tightening stops to be defensive but this is an A+ chart right now that just needs market cooperation.
Cybersecurity
This is currently one of the best RS groups and has a handful of constructive setups. It is also a much higher growth group than Restaurants/Healthcare.
FFIV$394.53
Cybersecurity
MA4W·10W·30W
6 weeks tight basing near highs. One of the cleanest offering a range to get involved.
FTNT$151.35
Cybersecurity
MA4W·10W·30W
3ish weeks tight just broke to new highs last week. Weakness back near $145 level could be a good spot to manage risk.
PANW$304.20
Cybersecurity
MA4W·10W·30W
This is the leader of Cybersecurity group in my opinion. Same as the others, constructive weakness/retest to get involved.
RBRK$72.33
Cybersecurity
MA4W·10W·30W
Not as clean, a bit wide & loose but acting constructively and could be actionable
TENB$30.22
Cybersecurity
MA4W·10W·30W
Similar to FROG & BB. Breakout of its recent consolidation. A retest or inside week could offer opportunity to get involved.
Neoclouds
This along with Semis is the top priority group for me. It has been relatively weak but structure is still intact.
APLD$39.16
Neoclouds
MA4W·10W·30W
Wide & loose but so far still outside of its base with resistance -> support flip.
CIFR$25.94
Neoclouds
MA4W·10W·30W
After breaking out is retested its base pivot and closed on the rising 4-week. So far constructive and resistance -> support flip.
HUT$123.02
Neoclouds
MA4W·10W·30W
This has been hard to trade with the wide ranges but overall is acting constructive basing at highs. Big RS.
NBIS$240.30
Neoclouds
MA4W·10W·30W
Top dog in the group. If NBIS goes sideways for another week or 2 it could offer the first A+ entry since April.
Fintech
This group has been seeing RS with DAVE leading it higher.
DAVE$348.71
Fintech
MA4W·10W·30W
Huge earnings growth just broke out of a 1 year base. Watching this for insight into the group itself as I believe its the leader. I would consider entering on a pullback to the rising 4-week as its approaching its All time high which could ignite a new trend.
HOOD$98.69
Fintech
MA4W·10W·30W
Broke out 2 weeks ago and has twice pulled back and confirmed resistance -> support flip. One of the more actionable names going into the week.
AI Compute
AMD$521.58
AI Compute
MA4W·10W·30W
Big leader of this cycle. Broke out a 3 week tight range and has so far been supported at its previous resistance. Another one that just needs the group behind it. If it does another tight week above $500 I will put it on focus.
INTC$128.32
AI Compute
MA4W·10W·30W
My favorite play, just needs group participation in AI infra. So far has successfully retested its prior base pivot.
AI Networking Silicon
ALAB$391.74
AI Networking Silicon
MA4W·10W·30W
ALAB has held up the best from this entire subtheme. Last week pulled to the rising 4-week and still higher than the previous weeks low. If this traded tight sideways like it did in April it would become a top focus.
Healthcare
TEM$56.14
Healthcare
MA4W·10W·30W
Subtle higher low and coming up into resistance here. Looks ready to follow through if healthcare sees continued strength.
Restaurants
CAVA$83.40
Restaurants
MA4W·10W·30W
Coming back up to its resistance level with higher lows. Looks like a breakout is near although this is not an attractive growth group.
SG$9.14
Restaurants
MA4W·10W·30W
Character change a bit wide & loose but actionable.