That's sort of how a gander at this midweek market action seems; uncertain of the next move and hard to strategize what comes next. We're always wary of the late Summertime; although this year there can be some exceptions to that 'if' certain companies are awarded meaningful defense contracts or similar. It's not yet known; as for-instance there is the next-series of Dept. of War 'drone' dominance contests in August; and I believe 3 of our tickers are participants. I guess 'if' any get awards from that; we'd not know until September at earliest. For awhile there was so much avoidance related to anticipation of Micron (MU) that it may levitate almost the entire market; at least temporarily. If so it coming off the 50-Day Moving Average, which would be ideal for an S&P (SPY) upside effort. |
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While the media is focused on Micron and other 'existing major players' in the classical computing and memory world; I'm still thinking the hyper-growth AI phase we know so far, actually transitions. It doesn't diminish not lose speed, but gradually shifts from classical to hybrid (a mix with Quantum computing); and that.. facilitated by the early uses of optical connectivity in data-centers .. will likely change 'not' the embrace of AI; but the need for huge data-centers, as well as reduce the incredible demand for power to run and water to chills; all of which is great for business and affordability of AI; but maybe not so hot for the companies that are committed to the first-generation of the systems. It's why (and talked about this the other day and periodically since 2024) we'd focused on Quantum in the first place (we were in Intel (INTC) 30 years ago and by the way Micron when it was 5 bucks and sold both too soon at various times); took gains in all the holdings and retained only most D-Wave (QBTS) for the moment. Some of the funds went into Ondas (ONDS), which is differentiated of course (drones and autonomy), as well as others. All including Unusual Machines (UMAC) and even Redwire Space (RDW)) advanced nicely from entry levels; and all are momentarily stalled, without any particular reason (some traders speak of Ondas dilution; but it's all accretive acquisitions); and aside Ondas arguments; there's really no particular reason for the others to also be defensive for now; other than of course several are pending whether or not they received military contracts or similar security deals. Generally we think some of this is a defensive rolling consolidation just before the Russell (IWM) re-balancing; but we can't be sure about that. |
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Market X-ray: well Wednesday was painful for 'most' smaller-cap tickers; and while it's tough to ascertain if there is correlation to the upcoming re-balancing or not; it was obviously a two-way street, between speculative tickers and the older-guard leadership, that faltered bounces ahead of the Micron earnings. Of course there can be an argument for being bearish on the Russell for after the holiday; although that wouldn't be my best-case idea of the week ahead. I really have no great insight beyond the re-balancing, for daily-basis shuffles. I also think it's conceivable several tickers washed-out just making cycle lows. |
After Wednesday's close; Micron finally reported (this was a stock I found at 5 bucks and unfortunately sold at 30 .. on the surface a 6x gain when I sort of was called 'Mr. Micron' on the old Channel 22 in Los Angles days). Anyway it is one of the stocks that contributed to my 'if a stock doubles, sell half and do hope you're wrong' (if the rest perhaps goes up even more). So I haven't done that with Ondas, although it certainly (even now) is a muti-X-gainer from our entry price (and I realize how frustrating it is for those who paid-up for it; frustrating if I wanted to join the 'should have, could have, but didn't' crowd. I think it will be fine in the fullness of time; and didn't expect this much shake. As to Micron: the numbers were exceeded close to the highest estimates on the Street. EPS beat 25. (billIon); revenue 41 billion beat 35 billion estimates. MU states strategic customer agreements will enhance bullish prospects; so we'll see. 'For the moment' it validates the 'classical' bullish perspective; but of course it is still premature for Quantum to kick-in as a meaningful interloper or collaborator; which even NVDA CEO Huang conceded has to arrive in time. Most all tech stocks (related to MU and classical compute or not) that finished near their lows, are higher in aftermarket trading (again it's Wednesday; and no more reports this week; aside perhaps an occasional comment on X). MU was up more than 30 points; and also JPM rallied as Chase authorized a big new buyback program. Also Goldman Sachs (GS) is boosting dividends. We'll see if this contributes to a less-stressed tone on Thursday ahead of re-balancing. |
Overall let's hope aside seasonal moves (that includes Summer doldrums as we move forward, aside special stocks that can deviate from Index behavior; and I would hope not the kind of deviation of the last couple days)... that the pressure on stocks is primarily related to all the analyst discussions and not my persona view that it has some correlation to growing awareness that the future is going to be more centered on merging Quantum into the AI scene. Sure that will help our D-Wave most likely; and probably IBM and Microsoft (MSFT) too; but that's not the point. The market is fixated on incredible expenditures for ramping-up data-center capacity; and classical computing 'power' and that is where I think there's excess; perhaps a reckoning; and some early trimming of certain big cap infrastructure and related companies involved in that. So it could be reminiscent of the early cellular and/or fiber-optic roll-outs; or even microwave-linked towers (that never worked well given latency). So I'm not fixated on this conclusion; but find it noteworthy how little attention is given to the prospect that the money poured into AI support (huge expenses) is either excessive or pointed-at what will be the fading first generation of AI. |
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Again I don't know; just sense that. It's why I focused on Quantum from the get-go in 2024; and why I prefer 'application AI' to the big data-centers. In fact 'present' AI boom continuing or not, the Quantum / photonics era will be the likely new path for these technologies; but once more; it's speculative. Things change in technology, so that's again the point. In downtown Orlando, developers tore down an historic block of quaint old shoppes and restaurants, to build a huge condo, and 15-screen movie theater; IMAX (IMAX) included. Well can you guess what happened after only about 10 years? The condo is fine; the area is increasingly dangerous (like many downtowns); few will go and that best-in-town movie theater closed. Lack of business and no idea how to use the space (yet). Perhaps that's the future of some gargantuan data-centers? Most likely we get an era of 'hybrid' compatible systems; but the shares of the leaders have been 'heavy' for awhile; so there's some trepidation about it all. |
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