Traction was maintained after the early post-Microsoft (related) selloff. This was nonsense and I anticipated a full S&P recovery (MSFT, SPX).

Freepik

We got it. And while the market can be viewed as short-term extended, the optimism among investors versus pessimism among many professionals, is palpable.

This is not a repeat of 1929 (where you had sharp rebounds that faltered), but it is more like 'groundhog' day, with some stocks sticking their heads up, but it remains hard to forecast the future, because the actual interpretation is 'mixed behavior'. That's pretty much describes Wednesday, but we're rather pleased.

So yes the sell-offs were contained and likely will be tomorrow as well. After the close IBM (IBM) made it's consensus numbers, and interestingly so did Tesla (TSLA). I won't dwell on any of it tonight, but basically it all supports the idea of slower but not catastrophe, and holding up better than most on Wall Street would like given they missed opportunity to enter lower, especially in the best AEHR (AEHR).

The Tesla story says the consumer is still strong, forthcoming EV's will find a market (even though we prefer hybrids, but has nothing to do with investing at this point). The move in some stocks is not a head-fake, but based on general expectations that things won't get better, with which I disagree in some areas.

My view was that Microsoft is mature, focus on disruptive new technologies. Enterprise is tough for sure, AI is sort of frightening, and Silicon Carbide still is the focus and should be, because it will be spreading beyond just EV's, and it is worth mentioning testing modalities will grow into mainstream chips realms too (and may be part of why AEHR's run has no correlation with valuation on metrics that are known, with an open-ended but higher future).

Let me see if I can summarize that and why Tesla's unit volume helps too. So AEHR won the Silicon Carbide Quality Control test opportunity. All big players have either signed on, testing demo units, or already in ramp mode, others in our view will follow. To not do puts a player at clear competitive disadvantage (slower, less efficient testing means higher expenses and lower wafer-yields).

So for AEHR it's likely an avalanche of orders. AEHR comes from such a low starting base, with our 'pick of the year' selection ~6-7, that the analysts have no choice but to re-rate AEHR Test Systems with dramatically higher metrics that the reality requires. If they get Gallium Nitrate or Photonics, even more so in the future. It's a 'wealth-building' situation and impossible to measure peaks but clearly higher 'if' the company is not the target of an acquisition. That's not to say it won't have heart-pounding missed beats now and then, as it did last year. Generally that kind of speculative uncertainty may morph into just hold.

In-sum: 

The business model (and financing needs or lack) matter is many of the newer and smaller tech stocks. Something like AEHR (and even SKYT) don't need significant funding, hence the interest rate scene isn't relevant.

I realize some semi's are cutting work-forces for their businesses, but some of them expanded during pandemic (and the crypto lunacy) and got bloated. For sure traders that don't differentiate businesses lump it all together, whereas a bit of culling-out is helpful. For instance those big semi's have to build-in new testing systems for Silicon Carbide (Gallium Nitrate and eventually photonics too), even if the fabs have to spend a fortune to achieve competitive stature).

Market should move higher for now, as it grapples with the S&P resistance.

Games are on in a sense.

Our Chevron (CVX) announced a 75 Billion buyback after the close. So maybe we'll see insider selling in 2024 or 2025..haha. Anyway this alone will help not just one of our core long-term holdings, but the S&P.

As for Tesla they have more levers to pull (well too many touchscreens that at some point will be problematic), like their overpriced pickup truck. However all of it validates the industry, and if Canoo can make it (they cut a sales deal in Saudi Arabia today, which 'possibly' assures them needed funding), and we get to a point of 'Silicon Carbide' in more products along with 'Solid State' for the batteries (requiring replacement of the earlier variations... big business).. anyway Canoo (GOEV) could move higher, and potentially Solid Power (SLDP) joins-in as well.

Most times bears belong in the woods, not on Wall Street haha.. just kidding as we've called for numerous tops over the years, but nothing like that exists now.. since the top was in 2021, and this would be year 3 bear and that's very rare, especially given the Presidential Cycle and more. War of course can change that, so that tanks to Ukraine either helps end it or there is a bigger problem, but that's nothing anyone can shuffle-off on the Fed. For now though.. thanks for tanks.

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