Weekly Update: Stocks Come Ripping Back (Charts Inside)
Good evening, and welcome to this week’s edition of Stealth Trades!
After a volatile few days of trading last week, stocks came ripping back to tack on 2% for the week.
The Nasdaq and S&P 500 both made new all-time highs today.
The home construction sector is holding strong, but we are also seeing “risk on” movement as solar, crypto and quantum computing stocks showed tremendous strength this week.
Instead of wasting time on lengthy analysis, I am instead going to share some of my favorite stocks in a few of the hottest sectors.
Quantum Computing
D-Wave Quantum (QBTS)
I shared this trade idea in Tuesday’s “Two Trades in Two Minutes” YouTube video, recommending a buy above $16.50 on a breakout. That triggered yesterday and then surged another 8% today. This was a clean breakout on above-average volume that should lead to a re-test of the highs and potentially new highs.
Quantum Computing (QUBT)
This chart is nearly identical to QBTS above but, believe it or not, these are different companies and different stocks.
Personally, I would trade one or the other. Both are pre-profit firms with almost no current revenue, so they are purely momentum trades.
Roblox (RBLX)
Roblox has been a market leader for the last year and a half, and it has tripled since November.
The stock finally took a breath in August to consolidate and absorb the move, but it looks poised for another rally on a move above $136.
Nuclear Energy
The nuclear sector has cooled, and Wall Street appears to be consolidating their bets. 6 months ago, every nuclear stock on the exchange was surging. But today funds are getting more selective and homing in on the ones most likely to succeed long term.
SMR has been one of my favorites for the last few years, but it has completely run out of steam. OKLO, on the other hand, is pressing against its highs.
Oklo, Inc. (OKLO)
I initiated a small position in this stock on Thursday at $80. I also placed a limit order to buy more at $75 since I was/am hoping the stock consolidates a bit more to absorb more supply before beginning its ascent.
That $75 buy may or may not get filled. In a perfect world, I’d like to see OKLO come in and trade tight in the $75-$80 for a week or two and then rip to new highs.
Cameco (CCJ)
Uranium miner, Cameco, also looks strong. After a failed breakout attempt on August 29th, the stock pulled back into its base and continued to compress.
CCJ looks poised for another run higher.
Interestingly, we are seeing stocks rally alongside precious metals. This is historically rare since they tend to move inversely. Gold and silver have long been viewed as a hedge during uncertain times.
But the US federal government has proven they are unable to cut spending in any meaningful way. And investors are starting to see the writing on the wall. Debt continues to climb, and Uncle Sam will be forced to keep printing money at an ever-accelerating pace.
This means two things – inflation and a devaluing of the US dollar. Both will cause demand to weaken for government bonds. And with $37 trillion worth of federal paper already out there, investors are beginning to look elsewhere for stores of value.
That, in my opinion, is why we are seeing such a powerful rally in gold and silver.
Mining stocks typically make exaggerated moves in the direction of metals. Since their profits are leveraged due to mining costs, even a 10-20% rise in gold can cause these stocks to double. So, it is unsurprising that miners have been one of the strongest performing areas of the market this year.
The VanEck Gold Miners ETF, GDX, is up 27% from where I bought it in my retirement account in August:
MP Materials (MP) is a rare earth miner securing huge deals with the Department of War and other major players.
It just touched the 50-day simple moving average (yellow line on chart below) for the first time in months.
This is a great place to make a pullback buy on what has been a monster mover.
Trend followers looking to hitch their wagon to a winner may consider Sandstorm Gold (SAND), Coeur Mining (CDE), Iamgold (IAG) or First Majestic Silver (AG). All are showing tremendous relative strength and showing no signs of slowing down.
We can walk through these in greater detail in Monday’s live trading session. We have begun hosting these on YouTube to deliver a better viewer experience and your feedback has been positive.
Here is the link to join Monday’s session at 9am ET: https://youtube.com/live/DCAkq6BHivQ
I hope to see you there.
Best wishes for your trading,
