Reading the Current Price Action
So far this week, market action has been encouraging — a welcome change after a genuinely awful prior week. That earlier stretch gave the distinct impression that the market, at least in the short term, was becoming choppy. In response, hedges were being added during that period, and the guidance going out to newsletter subscribers this week has been to layer in some tactical hedges as a precaution.
That said, this week's strength has to be read with caution. It is a holiday-shortened trading week coinciding with the end of the quarter, and with much of the professional crowd effectively absent (the "everyone's in the Hamptons" effect), there is genuinely a limit to how much signal can be extracted from the day's moves. The underlying picture coming into the week still looked somewhat choppy in the near term.
Is the Rebound a Buy-the-Dip Opportunity, or Something Changing Beneath the Surface?
The sharp sell-off seen last week, concentrated specifically in tech, was followed by a rebound. The question is whether this should be treated as buying the dip, or whether something is shifting under the surface.
The answer: we are firmly in a retail-driven, buy-the-dip market. This matters because market behaviors that historically signaled tops no longer carry the same meaning. With roughly four and a half decades of market experience to draw on (active in markets since 1981), the lesson is that you now have to be more cautious in interpreting those old signals. The reason is the dominance of retail-favored themes — the memory names, the photonics names, the space names. Give retail investors a dip, and they will buy it. That dynamic is almost certainly what is driving the action right now.
Fading the End-of-War Headlines and the Inflation Worry
Many of the recent dips have been tied to the back-and-forth of pricing in peace, then pricing out peace, then repricing the peace again. The recommended approach is to fade these end-of-war headlines, of which there have been more than anyone can reasonably count.
The reasoning is one of fatigue with the geopolitical narrative — "we've won this war, like, 40 times," to the point of numbness toward each new headline. The market is currently treating higher oil prices as transitory, and that assumption is the real problem. There is good reason to believe oil could come back up regardless of whether the relevant trade route finally opens and the conflict is genuinely resolved. The damage has already been done.
The deeper concern is inflation. Higher inflation leads to higher interest rates, and higher interest rates are precisely what the more speculative technology companies cannot tolerate — it is "kryptonite" to them. If conditions develop such that the Federal Reserve is forced to raise rates faster than the market currently expects, that scenario could become a serious problem for a large swath of tech names.
Where the Opportunities Are in Tech
Asked where opportunities exist and where to stay away, the guiding framework is to remain in the "bottleneck trades": memory and photonics. Space is also treated as a bottleneck trade, grounded in the belief in Elon Musk's claim that data centers will eventually be built in space.
These areas are worth buying on dips, but with disciplined position sizing. Both memory and photonics have already enjoyed amazing runs. Space is especially attractive at current levels because space stocks were crushed in the lead-up to the SpaceX IPO.
Why Space Names Got Battered — and the Rocket Lab / Iridium Catalyst
In the run-up to the SpaceX IPO, space and space-adjacent names rallied as a proxy play, only to be severely beaten down afterward. The question is how that single IPO managed to absorb so much capital that nothing was left for other names, many of which still arguably have compelling fundamentals.
The explanation: everyone needed access to SpaceX and needed to buy it, so they funded those purchases by selling the other space names. On top of that, the broader space group had simply run too far, too fast. As an illustration, a space ETF launched in March doubled within two months — a ridiculous price movement that almost by definition required giving some back. Both factors — the rotation into SpaceX and the prior overextension — combined to make conditions difficult for the space names.
The hopeful turning point is the Rocket Lab / Iridium deal, which could be the fuel the space names needed to start moving back up. So far, so good.
A Notable Consolidation Signal
The market's reaction to the Rocket Lab / Iridium deal was itself unusual. Typically in an acquisition, the acquirer moves lower while the target moves higher. That did not happen here — both names moved up double digits.
Because the companies involved are not massive mega-cap names, there is real room for further M&A activity in the sector. That potential is likely part of why so many of these names posted double-digit gains, and this deal could well be the first of many consolidation moves in the space economy. That interpretation appears to be shared by other market participants.
AI Beyond the Crowded Names: Tempus AI
One favored name that gets relatively little attention is Tempus AI — a play on AI in healthcare, a branch of the AI theme distinct from the usual high flyers. The strategy is to look for corners of AI the crowd has not yet reached. AI in healthcare and AI in drug discovery is expected to become one of the big eventual opportunities, a view echoed by figures such as Jensen Huang and Marc Andreessen. Tempus AI offers exposure to AI without requiring participation in all of the names that have already become high flyers.
Bloom Energy: A High Flyer With More Room to Run
Bloom Energy is the opposite of an under-the-radar name — it is up 234% year-to-date and more than 1,100% over the trailing 52 weeks. Even so, there is still believed to be upside. Bloom is currently viewed as the leader in AI power. An especially attractive feature was its large drop on Friday, which occurred because it was removed from the Russell 2000 index. That decline was seen as a great opportunity to buy in or add to an existing position.
