The market has been shaky. The prior day's data and the current day's CPI data drew opposite reactions. The recovery today came off the back of the latest CPI report.
The AI Trade
I am all in on the AI trade. It makes up 90% of the stocks I hold and 90% of the stocks I day trade and swing trade. I see this as a rare chance that may not come again in our lifetime. The market moves where these stocks move, and I think the trade is just getting started. Trading sectors outside AI means less opportunity.
The recent Wall Street Journal piece on "AI doomerism" - the fear that AI will kill us all - looks like a setup. Anthropic and Open AI are trying to build a moat to protect their businesses, mainly from open-source competitors. I am a big believer in open source and think it will be the biggest story in AI. AI is the greatest technology in the history of mankind, so use it if you are not already. The idea is to go where the puck is going.
Micron (MU)
Micron (MU) has been a big outperformer on both a year-to-date and year-over-year basis, though it can be bumpy. If a stock does no wrong, you stay long. MU had a massive run-up last year into this year, then hit a summer low and chopped sideways. I read that sideways move as building pressure for the next breakout. Stocks like this get ahead of themselves too far, too fast even when fundamentals support them, then they consolidate, digest, and bring in new buyers.
Memory demand is the core story. The cost of memory pushed the price of the same MacBook up by about $2,000. Micron (MU) cannot make enough and is selling everything it can. A headline that morning reported Micron (MU) gave every employee in Taiwan roughly a $30,000 to $32,000 cash bonus plus stock options - a sign the business is booming. Mac Studio pre-orders with 256GB or 512GB of RAM are pushed out to next year. You need memory to do AI, and Micron (MU) is one of the biggest makers of it. Supply crunches also show up in everyday items - a simple flash drive on Amazon (AMZN) has risen sharply in price.
Chart for Micron (MU): The last earnings event on June 24th brought a big pop to 1255, but it faded fast. An unfilled upside gap sits between 1123 and 1097, which bulls may watch. There is a repeated ceiling near 1035. Shorter term, a small green-line gap sits near 960, another near 8.97 that did not quite fill, and one at 780 that was breached but recovered quickly. The blue upward-sloping trend line broke, giving way to a triangle between two converging white lines nearing a conclusion, so watch for a directional breakout. The stock is slipping below its 5-day EMA at about 9.85 and came close to touching its 21-day EMA at about 960, which lines up with the trend line and marks a potential breakdown point. RSI is still trending up but looks set to break its green trend line; watch for RSI to dip below 50. Recent trading has run between about 875 and 95, with a pronounced volume node there. Crossing above the $1,000 mark would be important.
Oracle (ORCL)
Oracle (ORCL) is struggling to hold earlier momentum. Many people worry about the huge debt it is taking on. In the standard financial-consultant view, debt is bad, but there are times in history when heavy debt makes sense. Oracle (ORCL) faces a race against time: it is doing massive capex spending, tens of billions of dollars, and it is unclear whether the revenue from it can catch up to what it spent. The earnings reaction flopped; it looked more promising in the morning but ended up only about 0.3% on the day.
One reason I like Oracle (ORCL) is that Michael Burry is short it, and one reason Adobe (ADBE) keeps selling off is that he is long it.
Chart for Oracle (ORCL): The stock remains inside an upward-sloping channel between two white lines after hitting a low near 11450 and bouncing 34% off that point. A recent relative high at 171 is the short-term mark to beat, hit just before earnings. Above that, a gap near 198 is the next key upside area, though it is a reach. A repeated floor at 139 bottomed three separate times recently and would be support if the channel breaks. Three shorter moving averages - 5-day, 21-day, and 63-day - cluster between about 150 and 155, an important confluence; a break there would open the door to testing the channel boundary. The 250-day EMA in orange, representing one trading year, sits near 170 to 270 and is a milestone to cross. RSI is above the 50 midline but not making big moves.
Apple (AAPL)
Apple (AAPL) this week did not follow the usual buy-the-rumor, sell-the-news pattern. My view is that the story is not mainly iPhone - it is more about John Ternus and the new desktop Macs. Those Macs keep getting pushed out; pre-orders are delayed to January. The AI story is bigger than the iPhone right now. There is a new CEO and new Macs with AI-enhanced hardware hitting the market, with the iPhone as a bonus on top. The new iPhone is generating a lot of buzz across consumers, prosumers, and data centers. A week or two ago, Open AI was buying tens of thousands of Mac minis and Mac Studios to train hardware because it is some of the best hardware available. Apple (AAPL) is basically selling everything.
Chart for Apple (AAPL): A few days ago the setup looked shaky, with Apple (AAPL) near crossing below its upward-sloping channel and making new relative lows beyond 313. A big surge reversed that, and now the stock may be breaking out above the channel - a bullish breakout from an already bullish pattern. The downward-sloping trend line off the highs has broken. The next level is a gap near 337, marked by a red line. A gap near 330 was broken resoundingly and could now act as support, since it was also the previous high - old support became brief resistance and then broke. The 5-day EMA at 326 could be support, and the 21-day sits near 319. RSI is pushing above its downward-sloping red trend line; the next step is a break into overbought territory at the 70 threshold. Volume profile shows price pushing beyond heavily traded areas into thinly traded ground; 328 to 336 is the clearest current node, while the heavier node at 308 to 314 is more notable as potential support.
