Market Backdrop and the AI Spending Thesis
The trading session opened on a shaky note, continuing a couple of choppy days. Consumer sentiment data came in looking somewhat brighter, but it remains near its lows. Layered on top was a developing conversation about a potential delay in OpenAI's IPO. Despite this muted tone, the overarching market thesis remains decidedly bullish, particularly on the enterprise AI side of the economy.
The single most closely tracked development was news that Apple is dramatically raising its prices. This ties directly into a thesis that has been building since January: as local AI models became more practical, the recommendation back then was to buy your own hardware and run your own AI. As a concrete illustration, the exact highest-end MacBook Pro that was purchased about a month ago for roughly $5,300 jumped to around $7,600 — the identical machine — purely because of soaring DRAM costs. While this price spike is genuinely bad news for the consumer, it serves as powerful evidence of one core idea: there is a literally insatiable demand for memory and semiconductors to power the AI arms race.
The central argument is that talk of pullbacks and reduced AI spending is misplaced. Whether a company is a hyperscaler or a front-end AI firm like OpenAI or Anthropic, it is effectively required to spend as much as it possibly can to win this arms race. The alternative is to be relegated to the "dustbin of history." A vivid historical analogy underscores this: Ask Jeeves was once considered the greatest search engine, but Google overtook it so completely that many people today don't even recognize the name. The lesson is that losing the hardware and capability race means extinction, so the spending will not stop.
Open-Source Models and Hardware Acceleration
An under-discussed but important storyline is the rise of open-source, open-weight AI models. These models are increasingly impressive — they almost match the performance of paid subscription services that cost hundreds of dollars per month. Because technology only improves, these open models will keep getting better. Combined with continually accelerating hardware, this trend effectively puts power into the hands of the people. There are, in short, many reasons to be bullish, and short-term choppiness or "chopping around" does not change the underlying narrative.
A Note on SpaceX, Animal Spirits, and Market Psychology
Part of the week's muted, jittery mood is attributed to what happened with SpaceX. There is strong conviction in SpaceX — described as the most believed-in company since Tesla — but the market piled into it with far too much animal spirits and irrational exuberance. When the stock did not rocket to 500 by the following Monday, investors panicked. Ahead of that event, people were front-loading: Bitcoin sold off, and related stocks sold off in anticipation. The takeaway is that participants need to understand how markets actually work. The current approach is patient: waiting and hoping for a big, massive pullback in SpaceX to establish an entry point. The broader observation is that people are fretting over the "sell in May and go away" seasonality and panicking simply because SpaceX isn't at 500 — none of which alters the bullish long-term stance.
Pick One: Delta Air Lines (DAL)
The first selection is Delta, and oil prices are central to the reasoning. There is admitted bias here, as the trader has made many swing trades on Delta over the past couple of years and frequently flies out of Delta's major hub at DTW in Michigan. American Airlines (AAL) also broke out, reflecting the same thesis across the group.
The simple logic: these airline stocks had been going nowhere because oil prices exploded, in part driven by the Iran war situation. Now oil is actually a little below where it was during that conflict. This is a "keep it simple, stupid" (KISS) idea — traders too often overlook simplicity. It is summer travel season, oil prices are down, and lower fuel input costs flow directly to the airlines' bottom line. Ticket prices, which had climbed, are hoped to pull back, which should further stimulate demand. The chart shows a clean, beautiful breakout.
Technical read on Delta: After choppier action in the spring, optimism over the Iran resolution and lower oil prices produced a breakout. The simple framework is to look for a breakout beyond the initial highs, with the high-water mark at 95.14 set the prior day. Key gap levels and prior highs and lows serve as reference points — extreme highs and lows, notable gaps, and stopping points for price are the most basic and useful markers. An old high lines up roughly with a subsequent low near 87.40; another old high near 83.76 was less supportive, as price did dip below it. A particularly notable zone sits around 76 to 76.50, where price topped out several times before a big breakout and a pullback that turned old resistance into new support.
Structurally, there is a broad upward channel between two white dashed lines and a much narrower, steeper channel in blue, representing two competing interpretations depending on how aggressive one wants to be. The 5-day EMA (dark blue) sits near the steeper trend line around 90, while the 21-day EMA (teal) is lower at 83.60. The RSI has crossed into overbought territory at 74.40, which is typically a sign of strength in a trending market; price is comfortably above. A bearish trigger would be an RSI breakdown back below 70. Volume profile shows a clump of trading activity between roughly 78 and 85 (the most notable zone near current price), with far heavier activity down between about 67 and 72. On the day, Delta traded up about three-quarters of a percent at 92.80.
Pick Two: Micron (MU)
Micron has been a recurring topic, and nothing in its setup has changed despite a post-earnings pullback. The fundamentals remain extraordinary: roughly $100 billion in customer commitments and revenue up close to 350%. Yet the stock was down more than 4% (around 116.339), pulling back more sharply than the broader market.
The view is that the story has not changed at all. The earnings statement was so strong it was like seeing "stars in front of your eyes," and the huge gap-up following the announcement is being given back as many participants "ring the register" and lock in profits — always a smart move. The crucial point for those who missed the run: do not buy the breakout. Most breakouts featured among these picks are in their first leg, but Micron's breakout has been underway for nearly a year, so this is not a first-leg entry. The right approach for anyone who has watched the stock climb relentlessly for six to nine months is to wait for exactly these kinds of dips. Reinforcing the macro thesis: hyperscalers and AI companies must keep spending or they will go out of business and be "laughed about down the road" for losing the hardware arms race. Previous support sits around 100–110 (referenced as "right about 50/110" type zones); a pullback that deep may not materialize, but that is the ideal target for a dip buy.
Technical read on Micron: This is a very common situation — a big push to the upside, people get in at the top, a "rug pull" arrives, they panic-sell, and then the trend resumes. It is not something worth losing sleep over, though it is no fun for anyone who entered at the top. Potential support comes from old highs near 112.50, with the best close near 121.30 and another area of interest from old highs and subsequent lows near 101.20. On moving averages, the 5-day EMA has been roughly supportive near 113.50, with the trend line and 21-day EMA near 101.90. The RSI is compressing into a triangular shape, so a breakout in either direction from that momentum indicator should be watched. Volume profile over the past three months shows the most noteworthy node — the heaviest trading activity — between about 101.0 and 110.0.
The accompanying trading-psychology lesson, praised as a "master class," is that so many people struggle precisely because they panic-buy, panic-sell, and repeat that cycle. The better path is to let the parabolic spike happen, wait for the pullback, and then join the continued trend.
Pick Three: ON Semiconductor (ON)
The final pick is ON Semiconductor, prompted by news that the company announced another acquisition — one in a long line of deals seen across the AI race. This is an admitted oversight: ON was sitting in a basket of semiconductors and was overlooked despite a strong trend running from about 70 to 130 a couple of months ago. It flew under the radar partly because it is a lower-volume play than is typically sought and is not a household name.
On the acquisition itself, sentiment on X (read daily) has been largely negative, with many people bashing the deal as a terrible idea. The contrarian view here is positive: the headline is likable, and the company is seen as trying to build future revenues. From a trading standpoint, however, the discipline is clear — do not guess bottoms. There was a big selloff in the morning, with the stock sitting essentially at its lows, but the plan is to let things solidify and base before acting. A core conviction is the "century rule": stocks that break 100 statistically tend to continue much higher. ON demonstrated this — when it first cleared 100 it butted against that level for about a week, then broke through and ran to 130. The thesis is that the roughly 22% selloff (down almost 22% on the acquisition news) is an overreaction, and if the stock can cross back above 100, it could retest its pre-announcement highs within a short period. This is framed as a potential dip-buying opportunity.
Technical read on ON: A large drop-off after a major acquisition is fairly common. Using the simple gap-tracking approach, there is a small gap between about 90 and 92, which is roughly where the day's lows were hit. An extreme low point near 99 marked roughly where the stock topped out on the day. These levels are not ironclad walls of support and resistance but general boundaries worth tracking, because they represent significant changes in the stock's underlying fundamentals. Looking upward, prior significant low points that were previously reached — 104, 108, and 112 — stand out as further potential resistance.
On moving averages, the 21-day EMA is in gold and the quarterly EMA comes in just above 103, an area to watch; the 251-day (yearly) EMA sits far below at 75. The RSI took a big fall below the 50 midline but remains above the oversold zone. Volume profile shows price poking below the edge of a node spanning about 96 to 106, with very thin activity below that until reaching down near 70. The stock traded in the mid-range at 93.59 on the day.
A closing technical observation reinforces normal merger dynamics: it is not abnormal to see the acquirer trade lower on deal news, while the acquired company (the "acquiree") typically trades higher, exactly as expected with this kind of transaction.
Key Questions Asked and Answered
How are you looking at the market today? It has been shaky over the last couple of days, but the dominant theme is insatiable demand for memory and semiconductors driving the AI arms race — evidenced by Apple's price hikes and surging DRAM costs. Despite muted sentiment, the stance remains very bullish, especially on enterprise AI, with the choppiness seen as noise that does not change the narrative.
Is Delta in the big three because of oil prices? Yes, 100%. Airlines had stalled because oil prices exploded amid the Iran war; now oil sits below those levels. With summer travel season and reduced fuel input costs, those savings should add to airlines' bottom line, and the chart shows a clean breakout.
What do the Delta technicals show? A breakout beyond prior highs (high-water mark 95.14), supported by gap levels and old resistance-turned-support around 76–76.50; a broad white channel and a steeper blue channel; 5-day EMA near 90, 21-day EMA at 83.60; RSI overbought at 74.40 (strength), with a bearish signal if it crosses back below 70.
Has Micron's setup changed? No — $100 billion in customer commitments, revenue up nearly 350%, and an outstanding earnings report. The pullback is profit-taking, not a change in story, and represents the kind of dip to buy for those who missed the year-long run rather than chasing the breakout.
What do the Micron technicals show? A common top-buyers-panic-then-trend-continues pattern; support near 112.50 and 101.20; 5-day EMA supportive near 113.50; RSI compressing in a triangle, so watch for a breakout either way; heaviest volume node between 101 and 110.
Did the acquisition put ON in the big three? Yes — the new acquisition, though widely bashed on X, is viewed positively as building future revenue. The plan avoids guessing the bottom, waiting for the stock to base and to reclaim 100 (the "century rule"), after which a retest of pre-news highs is plausible.
Do the ON technicals show the same ~100 level and breakout potential? Possibly, yes. A big drop after a major acquisition is common; a small gap sits at 90–92, resistance steps at 104/108/112, the quarterly EMA just above 103; RSI below the 50 midline but above oversold; thin volume below the 96–106 node down to 70.
