Stage Analysis and Base Breakouts
Happy Monday everyone, I hope your week is off to a great start!
Today was a very quiet day ahead of what I consider a noisy week. The indices broke out to new all time highs after representatives from both the U.S. and China said major progress is being made on a trade deal. The enthusiasm from both sides is notable, typically the U.S. has been the one pushing the positive commentary, but this time even Chinese representatives seemed optimistic. I think a deal really is getting closer. We’re now coming up on over six months of negotiations since “Liberation Day,” and typically these deals take six or more months to wrap up. It feels like we could actually get something of substance before the end of 2025, at the latest Q1 2026.
One note I think is very important: China said they would delay their rare earth restrictions “for one year.” That isn’t permanent and it isn’t a definitive trade deal yet. I do expect a deal to be made, but until something is signed, sealed, and delivered, nothing is definitive and the terms will remain unknown. To me this shows that rare earths continue to be China’s “Trump card” (pun intended), and it’s clear that the U.S. needs to accelerate manufacturing here at home ASAP. They’re just too critical to AI for us to depend on China not hitting us with tariffs or cutting off exports over the long term.
Today we also got news that Qualcomm announced new AI chips to compete with Nvidia and AMD which sent the stock soaring +20% at its peak before settling around +12%. Qualcomm said that both of their new chips, the AI200 and the AI250, go on sale in 2026 and 2027 respectively. Nvidia currently owns 90% of the AI chip market so there’s plenty of room for players like Qualcomm and AMD to be a factor. Even if Nvidia ends up controlling 75% of the market, that remaining 25% is very valuable. Especially considering demand is set to explode in the coming years as robotics, autonomous vehicles. etc. begin to take off.
I want to quickly highlight that last week I mentioned this was a focus name with tons of bullish options flow and a nice chart:
I mentioned that we could see an AI deal for Qualcomm and today we got one! In this newsletter, everything I mention or discuss is for a reason. This is the second major AI chip deal I’ve mentioned here before it was announced, the first being ARM and their deal with OpenAI. I think I might have found another semiconductor name due for an AI deal… I’ll touch on it this week in the newsletter, so keep an eye out for that!
This week we have a busy slate with big tech earnings, the Trump-Xi meeting, and the FOMC, so before things get hectic I wanted to use this piece as my third educational article, this time focusing on stage analysis. I’ll be walking through older examples and a few names I’m currently watching that look like they’re building early stage one bases… the kinds that could turn into tomorrow’s leaders.
If you missed the first two educational posts, you can check out the one on position sizing here and the one on long term investing here. I plan to keep building a catalog of these educational pieces so you can go back to them any time to brush up on your research and education. If you have any suggestions or topics you’d like to see next, let me know in the comments and I’ll add them to the list!
Now to get into stage analysis…