The Ultimate Rotation Trade
Where is the alpha? Is the AI infrastructure trade over?
Market musical chairs.
If you weren’t part of the AI trade from early April until mid-late June, you missed out.
Now, the same people who missed that move decided last week was the time to start piling the leaders that have advanced many hundreds of percent.
Just as the trade changes.
This is textbook market psychology.
People ignore a trade when it’s early and end up chasing it only after the move becomes obvious and consensus.
That’s usually when the risk/reward starts to flip, and clearly the risk/reward on these stocks has flipped.
Over the past few weeks, I’ve been emphasizing the fact that the next trade will be different and the AI infrastructure trade needed time to breathe. I even published an article on 5/28 titled “The Next Trade Will Be Different” here where I emphasized that the market was changing.
All of my new positions over the past few weeks like HOOD at $84 have come out of the AI infrastructure trade. Why? The risk reward flipped.
Now, we have a very different market and an environment that calls for something new, something most people haven’t been prepared for…
If you’re not already in the subscriber chat, I strongly suggest paying attention to it.
This is where I post all of my new trades as I enter them. I walk through the trade idea entirely including my thesis, risk level, cost basis, and more.
This past week I added multiple new positions in emerging groups. One was ABCL, it’s already up 30%!
The subscriber chat is also where I post a daily thread with my thoughts on the day ahead, relevant headlines and macro events, my main focus names, notable upgrades and downgrades, and anything else I’m watching.
It’s basically become a live market group chat. We have a ton of smart people sharing ideas, setups, headlines, and observations throughout the day, and there’s a lot of genuine alpha in there.
I honestly believe it might be one of the most (if not the most active) subscriber chats on Substack.
Come join us!
In the remainder of this article, I’m going to discuss
The AI infrastructure trade
When I think AI infrastructure names may start to lead again
The names and groups leading the market
The next big catalyst
What big money is doing
The rotation
The Magnificent Seven
Some of the best charts in the market outside of the AI infrastructure trade
And more.
This article is packed with information and I think it’s one of my favorites yet.
Staying in tune with the market is always important, but even moreso when the environment shifts.