Trade Alert: A Chip Leader Clears Our Screens Again
A long-dated Top Names trade and a short-term earnings trade.
A Chip Leader Clears Our Screens Again
Throughout most of last month’s momentum correction, chip and memory stocks continued to appear among Portfolio Armor’s Top Names. After the first week of July, though, we didn’t enter any new trades on them. Their shares no longer passed our technical screens, which are designed in part to keep us from catching falling knives.
Meanwhile, the demand picture kept strengthening. As we wrote yesterday, earnings and management commentary across the supply chain continue to point to accelerating AI infrastructure spending.
A Turning Point For AI Stack Top Names
Wednesday night marked an important change. A chip stock was our #1 name, but it also had two other factors in its favor: its shares had pulled back after a strong fiscal Q2 report, and they passed our technical screens again.
We’re entering a trade on that chip stock today with a particularly attractive structure. It goes out far enough to cover the company’s next two earnings reports, but it pays us up front. As long as the stock doesn’t fall by more than 20% between now and February, the trade will be profitable. And if the stock hits Portfolio Armor’s potential return estimate for it, we can more than double the amount of money we’re risking here.
We’re also placing a short-term earnings trade today. Paid subscribers will find both structures, our required entry prices, and our pre-set exit plans below.
Today’s Top Names Trade
Theme: AI infrastructure and semiconductors.
RSI: 47; Chartmill Technical Rating: 7; Setup Rating: 7; Fundamental Rating: 6 (we note these stats in trade alerts and in spreadsheets to track how well they correlate with trade performance).
