Trade Alert: Buying The Dip
Bullish bets on beaten down nuclear and AI hardware names; plus a biotech buyout trade.
Buying The Dip In Nuclear & AI Plumbing
Using Monday’s selloff to lean into Trump-linked nuclear stock and a key AI bottleneck name
Over the weekend, we wrote about Washington’s newest “strategic bet”: the U.S. government taking a stake in a uranium enrichment company we were already long, USA Rare Earth (USAR -14.16%↓).
That move sparked a wave of speculation that Washington might eventually take stakes in other critical nuclear and energy-security names too.
You wouldn’t know it from the tape on Monday. Instead of piling into anything nuclear, the market punished nuclear and other momentum names, taking a big chunk out of many of the stocks that had led on the way up. In our view, that kind of “sell first, think later” reaction is usually more of an opportunity than a warning—provided we’re selective about where we add risk.
To avoid simply catching falling knives, we applied a couple of basic sanity checks:
A Chartmill setup rating of 5 or better, so we’re not buying something that’s still completely broken technically.
An RSI that’s neither oversold nor overbought, so we’re not piling into a name that’s still in free-fall or already stretched.
With those filters in place, we’re using this pullback to add exposure in two areas where we already wanted more risk:
A nuclear name where the Trump family is already invested via its uranium-enrichment subsidiary—a direct play on the emerging U.S. nuclear and fuel-security theme that Washington’s USAR move just highlighted.
A key photonics / optical-substrate supplier that sits in the critical path for AI and high-speed networking. This company makes compound semiconductor substrates (including indium phosphide) that end up inside the optical gear linking AI accelerators and datacenters. As AI builds out, that substrate bottleneck becomes more valuable, not less.
In addition to those, we’re taking another swing at a late-stage biotech that our Multibagger accounts remain bullish on. It’s a name that didn’t get acquired during the JPMorgan Healthcare Conference but still looks like a plausible buyout candidate at a price well above the current quote. There are more conference catalysts coming in February and a regulatory window later this spring when any serious suitor would likely want clarity. Rather than chase rumors outright, we’re structuring a defined-risk position that benefits if the story plays out, while capping the downside if it doesn’t.
Details on all three trades are below, in the paid section.
Today’s First Market Watchers Trade
(Photonics / InP substrate bottleneck theme)
