Trade Alert: Momentum Pullback, Thesis Intact
The AI buildout's still happening, and we've got three new bullish options trades on it, including one on a name that's been a 2x repeat winner for us this year.
Momentum Pullback, Thesis Intact
Zero Hedge highlighted a Goldman note yesterday warning that the AI/momentum trade has become “one big trade” (“‘It’s All One Big Trade’: Momentum Euphoria Is Cracking, Here’s How Goldman Is Hedging The Coming Hangover”) The concern is fair enough: TMT (Technology, Media, and Telecommunications) has accounted for most of the S&P 500’s gains this year, semiconductor and AI infrastructure names have carried the tape, and Goldman’s Momentum factor has surged sharply over the last three months. Narrow leadership can make pullbacks violent when positioning gets crowded.
But crowded doesn’t mean wrong.
The AI Buildout Still Looks Intact
Suppliers are still pointing to real demand, not just narrative demand. Micron (MU 0.00%↑) , for example, has projected the high-bandwidth memory market growing from about $35 billion in 2025 to around $100 billion in 2028.
Nvidia (NVDA 0.00%↑) reports this week, so we’ll get more clarity soon on current AI infrastructure demand. But for all the market nerves, Nvidia CEO Jensen Huang didn’t look too worried last week while slurping noodles with his fans in Beijing last week.
Goldman may be right that the momentum trade needs to cool off. The last couple of sessions may be part of that process.
AI-Adjacent Trades Are Still Working
There was another useful datapoint on Monday. In a Zero Hedge post last week (“You Are Not Bullish Enough”), we mentioned Leopold Aschenbrenner’s prediction about the scope of AI:
As we noted there, Aschenbrenner is a former OpenAI researcher, author of the widely read Situational Awareness AI essay, and now a successful fund manager, who has been ahead of the curve on AI.
On Monday, a 13F filing showed that his firm, Situational Awareness, held 10 million shares of T1 Energy (TE 0.00%↑) at the end of Q1. TE shares soared more than 23% after that filing, as investors tailed the position.
That matters for two reasons.
First, even during the momentum pullback, some AI-related infrastructure trades are still working. T1 isn’t a GPU company; it’s an energy infrastructure / power-buildout name. That fits the point we’ve been making: the AI trade is broader than semiconductors, and the power layer may be one of the most important parts of it.
Second, we were already there. We added a T1 trade last week, before Monday’s 13F-driven move:
This was our T1 trade from that alert:
Today’s Third Market Watchers Trade
Energy infrastructure / power buildout theme
The stock is T1 Energy (TE 11.82%↑), and our trade is a combo consisting of these three legs:
Buying four of the December 18th, 2026 $8 calls,
Selling two of the December 18th, 2026 $5 puts,
Buying two of the December 18th, 2026 $3 puts,
For a max net debit of $1.95. The max gain on one combo (4 long calls, 2 short puts, and 2 long puts) is uncapped, and the max loss is $790.
This trade filled at $1.70.
How We’re Trading This
We’re not looking to buy the highest-flying AI names after vertical moves in either direction. We’re looking for stocks whose charts appear to have stabilized—names with reasonable Relative Strength Index (RSI) levels, constructive Chartmill Setup ratings, and bullish directional pressure..
We’re also using options tenors several months out, so a near-term momentum pullback doesn’t kill the trade. And where the options market gives us enough premium, we’re harvesting elevated implied volatility on the way in through put-spread and short-call financing legs.
If a pullback continues for a bit, short call legs can decay quickly and sometimes be bought-to-close for a fraction of what we collected when selling-to-open them. That can leave us with longer-dated bullish exposure still intact, and already partially paid for.
Back To A Repeat Winner
We’re also not new to this part of the supply chain. One of today’s names has already given us two successful exits this year: a 3-leg combo that produced a 1,069% profit on premium outlay (372% return on max risk), and a later hybrid combo that produced a 275% profit (72% return on max risk).
That doesn’t guarantee a third win, but it does explain why we’re willing to go back to the name when the setup lines up again.
Today’s trades are built around that idea: don’t chase blindly, don’t abandon the AI infrastructure thesis because momentum cracked for a couple of sessions, and use defined-risk structures that can survive some volatility and use it to offset the cost of our bullish bets.
As usual, this trade alert includes pre-set exit order instructions, so in a volatile tape, we can automatically cash in gains.
Today’s First Market Watchers Trade
Optical / network-test / AI infrastructure theme
