BotTrigger Trade Alert:
$KMX sold @ $64.15 for a +11.6% gain
$BABA bought back @ $151.49 with a 5% allocation
$NVDA bought back @ $163.80 for a 5% allocation
BotTrigger Trade Watch:
$BABA & $NVDA → on the next relative pullback we'll be rotating out of our common and buy a deep in the money call or vertical call-spread.
$AAPL → We're getting close to selling our existing spread & rotating that capital into another dream spread. We're not there yet. We'll discuss that setup in another post.
$IBM is getting very close to bottoming. Once we see confirmation of a reversal we'll likely add this one to the folio. A retest of the highs is very likely which is about a +18% gain from around here.
$TSLA → After being in @ $199 & $207...selling around $270 then buying back @ $304 & recently selling @ $371...we're once more looking to get back in. In a separate post we'll outline our plan for what's happening and how we want to be taking advantage of this. It will be a while and from what we can thus far see it's very likely TSLA will be revisiting the $290 area.
The Fundamental Take
Yellen’s slower pace of rate hikes combined with a better than expected forecast from Target is enough to keep the bullish trend on track. With earnings season on the horizon we remain confident owning Alibaba especially after Amazon’s Prime shopping bonanza yielded 60% growth. The movement towards e-commerce is in a stage of hyper growth. Owning Alibaba provides the same exposure to Amazon’s upside but without the risk of government antitrust issues (Doug Kass says preliminary talks in Washington DC are being held), without the risk of negative profits, and without the risk of the $13.4 billion acquisition of Whole Foods turning into an earnings disaster for the next 6 quarters.
Beyond BABA, another stock is emerging as a Wall Street gem. Surprise, it's Nvidia (NVDA).
We've made some phenomenal trades on NVDA but net wise we were better off staying put in this name.
A while back we published a technical / fundamental report on IBM's potential with Watson but have been unable to own the stock due to a lack of revenue growth and stock momentum. That along with the technical picture showed back then that it still had some more downside to go. And indeed we've thus seen about another -10 points of decline The overhang from IBM’s legacy business has proven to be an insurmountable burden. Nevertheless, we still believe in artificial intelligence as the next big thing. Back in April, IBM announced it would be the first major cloud provider to offer Nvidia’s Tesla P100 graphics processing unit (GPU) accelerator worldwide on its cloud. This GPU accelerator supports the intense workloads needed for artificial intelligence, deep learning and high performance data analytics. According to IBM, these GPU’s are already enabling customers to make breakthroughs in fraud detection, genomic research, better inventory management, automation of manufacturing, etc…IBM is not the only major cloud company Nvidia is working with. In May, Amazon Web Services announced an expansion of its deep learning partnership with Nvidia. Microsoft announced something similar for it’s Azure cloud. Nvidia’s GPU computing is powering the next generation of data centers around the world. Alibaba uses Nvidia. So does Tencent and Baidu. These server farms require tens of thousands of speedy GPU’s, all of which are being provided by Nvidia.
According to Jeffries analyst Mark Lipacis, Nvidia is years ahead of its competition and should be regarded as the a next generation Intel. The key is parallel processing. Parallel processing carries the ability to work faster in tandem than the single microprocessor architecture espoused by Intel for the past two decades. With connected devices scattered throughout the world collecting data, the advanced computing techniques developed through those efforts will be better able to crunch and understand that data, which Lipacis believes will become a core function of technology. “We believe we are at the start of the fourth tectonic shift now, to a parallel processing/Internet of Things model, driven by lower memory costs, free data storage, improvements in parallel processing hardware and software, and improvements in AI technologies like neural networking, that make it easy to monetize all the data that is being stored,” he wrote.
Not only is Nvidia the market share leader, it’s also profitable as the first major tech company to find large financial gains from artificial intelligence. The company reported EPS of $0.79 on $1.94 billion in revenue beating consensus of $0.66 on $1.91 billion in revenue. Revenue was up 48% and EPS was up 126%. Nvidia looks likely to have at least three years to run as this industry ramps. "The AI revolution is moving fast and continuing to accelerate," CEO Jensen Huang said in a release. "Our Datacenter GPU computing business nearly tripled from last year, as more of the world's computer scientists engage deep learning. One industry after another is awakening to the power of GPU deep learning and AI, the most important technology force of our time," he said. This is a stock you can add to as it grows. Today we’re purchasing a 5% allocation of NVDA largely just as a hedge against upside risk. Our primary intent will be to rotate that capital into the January 2018 $130 (or farther) calls; or a vertical call spread that has a clean 2x double. As always, we'll be targeting a position that is very much on the conservative size but giving us the ability to achieve oversized gains at the same time.