A Hellish Week.
Weekly Plan 1.25.25
Hey traders-
What a week is upon us! This will be the Super Bowl of all the risk-event in the year.
There is Consumer confidence on Tuesday, FED on Wednesday, ECB and GDP on Thursday and if that was not enough you have core PCE on Friday. To top it all up, you have the mega-cap earnings from AAPL to MSFT, TSLA, META this week as well.
There is nothing wrong with waiting this week out and seeing if this creates some favorable levels. If you backtest the data going back years on indices as well as stocks, pullbacks are not a bad strategy for long traders. Breakouts do come once in a while and when they do, even then they can be tricky. Bottomline is I do not want to loose money, I definitely do not want my readers to loose money.
As far some few recent calls go, you can see the power of taking a long term approach. Below are some calls shared here in last few months which have more than doubled in a few weeks -
Tapestry/Coach
Robinhood
Roblox
CLOV and Sofi
Northface/VFC
DoorDash
SAP
These and dozens others like these were shared here along with Line in Sands, and full DD and thesis why I favored them on the long side.
On the short term time frames, my options calls from last week alone- whether RCAT, GME, JD, BABA, SOUN- all were big winners.
I want to kick off the post by sharing a few thoughts on these price levels here, as well a bit of my personal thinking on the overall nature of current economic-political dynamic at play. This is just how I feel about these markets and is not based on a price or orderflow generated signal. I want to put that out there.
This is more applicable for longer term stock picks, not short term options or weekly or daily SPX/ES levels.
Generally when I share an idea on the long side, my goal is to see that stock move minimum 30-40% or more. In many cases, these stocks do very well because when I share them, they are on no-one’s radar. They are for most part ignored and hence they are usually at really cheap prices which gives them a natural floor to rise up considerably. We saw this in Palantir at 6 dollars. HOOD at 10 bucks. GEO at like 6 bucks. Or even a CVNA or a COIN. DOGE, MSTR etc.
Generally when I see an asset make all time highs or new highs, I tend to focus less on those as now they are already in the markup phase. This does not mean they cannot continue to grind higher. This just means it gives me less room to put a stop around these names. I will usually buy something and get out if it drops 20-30% from my buy point. If I am right even half the times, and each time I am right, it goes up 50% or more, I do not lose money on balance. This is an important context - and I am bringing this up since we are trading like 150 on NVDA, a 400+ on TSLA, AMZN now is approaching 250. This is not to say NVDA cannot be a 300 dollar stock or TSLA can’t trade 800. It is to say a) it is gonna be much harder compared to when TSLA doubled from 200 to 400 and b) I am not seeing the same orderflow at 450 I saw when TSLA was 200.
In other words, I am not seeing a ton of great setups as we sit here in January 2025. This can change next week. Or it may stay this way for months to come. Anyone who claims to know otherwise is either delusional or is fooling you. Patience in these markets is a must. Taking a long term approach of a few months to even a year or more is a must.
Now the problem with these type of newsletters is that some of the audience is looking for some quick actions, some quick gains. This is why we have a 99% failure rate in active traders. Less active you are, better you will do.
If you wanna be active in intraday time frames, that is another game. But there are just not too many great setups during the year to be active every week in stocks! A lot of newsletters will try to ram in some setups just for sake of it, we cannot. We have a proven track record of sharing good setups , at cheaper prices. We will stick to it. The downside is we will probably loose some get rich quick traders while we are waiting for some good setups. But atleast we will not loose money chasing stocks at unfair prices.
The other part of my thinking at the moment is that what you are seeing shape up politically here in the US has never been seen before. May be this was always the case to some extent, but it was never this overt. It was never so transparent.
So what do we have now? We have the politics and the markets merge as one entity.
We have the Leader of the USA now openly working with leaders of the industry but those who have been chosen have been chosen for all the wrong reasons. In a way you can say, that the politicians can now pick winners and losers of markets.
Earlier, the market forces picked who will win in markets. To win, you had to work obsessively to deliver products and services that the consumer wanted. This gave us the iPhone, this gave the FaceBook, this gave us Microsoft Office. And in doing so, these companies drowned the competition.
This is how a truly open economy works. Competition. This was all decentralized before. So your risk to the downside was finite since these top companies had little correlations to each other.
So instead of individuals slugging it out, fighting their odds and winning against them in face of adversity and competition, we now have a messiah like figure at the helm who has promised it is all going to be ok.
If you don’t believe me, look at the recent half a trillion dollar proposed capital spend on Stargate. In my opinion, this is one of the greatest examples of lack of understanding of what is needed, even what the problem is and instead throw billions of dollars on these schemes which frankly will add little to no value. The impulse for these schemes is insecurity, it is hostility and it is more control. When you look at this specific example in AI, there are others like DeepSeek who are doing this at much cheaper scale and are making their solutions more about serving than consolidating power in few hands. If you come from a tech background, you will instinctively understand the nature of this problem and it is not CAPEX. I will submit that we are seeing an end of dominance of American mega caps and it can only go downhill from here. However, this is a topping process. This will not be an overnight thing and if I am buying these mega caps here for the first time here at S&P500 at near 6200, I will personally be cognizant that there are probably better levels on the downside to buy these mega caps. There are certainly better smaller stocks which are not so correlated to each other. Remember, I first gave TSLA at 100. I gave AMZN at 130 last year.
My intent is NOT a political statement or to influence your thinking in any given direction, but to rather share my thinking. Whether right or wrong, I will strive to stay as unbiased as possible and try and share what I think is BEST when it comes to finding great ideas for myself at fair prices. Now note I am not saying this will all play out instantly. They will try and throw CAPEX at this trying to revive this or prop it up. But this is not a CAPEX problem. These companies are already cash rich. They are bloated with cash. This is a problem of centralization, too much power and too little willpower to create solutions that serve the most. This is basically owning one large mega cap with 7-8 trillion dollars in market cap. This is too little diversification.
When you pick winners and losers from a Central person’s perspective or a Central agency like the Federal government, this will stifle the competition. What we are seeing now will have long term impact on the public markets in the US. I am not sure yet how this will manifest but I think the results will be interesting.
To get some idea from similar experiments, you can look outside the US.
There are economies globally which are much more centralized than the US is seeking to be. China, Japan, Europe, Middle East. None of them is as robust and better performing than the US. In a sense, for good or for bad, the US was the only last standing bastion of free markets. Is it still so?
This is not so relevant if you are focussed on next few weeks to a few months. But this is going to take an enormous importance for someone counting on these markets to return 12-15% year over year for next decade or so. I think they are going to be disappointed.
If I am right, it becomes even more important to wait for more optimal levels to own these companies at fair prices. If I am wrong, we should breakout and be able to buy the pullback.
Levels for next week
So paraphrasing from the action last week, main expectation was to see us dip and the dip being supported.
This dip never came but towards mid of the week I was bullish at 6050 for a move into 6100s and on Thursday the main idea was to see 6100 supported for a move into 6150s.
On Friday, we saw some selling and we closed down into 6120s.
Looking at the week ahead, you have this whole crazy week loaded with event risk and right below us at 6090 or so you have a key order flow level.
If you are super bearish here, I think it will help if we can see a close or two below 6090 or so. Minus this, I think we could remain supported for a test of what’s out there at 6170-6189 area.
Scenario 1: I expect dips if any into 6090 to be supported for a move back into 6156 or so.
Scenario 2: My edge case on the week will be if we are able to close below 6090 on the Daily time frames. In this case, I will share an update in the chat room and/or the Daily plan.
Generally I still see dips being supported. How much of a dip we get I think comes down to these mega cap earnings and the FOMC. The FED also now takes a backseat. I expect Trump to play a larger role, as a quasi FED. So Trump is more important now than the FED. Atleast a year or so out.
Regardless, I will be a bit surprised if are able to take out 5977 on the downside. I think the line of least resistance could remain up until and unless we begin to close below some of these levels I shared earlier.
With this out of the way, let us look at some other things on my radar.
SOFI
Back in November I did a detailed DD on why I liked SOFI at 7 bucks and since then the stock has doubled or so. See below.
I still like SOFI even here near 16 at the moment but do know that these stocks can have a wide volatility around them of 20% or so.
At any rate, I think if we see 12-13 area supported, I personally see SOFI push higher here into 25-30 area.
KGC
At start of the year, I shared my bullish thesis on Gold and KGC when it was 6 dollars. This stock in about a year has risen more than 70% and is now trading near 10 dollars. See below.
With spend from the FEDS, weaker dollar and with cheaper fuel costs, I think these Gold stocks could have room to run. At any rate, Gold is looking fairly supported and this could in turn fuel such stocks higher into 15-16 area. May be higher. I favor dips being supported on KGC.
Note that the most value from this blog is for the trader taking a longer term view.
How long did it take SOFI? 3 months.
How long has it taken for our call in KGC? 1 year.
What about PLTR? 2 years.
So you see a pattern. Convert your membership to annual plans and stop worrying about price hikes and commit to minimum of 2 years. If your game does not improve in 2 years, you can always go back to thousands of other chart based experts. What’s there to loose?
TWLO
TWLO had a very nice move on Friday. It was up 20% and is now trading 135. I like such breakouts. Now note that TWLO Line in Sand could be 110-120. If this level holds, I think we heading much higher into TWLO around 160s and we will reassess if and when we get there.
NVDA
The more I dig deeper into the Stargate project and the trillions in spend that will come to support it, the more convinced I became that here in the US , the focus will be on throwing more hardware on this. They are treating this as a CAPEX project. This is typical in current thinking here in the States.
I think this helps NVDA. I will not rule out NVDA yet for much higher move into 160s, may be a bit higher. Line in Sand remains around shared by me a couple of weeks ago. Please refer to the archives. It is about 140 at the moment.
Energy
Hardware spend and the costs associated with running all this hardware cannot come without the energy demand to fuel all this.
Look at SMR for a second. See below.
It is 27 now. But let us assume it holds this 22 area. I see it headed higher into 38-40 area if we hold 20-22 on this Alt energy stock.
Few more names below which were shared by me here in last few months alone.
~ toc
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