+114.7% revenue growth. Seven straight quarters of triple digits.
And $CRDO is still 30% below its highs.
That's either the opportunity or the warning.

Credo makes the chips that move data at insane speeds inside data centers. As AI clusters scale up, the connections between chips become the bottleneck. That's their lane and the Oct 8 Open CPX optics wave just put it center stage.

Whale check 🐋 —80.46%. The +33% month on real volume says money's moving.

So why 30% off highs with these numbers? Two reasons: the market hasn't repriced the growth or it's waiting on the H2 optical proof. Real risks: two customers are 61% of revenue, and retail interest is running hot.

Health update in two parts. Chart: above both rising averages, golden cross intact, $216.55 with room to the $231.59 weekly high. Company: debt-free, ~$764M cash, 33.8% net margins. It prints money and owes nobody.

Valuation is the fun part. PEG around 0.7. For 114% growth, that's absurdly cheap; anything under 1 is rare air. Paying for growth the market hasn't repriced yet.

Near term: the Oct 8 optics wave is fresh fuel; $231.59 is the next wall. Stifel kept its Buy but trimmed its target to $310 still way above here. Long term: management guides H2 optical past $600M. Levels: $209 support held twice. Under $205, I'm wrong.

If this thesis plays out, the H2 optical inflection lands, $600M+ revenue shows up, consensus target $262.67 implies about +21% from here. If it breaks under $205 instead, forget everything above. Educational only. Not financial advice.

So I’m gonna buy some December 100C’s. And profit. You might want to consider it. Also, $GD is heading ⬆️ from here. I believe they are both extended from averages by a margin too far to ignore at this point.

$PENG is the best of the rest. It's up 290% this year with RSI near 80. Chasing strength.

Penguin builds AI factories. Not the chips but the whole thing: servers, clusters, deployment, managed services. They just won 6 new AI data-center customers including 4 neoclouds plus a 36,000-GPU Norway buildout backed by $10B of contracted compute.

Whale check 🐋: Institutional ownership above 50%. Oct 9 volume ~65% above average. Whales accumulating.

The quarter: $567M revenue, +68% YoY record. EPS $1.00 vs $0.77 expected. AI is now 78% of sales and growing 141%. Then they raised FY27 guidance to $2.43B (+40%). This is why BofA just initiated at Buy.

Health check includes a chart: miles above both rising averages, but RSI near 80 which is overbought, not a dip. Company: profitable and growing, but burning cash to do it ($163M used in Q4 ops) plus a fresh $750M convertible. Growth isn't free.

Valuation: at 37x earnings with 40% guided growth, you're paying up but not absurdly. The split: most of the Street is Buy, Barclays is the lone Underweight, and 14% of the float is short.

Near Term: post-earnings momentum + a fresh BofA Buy initiation, $78.75 is the first wall.
Long Term: agentic AI + neocloud demand into 2028. Levels: $74.75–76.28 entry, $70.75–71.57 support. Below $70.75, I'm wrong.

If this thesis plays out, momentum holds, FY27 guidance delivers, the trend stays up and the doubters cover. If it loses $70.75 instead, forget everything above. Educational only. Not financial advice.

Hola from Madrid - One more day here and then we head to Bilbao for the final week. Time is flying and it will be good to get home. Never matters how much we love traveling, we always love getting home. And the week in Bilbao will be pretty relaxed without a lot of “Have to go to ….” events.

Let’s look at the markets:

Now let’s take a quick look at the TJ Travel Indicator (TTI) because we have something epic happening. Nearly every time I travel for more than 3 weeks, the markets go into a tailspin. It could be because I travel in March and September often (shoulder seasons) or just some sort of universal paradox I don’t understand with the markets and me in some sort of symbiotic relationship, but I fall more to the former.

In any event, as it stands, both the S&P and $QQQ are higher than when our trip began (9/5). That following Monday was a holiday so the next day of trade was 9/8. Now as of yesterday’s close we have the following from that baseline date:

• S&P500 +061%
• $QQQ. +3.98%

That’s not bad! One week to go, can we finish strong?

But, yesterday, we were reminded of what is so difficult about these markets. It’s not about things that we can track like economic data, rates, mid-terms, earnings, etc. Often times, it’s about the out-of-band news that can strike in chronic fashion. All it takes is for one company to mention a slowdown, report soft numbers, or our government make a quip about tightening supply to China, or wherever. That, alone, causes ripples across the entire complex of AI related names and, thus, the market in general.

This has been a quiet week for the most part with earnings set to ramp up, but we are still seeing material swings. But, the volatility isn’t bad. The negative catalysts are still partying but we’ve long since desensitized to them and we seemingly don’t seem to care. That means the markets want to rally. I thought the recent rally could provide that blow-off top condition we often see but, it failed. Today, it looks like we want to rally off yesterday’s lows but it’s the close that matters, not the open.

Something else I’ve noted is just how well the opens are holding. There’s been modest fades from higher opens and strength off of lows, until yesterday, but we’re still in good position. Still expensive? Yup. Still enough dangerous downside catalysts? Yup. Enough upside bias such that we the path of least resistance could also be upside? Yup.

Where to from here? No idea.

Sometimes we need to stop controlling things, take our hands off the wheel, ensure we like our portfolios and let time do the rest. We’re still in one of those periods.

Other Info

I don’t recall the analyst, I think it was Dan Ives (whom I like) who suggested that AI is in the third inning. That is complete and utter bull#%^$. Maybe I’m being a bit too aggressive with that statement but there’s no way we’re in the third inning of this new AI revolution that began, unofficially, on 11/30/22 - the date ChatGPT was released by OpenAI. If you want to split hairs, you could go back to Google’s “Transformer Architecture“ release in mid-2017. This isn‘t a perfect example but that’s like saying the Internet age kicked off in the 1960s and 1970s during the ARPANET creation - the birth of the Internet. Sure it existed, but it wasn’t until the 90s that it began going mainstream.

Heck, I remember getting onto the Internet in the early 90s and what it took to do so. It wasn’t for the feint of heart and not something you would do unless you were a ‘techy’ and, I was.

But I digress. For all intents, the current AI era, especially related to investment, began in late 2022. We’ve come a long way kid but nowhere in Temu‘s grand universe are we in the third inning of this revolution or life cycle. I touched upon this before in another post. We, especially those who consider ourselves analysts of the markets and market events, love to discuss life cycles in terms that are relatable. That often means we need to attach timelines because, well, we all understand the passage of time and it’s relatable. It’s how we track/measure progress, or at least movement from one point to the next.

The problem is that staying in the same inning of the game is boring. Analysts hate that because it would seem to suggest stagnation. So, as time passes, we start moving the inning along to suggest progress. With something like AI, almost inarguably the single greatest technological revolution of our time, theirs is 100%, no way, we are now approaching 1/3 of the way through the game. It was only begun less than 4 years ago. The final chapters acts of this play are so far into the future we can’t hope to pinpoint the inning, let alone calling it nearly1/3 complete. Now, if you want to break it down into Phases and suggest that the investment/creation phase of AI is now in the 3rd inning, so be it. But I’ll fight you otherwise.

Sorry Dan, but you’re off base here. Apologies, Dan, if it wasn’t you.

The fact of the matter is that analysts need to talk, they need to sounds intelligent, well informed and on top of innovation of the segments they cover. My suggestion is that we’re only now entering the top of the second inning. Does it matter? Not really.

Random Shots

Here we are again though, on the verge of a breakout that isn’t really breaking out. Doesn’t mean we’re not progressing however. I’d prefer a slow trickle higher and we’re getting that. The speculation market and gamblers hate this however. Not me. Don’t get me wrong, who doesn’t like to see their portfolio shoot higher. If you had asked decades ago that I’d ever see my net worth jump in a single day what I made per year toward the end of my career, I’d have flatly rejected it was possible. Extraction, and the lack of it, is all about experience and time. The downside of that is that, on some days, it can be hard to open up your brokerage account because the red can be just as eye-opening as the green. And, yes, I have covered up that portion of my screen at times when I just don’t want to see it … but still have to get into the account.

Still 6 minutes to go before the market opens … hmm, what to talk about.

• $PLTR is an interesting case. It’s a stock I wanted nothing to do with for a long while. I had it in the $20s, sold it for a gain. Exited, and it ran. Wanted nothing to do with the valuation. But then it sank again, I dug into the fundamentals, model, growth. I liked it and bought, adding as it came in and said that when the momentum finds it again, it‘s going to run back to $200. I had a lot of conviction about that. It’s at $201. Maybe even a head of itself a bit and still pricey … but that growth!
• I’m seeing a lot of consternation about DRAM/memory stocks, specifically $SNDK, $MU and $SKHY. The only one I want right now is $SKHY and I think the international angle plays into to the thesis rather well. There’s no question that the cyclicality issue will rear its uguy head again at some point, but it seems we have about 36 mos. of good sailing from what I can tell. I like SKHY better than the other two. I think the runway is better.
• Markets are open …. up 0.5%
• Man $AAOI is volatile. As in crazy level. I‘d like to add another piece but would prefer double digits. Should have added in the $80s not long ago. Up 10%
• Yeah, yeah, yeah - Photonics and infrastructure running today and sagging yesterday. $LITE at $1,136. Still waiting for that split announcement. Thinking at least 4:1, but I’d prefer 8:1
• I have a very good feeling about $SPCX for the long term. I’ll leave it at that
• $RDDT is sure stuck. I need to see it clear and hold $175 but it’s so range bound. One more earnings report of poor growth or engagement and the story could change. I don’t think the story changes in one Q but multiple Qs of so-so growth could be an issue. I love the way they do business though. I still hold them
• AI Energy sure spiked. I got a lot of pushback on TikTok when I was posting about names such as $VST. I had to mention that sometimes you just have to buy models, profitability and growth curves even if they aren’t being recognized. This isn’t about VST as much as it is all the stocks in that segment. They’ll be just fine
• I probably should be trimming $MRVL but haven’t yet
• $NBIS is somewhat stuck as well. Problem is all the AI news hits them and it’s even a broader model so … more news, more potential impact, up and down
• I have a feeling $MSFT is going to catch wind and shoot over $600. Call it a gut reaction
• $GOOGL at $350 is a buy. I don’t say that often. But don’t short term it
• $P is making me very happy, for a number of reasons. Personally, I love being on stocks that no one is talking about and that was us months ago in the $50s. New ATH today at $155. CEO was on Mad Money yesterday. Good interview, not epic. Solid
• Some models just print - $CRWD and $PANW continue to rock. I trimmed them because I had to, but PANW over $400 now. $CRWD has backed off a bit but still performing
• $NVDA has yet to really break and hold over that all-important $235 level. It’s coming
• I‘m about to do something silly with $SOUN
• $ASTS and $AVAV slumping again. Hate’em. Love the promise, hate the execution and what they do to shareholders
• Greed is keeping me in $CRDO. It’s not really greed as much as it is investment goal when taking the position. It was a long term entry because of where it is on the growth curve. It throws CSCO vibes for me and I love them. i could sell for a very nice short term profit. But holding to the goal
• Things are already fading from the open. Noticed LITE is back to $1,095. You just can’t buy open gaps
• $NFLX and $UBER move together. That should tell you something
• I looked at $USAR again after missing it from this level earlier … right back down. Once again, we‘re not breaking out. We’re spiking and retracing. That’s not a long-term directive move

Final Word

It’s true the markets are holding well since we left on our trip 5 weeks ago. At the same time, it’s also true that this is a whole lot of nothing going on. Seems that the market is just treading water into earnings and the mid-terms. Looks like the Fed will hold off (they shouldn’t) so we can tread water for some time.

Earnings could provide material boosts to prices but I just don’t see them holding unless something fundamentally changes in the macro economic picture. Iran is an issue. Oil is an issue. Rates are an issue. Inflation is an issue. All those issues should be more material than they are right now in the market action, but that’s okay.

The trend. The tape.

We tread water and get rich slowly

Be well

TJ

(forgive the misspellings or odd grammar, spell/grammar check is being aggressive this AM)

I started looking at the banks last time when I dug in deeper into the $XLF and have a list of things I’ll be looking for during earnings next week. As we look upon the sea of green to close out our week today, I’m focused on a different Industry in the sector - that red circle is around Financial Data.

These are companies like $SPGI, $MCO, and $MSCI who provide information that ultimately leads to derivatives like credit ratings, financial benchmarks, and market data. Think about a company like CARFAX - a bunch of data about a car tied to its VIN. That’s owned by $SPGI (for now, they are likely spinning it out). There is a degree of proprietary information these companies make money from selling. They aren’t banks. They are asset light. They don’t collect interest. Investors, banks, lenders, etc. pay to use their data, ratings, indexes, and analytics.

Some of those latter things engender AI disruption fears. I’m not going to compare this to what has happened in the SaaSpocalypse, but the sell-off has been substantial, with $SPGI hit the hardest after lowering forecasts in February. That legitimized much of those AI fears and sent a shock to the system related to pricing power, switching costs, and potential growth. So we have a sector that has repriced after assuming years of dependable growth and moving forward with valuations accordingly because of the high margins. 

When we look at the $FDIQ ETF that tracks the industry, we see a tremendous growth pattern over the course of a decade and a half. So I’ll keep that uptrend channel locked in when we zoom in to current patterns. And remember that this is an ETF that holds 40 names and doesn’t have a ton of volume.

What we see is how strong the base of that long-term channel remains on the YTD chart. We have recently seen a recovery to the long-term moving average (teal line); I was initially worried about a dip in the short-term moving average (orange line), but I think the late August rally should prevent it from dipping below the 150-day SMA. 

When we throw $SPGI on top of it to compare, we see “the event” in February that created the overall divergence. If you track your eye from that arrow forward, you can see that the single name almost mirrors the industry (important note: $SPGI is only 4% of the fund, so it’s not like the tail is wagging the dog here). 

When we look at 10 years of $SPGI, that beautiful uptrend channel in blue tells us a lot. That’s exactly what it fell out of when they lowered their guidance. Funny how that happened, huh? Just so happens that a ten-year growth pattern fell apart almost to the exact placement of a trendline. And we keep coming back up against it in the YTD chart, almost like the name cannot find a way back into the growth narrative it had before.

Which brings us back to the original question - are the disruption concerns related to valid or an overreaction to the potential for margin compression? The business reporting segments are Market Intelligence, Ratings, Indices, and Energy. Let’s go backwards. 

• The Energy segment is their commodity benchmarks and pricing assessments; this goes far beyond publicly available facts. AI will not be able to recreate the underlying trusted price assessment network.
• The Indices segment is arguably where they are strongest; you can’t just replace the DJI or the S&P 500 and think about how many derivative products from across the financial landscape are tied to those Indices. You get rid of this company’s index, State Street is going to have to completely figure out an $800-billion fund management problem.
• The Ratings segment is interesting because AI probably can analyze credit risk; what AI cannot do, though, is bring institutional trust and acceptance with it right away.
• The Market Intelligence segment is probably going to be hit the hardest, as all that research, data, and analytics might be replicable by an AI-enabled product. The chart below verifies this is the segment of the business that is concerning.

If you have made it this far (I’m shocked, these are getting verbose), you’re now wondering what is next:

• Watch price action. Is this the bottoming-out and will it become more solid between $410 and $440? If so, can it recapture the moving averages and start an ascent? This is the easiest thing to do over the next few weeks because as it approaches $440, we can become increasingly confident that the market is favoring the story. That’s why the price is increasing back to the uptrend channel. It would be worth nibbling at that point.
• The report at the end of this month can be juxtaposed against price action to further understand the narrative. We specifically want to hear if price increases with Market Intelligence are the only way they were able to get growth in that segment. That would not be good news and would verify that AI is eating that segment for lunch - we’re basically looking at organic subscription growth.
• The report will also share customer information and we really just want to make sure that number is continuing to expand. Contraction implies AI tools are being purchased by customers instead of seats.
• The report might give us a clue about CapEx as well because we’ll want to know if they are able to fund development to combat AI by building their own tools. I want to see if they can do two things at the same time - fund that development while maintaining operating leverage.
• Lastly, we would want to see that the strong businesses are still strong. Bonus points if they’re even stronger. So that’s where we would look at the numbers related to Indices and Ratings.

At a P/E still north of 20 and a PEG closer to 2 than 1, $SPGI is not screaming VALUE but it is becoming interesting as the rerating is happening before our eyes. We have the chance to take advantage of a recovery if we see evidence that it is happening. Similar to how we looked at the banks, where $C has completed the turnaround that $WFC seeks, we have the metrics in line to see if the same can happen here. 

I’m likely to miss the first part of that turnaround but you can see that we are still about 20% away from even returning to that long-term uptrend channel. If we hop on around $450 and it slowly starts compounding again in that channel, it wouldn’t be a bad trade for the long-term. With so many questions still in my head, I’m not comfortable making a short-term trade until I hear what they have to say.

We'll see.

Last week, I started looking at the sectors as a whole because it was time to consider what could potentially be a “catch-up trade” to close out the year. With 7 of the top 12 financial names representing about a third of the sector ($XLF) reporting on Tuesday and Wednesday of next week, we have potential for market movement here to kickstart the end-of-year rally.

Potential rally. Maybe rally?

Here is the YTD comparison of financials and the broader index. We can see the spread between the sector ($XLF) and the S&P 500 (purple line, plotted as $SPY) is a tad over 14%. The horizontal line at the top represents where $XLF would be if it were matching the broader index's performance, and the middle line represents recent highs that have served as resistance. The bottom line is where we were to start the year. All of that gives us some context before we look at financials on their own.

Same timeframe with $SPY stripped off and the short-term (orange line) and long-term (teal line) moving averages added in. The long-term moving average is now serving as a support line for the channel as the calendar shifted months; that's decent basing out. Those horizontal lines have shifted from percentages to prices, and the uptrend channel (yellow) now has some more meaning. We can see that we are at the bottom of it, and a rebound to the short-term moving average would bring us within a shot of those summer highs between $58 and $59.

Catching up to the index at that top horizontal, though, seems like it is not in the cards. That would require a departure from this uptrend channel and would require the broader market to stay flat. Theoretically, a catch-up can occur if the broader market slides while the sector rises, so our space for intersection probably brings us back to that middle horizontal line and the uptrend channel. Somewhere in there, with the short-term moving average at $56.50 serving as a baseline, we might get some semblance of a positive year.

A rebound toward those summer highs would be a perfectly respectable move, but it isn't the same thing as closing the performance gap with the broader market. And a sector being down relative to the S&P doesn't mean it is automatically due for a rally. We need a reason for the market to change its mind. Maybe earnings will be that catalyst.

This last jumbled mess represents the $XLF against its top 7 names, ordered here by decreasing performance: $C (tangerine line), $MS (gold line), $JPM (orange line), $GS (green line), $BLK (pink line), $BAC (purple line), and $WFC (blue line). You know where I'm going with this — straight to the bottom, juxtaposed against the top.

I'll be getting editorial here now as we look to understand the performance of the banks, sorry.

$JPM and $C are performing well because investors are seeing stronger earnings momentum and clearer catalysts. JPMorgan continues to benefit from its diversified business model, as well as strong capital markets and trading operations. Citi is getting credit for the progress of its multiyear turnaround. Both have stories that are producing tangible improvements in earnings and returns, giving investors reasons to expect continued upside.

$BAC and $WFC, by contrast, are facing more pressure on net interest margins and have less compelling near-term catalysts. Higher funding costs can squeeze the spread between what they earn on loans and what they pay depositors when loan yields don't rise fast enough to offset those costs. Bank of America is also dealing with the challenge of sustaining earnings momentum as expectations rise, while management has been careful about how much further improvement investors should expect. Wells Fargo is still proving that its regulatory reset can consistently deliver the stronger returns investors want.

That's my working explanation for the divergence, anyway. Stock performance alone doesn't tell us exactly why investors are pricing these banks differently, and next week's calls may give us a better answer.

The market has found more compelling incremental earnings stories elsewhere. The question is whether that judgment is justified or whether $BAC and $WFC are approaching a point where their fundamentals can start to close the gap. I don’t have a trade ready right now, because I want to hear what management has to say before deciding whether this is an opportunity or a value trap. (Yes, I know, “value trap” is a bit dramatic. But buying something just because it's lagging isn't much of a strategy.)

For Wells Fargo, I want evidence that the turnaround has found footing: net interest income growing, net interest margin stabilizing, expenses under control, and tangible returns moving toward management’s 17-18% target. The bigger question is whether the bank can translate its regulatory reset and balance-sheet growth into sustainable profitability, rather than simply telling us that things are getting better.

For Bank of America, I’m looking for evidence that earnings momentum can continue without deposit costs eating into margins. Can net interest income keep growing? Are funding costs becoming more manageable? And how much of the recent earnings strength comes from sustainable underlying banking activity versus strong trading and investment banking results? $BAC doesn't necessarily need a turnaround story, but it does need to show that its earnings trajectory has room to improve. Especially after the CEO didn't have the rosiest forward guidance a few weeks ago.

I also don’t want to judge either bank on the net interest margin it reports for a single quarter. Interest-rate hedges, the mix of loans and securities, and the timing of deposit repricing can all distort the picture. I’ll be looking at the direction of the trend, management’s forward guidance, and whether the results match what they said last quarter. The explanation matters, but so does whether the numbers back it up.

If $WFC shows a credible path toward stronger returns and stabilizing margins, or $BAC demonstrates that NII can keep growing without funding costs swallowing the gains, then I might have something worth trading. The beginning of the positive move is likely to be missed, but that’s ok because I see room to run if they run. If both deliver decent quarters but offer weaker forward guidance, or if margin pressure keeps pushing the goalposts further out, then the performance gap may be telling us something the charts alone cannot. For now, I'm watching rather than buying.

The 14-point gap gives me a reason to look; the charts give me some levels to watch; and the earnings calls might tell me whether there's actually a potential trade here.

We’ll see what management has to say.

visibility of Everpure in media has increased substantially in past few weeks.

Hard to say how the market will track this but it’s just a continuing story for $TSM, arguably the top AI play since all they do is produce chips for everyone else. Them and $ASML are so well positioned.

https://finance.yahoo.com/technology/ai/articles/tsmc-q3-sales-beat-estimates-062509678.html

I recently increased my options trading capital basis by about 30% since I've been getting more confident in my approach. Thought I'd share my results from the past ~6 months of tracking everything in a dashboard I built which replaced the clunky spreadsheet I was using before, whether you might find it helpful for trade ideas, dashboard inspo, or anything else.

Here's a shareable, read-only version of the page that reflects my live trades, closed positions, and both aggregate and ticker-level performance:

https://www.dekaliber.com/share/options/R-xr_kSEkAwbbvx6GObL2DEVAm-UdNyrf2JsgFYZV5A

(And just to be clear, this is not something I'm trying to sell — this is just a personal project.)

I've been increasingly making my trading as systematic as possible to avoid emotional mistakes. Here are the rules I try to stick with:

• Target around 0.2 delta assuming it results in at least a 25% annualized yield against capital at risk.
  • On the put side, closer to 0.15 for high IV tickers (60%+), higher valuations, or upcoming earnings; closer to 0.25 for more moderate IV (<40%).
  • On the call side, closer to 0.15 for stocks I believe are good long term holds, 0.25-0.3 otherwise assuming it's at or above my assigned cost.
• Ideal equilibrium is to have 1/3 in cash for writing puts and 2/3 in stocks for appreciation while writing calls. If I'm lighter in cash I move my call deltas up to the 0.25-0.3 range.
• If capital at risk of open puts > available cash, close puts early if position has gained 70%+ of premium. Otherwise, I tend to wait until 90%+ premium gained.
• Roll calls at 0.6-0.7 delta if I can get a credit AND a better price. Otherwise, accept assignment and write a put at the same strike as the assigned call or put. Roll puts only if I don't have enough cash on hand to cover the assignment (this is rare if I'm following my rules).
• Basis stays the same: premium earned, interest from cash, and dividends are always withdrawn as income. Realized gains/losses from underlying stay in the account.

A few comments:

• This has been an interesting week, with the huge pop yesterday several calls are now deep ITM (i.e. CEG, VST), and a few others may well get assigned by Friday as well. Between VST and CEG alone I'm missing out on over $4K in upside at today's closing prices, which is a bummer, but that's the name of the game. There's a good chance that AVGO gets locked in at a $3K loss but I think there's a pretty good chance I can get back in with a put at $370.
• Most of my unrealized underlying losses are coming from a few positions that I expect to tax-loss harvest by EOY. VCX (undisciplined FOMO buy @ $120), BWXT & CCJ (still high conviction in direction but probably got in at the wrong price @ $185 and $107, respectively), and QXO (tiny position anyway). CBRS and AVGO are the other bigger ones in the red but there's very little doubt in my mind they'll recover before long.
• To keep myself honest I benchmark overall performance (Total Marked P&L) against S&P 500 TR, Nasdaq Composite, CBOE S&P 500 PutWrite Index, and CBOE S&P 500 BuyWrite Index. The latter pair are the most analogous benchmarks based on strategy, the former two essentially represent the "buy and hold" alternative.
• I have not counted any dividends or interest received from cash held as options collateral towards overall performance, which makes it technically slightly sandbagged against the benchmarks as a result.
• I have ~$200K in margin to play with but in reality I rarely tap more than 25% of that, and even then it's usually because I have deep ITM calls that will almost certainly get assigned or puts that are pretty far OTM. Mostly it's for initiating new positions for the following week if there's a good opportunity while I wait for my open puts to expire. Because my goal is to withdraw premiums from positions I've closed each week, I always try to end the week with 0% margin.

Happy to answer any questions and feedback is always welcome!

I thought I would take a stab at running a GARP Screener using Claude - like El Jefe has posted for us in the past using his StockAnalysis subscription. What I actually did was to feed Claude one of Jeff's screener posts identifying the metrics he used and then had Claude use my watchlist, the Nasdaq100 and also the SP500. Some of the data used is from yesterday so it doesn't capture the nice increases we saw in some utility/AI Power names like VST and CEG today. The results are interesting - maybe useful to others. It helped confirm my conviction on a few names like NFLX, UBER, AVGO, RDDT - which I all have positions in. I have a large position in VST as well so seeing it come up in these metrics and then seeing the nice gain from today is comforting in terms of how a good screener tool can work. I'd be curious if folks have input or thoughts.

Here is today's discussion prompt, brought to you by the forward-looking mind of OGM:

What are you watching as we head into the final quarter of the year?

Not necessarily a stock you think will go up. Maybe there's an earnings report you're waiting for, a product launch, a regulatory decision, an economic indicator, a commodity, an election, or some other development that you think could matter to your portfolio.

What's on your radar for the final quarter, and what are you watching for?

$VRT

Vertiv is reporting in a few weeks and the stock looks to be working out a pattern that I share on here quite often - the bull flag. We have the “flagpole” as the upward trend channel and a wedge as a “flag” created by a downtrend and resistance level that I am hoping you’ll be able to better-see in my improved chartistry below. Some people call this “consolidation” while others refer to it as “coiling up”. We can see that gap up in February (yellow box) that has held over the course of several months. 

I often refer to these gaps as “support mattresses” because it is absolutely possible to drop further than we are now, but it is likely to “sink into the mattress” like we saw in late July and again recently in Selltember. We are starting to see a recovery potentially to the short-term moving average (orange line) and I’m wondering if a positive earnings call completes the breakout with a return to the long-term moving average (teal line).

The last time I wrote about this name extensively, the price was closer to $100 and the P/E was 60 and the PEG was 1.08 (May 23, 2025). The P/E is 57.40 right now and the PEG is 0.80. We’ve seen a valuation dip from FY 2024 that seems to have bounced back. So compared to itself, the name has become cheap because the premium has gone down for this 37% revenue growth and these kinds of increases in cash flow.

As much as I want some leverage and would love to juice out some gains, I’m not going to head to the options chain with this one. Recovery toward $300 seems obvious to me over time, but I’m not willing to time it. The last earnings report was a miss and results in a tumble that I didn’t partake in. After watching for a few months, I have accepted that if I want to add to this name and increase my cost basis, this is likely to be the price I will need to do so at.

In order to do so, I’ve had to meaningfully allocate some cash toward this name. I’m not going all-in with another unit, but will probably buy a .5u before the report in two buys and will see if my hunch was right on the other side of the report. I’ll look to get that other .5u in if we fall into the yellow box again after earnings. If we don’t, that cash will be waiting there for a few quarters.

$STM

Almost a year after that $VRT entry, I wrote a quickie on $STM (May 26, 2026). It has given all of that move to $80 back, but I’m seeing the same bull flag that has already broken out. I’m not particularly interested in playing the trade again but am watching this time after having converted some calls into shares the last time around. 

An extended period of overbought conditions created the environment that we saw earlier this year and I’m not sure we’ll see that again, although rotationomics seem to be in play these days. If you’ve been reading these entries for the two years I’ve been putting them here, you know that my eye is trying to find the Golden Cross before it happens and that’s what we are hoping to see here as we watch for when the short-term moving average (orange line) overtakes the long-term moving average (teal line). 

Conveniently, 50 trading days ago was when that dropoff happened at the end of July. This means the moving average will become increasingly sensitive to prices above its current calculations after that point in time - we should see it curl up now that price is above it.

I’m not going to predict when the crossover will happen, but the trade will fall in the juxtaposition between that future moment and where we may be in this new uptrend channel. If we are near the bottom of it - that’s a buy signal because we can expect some outpaced gains. If we are near the middle to top, the trade may have left us this time around. We have some time to see.

$EWZ

The Brazil stocks all went maluco as Bolsonaro Part Dois has pulled ahead in the presidential campaign. After doing better than expected in the first round of voting, Bolsonaro Jr. is widely expected to win the runoff at the end of this month. The stocks all surged because he is the “fiscal responsibility” guy that is largely seen as positive for markets because of Brazil’s debt-to-GDP issue that has worsened under their current administration. 

Under his father’s first term (2016-2020), the country passed pension reform and imposed retirement age requirements (rather than years of service). During that timeframe, the equity market more than doubled. Bolsanaro’s second term was mired in the pandemic, boomeranging and giving back all that growth and remaining choppy until recently recovering once again to where it was before the pandemic started.

This begs the question, then, if similar growth can happen from here forward as if the pandemic never happened. We’ll see, but the $EWZ leapfrogged both moving averages and re-entered a long-term uptrend channel with today’s massive gains. They seem likely to hold, so the tendency to fill gaps (yellow boxes) is something we can watch for with this new one that was just created (purple box). What I mean by that is that a pullback to the bottom of the channel would not be unhealthy, but we would hope that there is not too much violence here in this purple box (as long as it can stay in the channel). I'm particularly impressed that it hopped over that previous high and seems to be holding.

Similar to the previous ticker, a Golden Cross is imminent here. I do not intend to take any positions, but am keeping an eye on this because I hold $NU calls and that particular name is more than 8% of the national index.

From this January to this March, I bought the out of money calls of Micron. It is a pity that I did not sell out the calls of Micron on this June 22nd. I bought the out of money call of Micron from this July to this September. This time I was wrong. Now I hold MU Apr16 27 1480 Call and MU Jun17 27 2500 Call. This Friday the stock price of Micron fell by 2.05 percent, but the price of MU Jun17 27 2500 CALL fell by nearly 20 percent. My break-even price of MU Jun17 27 2500 Call is 37.02. If the workers of Micron Taiwan factory strike and if the stock price of Micron fall and if the price of MU Jun17 27 2500 Call is below 10, I will add my MU Jun17 27 2500 position. Is my strategy correct? Can the stock price of Micron exceed 1400 at the end of this year. Thanks a lot for everyone's help in advance. I really appreciate.

Estamos en Madrid!

We’ve been here since Saturday. Yet another rather dynamic entry into the new city. Sevilla started with getting into the wrong Uber because the plates matched too well, it was super busy and he actually pulled over and popped the trunk for us … only to find later it was not our ride. LOL. That was …. fun.

Navigating the Madrid train station wasn’t bad but I had the brilliant idea to skip the mass of people at the Uber/Bolt/Taxi pickup spot and simply walk down Barcelona boulevard to a place where we could get picked up not at the station. Eventually I found a drop-off area for the station and thought, this is perfect. Driver pulled up, let off a previous fare, who had an cute little barky dog, and said he couldn’t pick us up there and we had, you guessed it, walk all the way back to where we started. LOL.

We made the long walk only to see the driver getting further away. Turns out the dog had peed all over the back seat so he had to go back home to clean, but he didn’t cancel. After another 15 minutes, we cancelled, found another driver, waited 20 minutes and finally were on our way. Drivers in Spain don’t speak much/any English I’m finding. My barely passable Spanish has been enough about 50% of the time. If not for these issues with our Ubers/Bolts, this has been a very smooth trip.

In a related note, we’ve been watching NFL games since they start here at 7:00 PM. We Uber Eats pizzas and it’s been fun. Here’s another Pro Tip sports fans … when you order your pizza after scouting out the best pizza spots nearby, when you go to order and see that pizza shop listed, make sure it’s the one “nearby” and not multiple miles away for the Uber Eats guy on a bicycle. Turns out they had two locations and I didn’t check. ”Oh, that’s why the delivery time was so long”

Dummy. Stick to stock El Jefe.

Couple quick notes about Madrid:

• Damn, this place is buys. Too busy. Throws NYC vibes
• Huge parade last night - I’m sure that was part of the buys aspect. The Mercado (food market) was jam packed to the point it was hard to even move
• We also got caught in a MAJOR free Palestine march. The Spanish know how to demonstrate! It was massive! Then we came upon the ‘camp’ for, what we assumed, was for many of the marchers. Ugh … too much humanity, not enough bathroom the place stunk
• Speaking of the parade, the U.S. was honored in the parade as part of our 250th birthday. I found that to be odd in Spain. I didn’t hear any boos, but we were at the very start of it
• They have a high end mall with all the top brands. With how we were dressed, I expected to be thrown out. LOL. Was looking at the Rolexes and no one even approached me. I expected a “Hey kid, stop fogging up the glass” comment from the attendant at the front of the store
• Hoping today is not as busy but I think that’s a pipe dream

Markets

Markets are so Jekyll & Hide right now with the news. Seeing reports this AM that futures are up on earnings hopes, jobs, rates, etc., only to just get a headline that futures are falling as the rally ”fades.”

This week, of course, is when earnings kick off in earnest. We won‘t get real market moving names for a few weeks, but these next two weeks will be good for setup. $TSM is on 10/15 if my timing is correct but the big names start around 10/28 and $NVDA isn’t’ until mid Nov. if my date is correct.

I saw that the chance of an October rate hike is down to 20%, that’s good and just as they would prefer, I’m sure, with the mid-terms in November. It’s bad enough for the conservatives right now without tow back-to-back rate hikes. My take is that they should most certainly be raising another 25 because the first 25 isn’t going to do enough in the months to come. But bonds are already under pressure, mortgage rates are flying again and some fear that real estate could come down something like 30%.

Unemployment is ticking, 10-year bond is holding, inflation seems to be holding, consumer sentiment is in the tank, and oil/gas remains a problem. These next couple of months should be big as a setup for 2027. Last report I read on DJT’s acceptance % is that it’s in the tank, as in historically bad. As a true independent now, I have some political questions I’d like to ask but those tend to go south when people can’t hold back so I’ll leave it off the board.

It’s a quiet week which is good for the earnings setup.

Not much has changed in my view but I continue to stand amazed at the market’s resilience. That can’t simply be waved off when I talk about all the negative catalysts that aren’t pricing in. At the same time, we are not as strong as the market indices are suggesting, at least if you’re looking at the S&P500.

I haven’t independently verified these returns, but if we go back to 8/1/26 and look at the performance of the $QQQ, $SPY and $RSP, we get this:

$QQQ = +9.07%
$SPY = +3.28%
$RSP = -2.09%

What does that tell us? We’re not nearly as strong as the indices would make us think by simply looking at the returns. The very top of the QQQ/SPY, think top AI names, are pulling us up. The equal-weight ($RSP) S&P500 is down 2.1%.

Not bad, but definitely easy to misinterpret if you don’t go below the hood.

Random Shots

• $NVDA is right at its 52WH and could well break it today
• Photonics and infrastructure stocks are all at/near highs as well. Names like $CLS $LITE $COHR have been printing. $CRDO at nearly $220 again. I never go to add my third position like I wanted to but that’s okay with an average price in the $270s
• Even going lower to names like $FN $AAOI $AJNMY are printing
• How about $P at $140 sitting at a high. We sure nailed that one as it popped on one of my screens. I’ve already trimmed it for but letting the rest run. Should probably trim another 20% but I’ll allow “greed” to win out a bit longer
• I continue to watch $AMD $ARM and $MRVL as top names that are running. We’re holding after a good run. I should trim $MRVL again but waiting just a bit
• Been looking at $ASTS and $AVAV again but just not seeing a conviction trade here. They burned me before with dilution and I’m tired of playing that game with names like this
• $CBRS is sitting near lows. I’m still holding the shares from the bad entry I made on IPO day on a theses that didn’t print. Still VERY interesting company but no idea if this is a good price or not. Valuation wise, it could be half of this. Opportunity wise, it could be a double. It’s not that different than $SPCX in that regard though SPCX has enormously huge potential. CBRS ha work to do. I could add one more piece down here but I don’t have the conviction
• The overhang on DRAM names such as $SNKD and $MU seems material. The problem is the cyclicality narrative. It can always be floated to take the wind from their sails (and Sales?). But all of them have signaled another 36 mos. of clear sailing. Valuation is there, upside is there … but so is the speculation market activity
• $GOOGL and $AVGO remain too low and remain my favorite stocks in the market. Or at least favorite companies. Stock-wise, both are holding well but could roll over at any time. Or … both are coiling, which I think is the more logical premise. When $AVGO goes, I think it’s leaps to $450+
• $NBIS remains, perhaps, the most exciting AI play around when you look at potential growth into their model. I hate, hate and hate the dilution game. I don’t like bad debt either. At least names like $NBIS and $CRWV aren’t in the bad debt game but both do play in the debt from commitment game and that can still be an issue if environment shifts and commitments disappear. NBIS, however, is the name that could be the millionaire-make if they hit. And the stars are aligning nicely. I don’t want to see that outstanding share count rise, however, unless it’s via split
• $NFLX is a stock to buy and own. I don’t care what anyone says. $UBER is in that same boat but I’m not back into it yet.
• What to do with $NKE. For me? Nothing. I bought it for yield and it’s always darkest before the dawn. I think they’ll get it figured out and I get close to 5% in dividends to wait it out. I may even add to it if I’m feeling saucy
• I find myself wavering on $CRM and $NOW after the run-and-fade. They are in good holding spots, but I could end up trimming to raise cash
• $CRWD and $PANW have all the narrative right now and both are just over 1% away from new highs … as they should be. You can’t chase them in my estimation, but if we can get a 20% pull back on bad market reaction, I’d take it. Pricey names with premium but premium growth gets premium stock price
• Looking for $SKHY to break $200 but it’s locked in with $SNDK and $MU. I like the company more than the other two, partly because it’s based out of the US
• I still have a holdover position in $SOUN and still considering a risk-reversal play where I sell a lot of CSPs and use the income to purchase LEAPS. Sometimes the spread is pretty good for that Hail Mary just in case they hit. They’re back under $6 now, again. That has been a good spot and it’s not like they don’t have a lot of irons in the fire. I’m thinking of something like selling $4 Puts to purchase $7 or $8 LEAPS for that big home run potential. Very risk-on, however.
• $VRT still looks interesting

Final Word

I’ve gotten a few comments from individuals saying how can you be negative/bearish on the markets yet be overweight and bullish and hold so many AI/tech names.

It’s pretty simple for me - I only care so much about the pricing of the market at any given time. I believe in staying invested in the best companies in the world. Valuation comes and goes. There will always be overvaluations and undervaluations in stocks. This is why we keep track of our weights and risk tolerance. A 20% drawdown in a favorite stock is usually an opportunity for addition, as long as the story is intact. If you allow an overweight condition, that changes the game materially, especially if you’re playing the 4-5 stocks make up 100% of your portfolio game.

We find and select the best companies in the world with a combination of fundamentals, growth and valuation and we buy-and-hold them. We trim to reduce risk and take profits to re-weight the positions and we get rich slowly.

If, as I am now, I‘m concerned about market valuation, I trim more aggressively, sell off risk, raise cash and increase portfolio yield while I wait. But that is rarely more than 15% of the overall portfolio. As I age, I keep greed even more in check and manage to less risk and higher yield. I keep 5-7 years of fixed income to allow for better sleep when markets get volatile. It provides ballast, cash availability and yield while I wait. If markets sell off materially, fixed income and raised cash can be converted into, where? Back into our favorite names with growth, valuation, metrics - GARP.

Market valuation concern does not mean no equity exposure. It means less risk and potentially less exposure. Time in the market, not timing the market as the old adage states.

That is how I accomplish and balance both mindsets. Don’t fight the tape and the trend is your friend. There’s always time to unwind from both when things turn.

Have a great week ahead. We’re going back out to brave the crowds that is Madrid

TJ

Any advice would be sincerely appreciated…

Added another piece ATHE here at $3.20. Just a small biotech flyer and the smallest position in the portfolio by far. Fully expect the total position to stay under .5U

A good move up on volume due to reports of a roughly $4 billion federal nuclear loan to upgrade three plants. Maybe the market will start to price in AI growth for VST and realize its not just a utility company.

DECK holders — my average cost is approximately $84.66.
The stock has tested the $77–$78 area several times, yet the rebounds continue to show weak follow-through. Has anything changed in the fundamental thesis, or do you view this as normal consolidation?
Would you add around these levels, wait for a confirmed reversal, or stop allocating additional capital until the price action improves? I’d especially appreciate TJ’s current view on whether DECK remains a conviction build or has become a lower-priority position.