The market is seeing good follow-through on Tuesday following robust action on Monday. Breadth is running 62% positive and the Nasdaq 100 (QQQ) is leading the charge with a gain of more than 2%, which puts it right at the 50-day simple moving average. Semiconductors are up over 4% and the Russell 2000 (IWM) is building on a bounce off its 50-day moving average.

The most notable action on my screens is an unusually high number of stocks with gains of more than 10%. Much of this is due to earnings reports from smaller stocks, but there are also some bigger-cap names, such as Wayfair (W) and Palantir (PLTR).

This two-day move makes immediate entries more difficult, but it does create some technical action that I want to watch closely. One name in particular that I’m trading is Hewlett Packard Enterprise (HPE).

Legacy Name, Rebuilt

HPE made a strong move on Monday. Shares pushed through $50 to close at $50.24, a gain of nearly 5%. The 50-day moving average has been rising underneath all summer, now around $46. That base matters more than the breakout candle.

HPE spent years as a slow-growth hardware company. It is not that anymore. It has remade itself into an edge-to-cloud infrastructure provider, selling the computing, storage and networking gear businesses use to run their operations locally, in the cloud, or some mix of the two, and it now sits in the middle of the AI buildout. The July 2025 acquisition of Juniper Networks, the routing, switching and AI-driven networking company, is what put it there.

The pivot showed up in the June 1 report. Fiscal Q2 revenue jumped 40% year over year to $10.7 billion, adjusted earnings nearly doubled to $0.79 a share, and server revenue alone came in at $5.5 billion. Both the top and bottom lines cleared expectations by a wide margin. Management raised its full-year targets above what it had been guiding for 2028 and walked into the current quarter with an AI systems backlog near $6 billion.

The AI story has kept building. HPE rolled out its ProLiant DL394 Gen12 server built on NVIDIA’s (NVDA) Vera chip, and it landed a marquee deal with Vultr, alongside NVIDIA, to build large-scale AI data centers using GB300 NVL72 systems and HPE’s own liquid-cooled rack designs. This is a company selling into demand it cannot yet fully meet.

Valuation

Most of the sector carries inflated multiples. HPE does not. Analysts see earnings growing better than 50% over the next year, and the stock trades around 12 times forward earnings. That puts its forward price-to-earnings-growth ratio near 0.2, well under the 1.0 line that usually marks a stock the market has not caught up with. The average analyst target sits in the mid-$60s, roughly a third above where shares trade now.

The Setup

HPE broke past long-term resistance in April, rode the AI rally through May, and ran higher into the June 1 earnings before pulling back and spending the summer building an ascending triangle under $50, a series of higher lows pressing against a flat ceiling. Monday resolved it to the upside.

My approach is to let the breakout prove itself rather than pay up for the first strong open. If you are so inclined, $50 is the level to watch. Holding above it keeps the move honest, and the rising 50-day near $46 marks where the thesis stops working. I would rather trade the volatility around this level than chase it, and I am in no hurry. The fundamentals give HPE a reason to be owned longer than a few days, and the chart will tell us when the rest of the market agrees.

Some of my favorite names like Precigen (PGEN), Xeris Biopharma (XERS), National Energy Services Reunited (NESR) and Definium Therapeutics (DFTX) are posting earnings this week, and I’m looking for opportunities to buy on pullbacks even if they are good reports. I want to have some flexibility when earnings news hits. Too often traders will panic on a negative reaction to a report when the reality is that it is a buying opportunity.

At the time of publication, DePorre was long HPE, PGEN, XERS, NESR and DFTX.

Peter Chawaga

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