I’m Tightly Trading Two Stocks While Protecting Gains
I’m reducing some positions, but adding this highly speculative, low-priced data center name.
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Crude oil is sharply lower midday on growing hopes of progress on an Iran deal. Interest rates are easing as well, with the iShares 20+ Year Treasury Bond ETF (TLT) firmer. The macro conditions that have been supporting the rotation since Friday are still in place.
What has changed is the speculative energy under the surface. The memory chip names and the space stocks that were leading hard at the open have cooled meaningfully. The action got a bit overheated and the easy money is taking some off. That is not a reversal of the rotation thesis. It is the kind of cooling that happens when momentum names run too fast and need to digest the move.
The Headline Indexes Are Mixed
The iShares Russell 2000 ETF (IWM), SPY, and the Invesco QQQ Trust (QQQ) are all trading close to flat, but the Equal Weight S&P 500 (RSP) is holding green and up about 0.38%. Breadth is still constructive at 60% positive. New highs to new lows ratio is still strong. The Magnificent Seven (MAGS) tech stocks are showing some rebound action after lagging at the open.
When the cap-weighted indexes are mixed but the equal-weight measure holds up and breadth stays positive, the rotation is still working. Participation is broader than the headline numbers suggest, just as it has been all week.
Narrower Pockets of Momentum
The momentum that has been carrying the speculative names is now running in narrower pockets rather than broadly and is a bit less frothy. Memory chips and space stocks cooled. The names still working are the ones with specific catalysts rather than the names being carried by sector enthusiasm. A broad speculative wave produces winners everywhere. A narrowing wave produces winners only in the names with their own reasons to move.
For active trading, that means being more selective and faster. The setups that work require a real catalyst rather than just sector heat, and the moves are shorter in duration when the speculative pulse is cooling.
Trading Tight and Picking Spots
I am trading very tightly midday, cutting back on some of my biggest gainers and dumping laggards that are not earning their place. The focus is on keeping client accounts at HammerHead Financial Strategies close to highs. Cash levels are around 40%. I am not bearish, just keeping things tight while the speculative pulse cools and the market sorts through the Iran situation.
That said, I am still looking for buys. I added to my position in Travere Therapeutics, Inc. (TVTX) this morning, because the chart setup is constructive, and it is exhibiting relative strength while broader biotech sector heat has cooled. That kind of relative strength inside a cooling group is the setup worth paying attention to.
I also started a small speculative position in AirJoule Technologies Corporation (AIRJ). AIRJ is a water-harvesting and cooling technology company with a 50/50 joint venture with GE Vernova (GEV) targeting the data center cooling market. The technology uses chemical processes rather than refrigerants and is reportedly four times more efficient than conventional refrigerant-based systems on a watts-per-liter basis. GE Vernova has supported the company with two equity investments, and AIRJ is already collaborating with Carrier Global, BASF, Google, and Microsoft on deployments.
The company has about $35 million in cash with no debt and runway through 2027, with commercial launch expected late this year. This is a pre-revenue speculative position that should attract retail interest focused on niche data center themes.
Strategy
I continue to maintain a reactive approach. The rotation is intact, the macro tailwinds remain in our favor, but the speculative action has lost its broadest reach for the moment. That is healthy for the longer-term picture and challenging for short-term trading.
The Iran deal remains the catalyst that could change the picture in either direction, and clarity on a deal has not arrived yet. Stay patient and let the action confirm the next move rather than chase it.
At the time of publication, DePorre was long TVTX, AIRJ.
