Qullamaggie Stream Notes: 1 June 2023

AI and quantum — only just getting started, and Kristjan's full updated list

First stream since 23 May 2023.

Kristjan’s positions

• AI

• APLD

• CVNA (added some today — “if it can’t go now, it’ll never go”)

• DNA

• IMGN

• IONQ (bought on 30 May 2023 — more detail later)

• MNDY

• PLTR (more detail later)

• QBTS

• SOUN (sold during stream at 9:51 and/or 9:52 EST — presumably stopped out)

Sold since 23 May 2023 stream: $FTCH and $LI. More detail on $LI later.

As Kristjan pointed out himself: not much has changed in his portfolio between this and the 23 May stream, so these notes won’t provide much detail on his entries etc., as I’ve already covered that in previous stream notes. However, I am going to repeat a point Kristjan himself repeated today during the stream about $PLTR, as it’s one definitely worth bearing in mind.

Kristjan’s watchlist

• SDA (removed 9:32 EST)

• SMCI (removed at 9:30 EST)

Market outlook

Now that earnings season is over, there’s not much going on. Kristjan thinks that the next couple of months are going to be “pretty slow”.

However, Kristjan made a point about how the media is still so bearish despite the recently strong market. At the end of the day, there’s always something to worry about but, as Kristjan phrased it, “you can’t live your life in fear”.

If you go back and read newspapers from, say, the 90s, despite the massive market rally at the time, the headlines were worrying. Things were far from perfect. Ditto during the rally that started in 2009. More recently, in 2020 and 2021, the market went parabolic while there was supposed to be a deadly virus around. Now we’ve got things like the debt ceiling, but stocks are going up.

In short, there’s always something to worry about. So here’s Kristjan’s advice:

“The best investment you can do in yourself [is to] never read financial media again. Or listen to it. It’s actually a waste of time. It’s not vocational, and it’s not entertaining. There’s no value in it.”

“The only thing you need to care about is what the market tells you. You need to have some kind of market filter. Doesn’t matter what, as long as it makes […] some type of sense.”

“Pradeep has his Market Monitor, I use just […] simple moving averages, the 10 and 20. And I’m also experimenting a little bit with MACD histograms.”

“You want be long, you want to buy breakouts and EPs when things are good, and you don’t want to buy stuff when […] markets are in downtrends.”

Focus on price and volume

I don’t want to get too repetitive in my notes — and where different streams overlap, as you’ve no doubt already noticed, I usually link to the stream notes that mentioned the topic first — but I thought this was worth repeating as a reminder of an important concept, but also just as a fun example of Kristjan’s dry answers at times to questions in the stream chat.

The question:

“Do you have a routine to identify sector rotation new theme?”

Kristjan’s answer:

“Yes, price and volume. Is it going up on big volume? Or no? There you have it.”

Not a lot of “retarded” money yet

While on the topic of looking at price and volume, Kristjan did mention that we’ve so far not seen a lot of stupid money going into things like small caps. However, he believes that will change if the market stays strong. Stupid/“retarded” money will start coming into smaller caps, waking them up and giving us some insane moves.

Sector observations

Semiconductors — recent mean reversion opportunities

Semiconductor names, having got really extended, recently offered good mean reversion opportunities. For example, $SOXL (6.6% ADR) on 30 May 2023:

And $AMD (4.8% ADR, mega cap) on the same day, 30 May 2023:

And $AVGO (3.2% ADR, mega cap) on the same day again, 30 May 2023:

For $AVGO, Kristjan also showed the 5-minute chart:

Kristjan called them all “five-star” setups, but missed out on the lot, as he hesitated to pull the trigger.

Uranium up today

The uranium sector was strong today; for example, look at $CCJ (3.5% ADR, large cap):

And $SRUUF, a uranium trust fund (3.1% ADR) that has been going sideways for around a year now, building higher lows:

$URA (2.4%), a uranium ETF, was up quite a bit today too:

China names: big relative strength in $LI

Kristjan got shaken out of Chinese EV maker $LI (ADR 3.9%, large cap) yesterday, but look at how well the stock is holding up:

Compare that to other Chinese EV makers, such as $NIO (4.8% ADR, large cap):

And Chinese EV maker $XPEV (4.8%, mid cap):

Non-EV China names have been going down too — for example, look at $KWEB (China Internet ETF, 2.6% ADR):

Or at $FXI (another China ETF, 1.4% ADR):

What do you reckon is going to happen to $LI if China names generally turn around and go higher? Find stocks showing relative strength, guys!

AI and quantum computing

There’s going to be five- and ten-baggers in micro-, small- and mid-cap AI names. Some people are already calling this a bubble, but the reality is that we’re only just getting started.

Now, we don’t know who the winners are going to be yet. You can point to something like $NVDA, but it’s already up nearly 300% off the October 2022 lows and has a $990.7B market cap — there’s only so much more you can squeeze out of this stock.

Again, stupid money hasn’t started entering the markets en masse yet. There’s a lot of money on the sidelines, not in AI stocks at all (yet).

Furthermore, remember that “pieces of s**t are the ones that make the biggest moves”, to quote Kristjan today. (And he said something similar during the 18 May stream.) $AI was an excellent example today, making a great recovery from a poor earnings report:

We see this pattern over and over again. Go study stocks from the late 90s and/or early 2000s; you’ll see the same thing. It’s not the quality stocks with dividends that make the biggest moves. Story stocks do. To quote Kristjan again:

“Stories are way more powerful than fundamentals.”

(Seems to me like something, for better or worse, that we see a fair bit in life too.)

Updated AI and quantum stock list

On the last stream’s notes, I published Kristjan’s list of AI and quantum computing stocks. I republished it in a more recent post, taking a closer look at some of the best names on that list (at least, at the time).

Here is the updated list, as shown by Kristjan during today’s stream, now with 99 names on it:

• AI

• AITX

• AIXI

• AMST

• APLD

• ARBE

• ARQQ

• AUGX

• AUUD

• BBAI

• BCAN

• BFLY

• BFRG

• BIDU

• BLBX

• BOTZ

• BZFD

• CD

• CDIO

• CRNC

• CXAI

• CXM

• DNA

• DPRO

• DT

• DUOT

• DYAI

• EXAI

• FOXO

• FRGT

• GAME

• GDVM

• GFAI

• GRRR

• GSIT

• HOLO

• HYPR

• IDAI

• INOD

• INPX

• INTA

• IONQ

• IOT

• IRNT

• JEWL

• JG

• KRBP

• KRKR

• LIZI

• LTRN

• LUCY

• MARK

• MCLD

• MCOM

• MDGS

• META

• MMAT

• MRAI

• MRVL

• MTEK

• NA

• NFTG

• NIR

• NOTE

• NRDY

• ONFO

• OPRA

• OTRK

• PATH

• PEGA

• PERF

• PLTR

• POAI

• PRST

• QBTS

• QUBT

• RCRT

• RGTI

• RMBS

• RSKD

• RXRX

• SAI

• SDGR

• SECO

• SES

• SMCI

• SOUN

• STAF

• SVRE

• SYM

• TASK

• TBLA

• VERI

• VUZI

• WLDS

• YEXT

• ZDGE

• ZH

• ZI

More detail on some of Kristjan’s positions

$IONQ

Kristjan bought $IONQ (quantum computing, 10.4% ADR, mid cap) on 30 May 2023, as it broke out of a small base:

Kristjan said that because the theme is so strong, he couldn’t ignore it. He also mentioned he already had two quantum computing names ($QBTS and $PLTR), and added that they’ll all eventually go. As Kristjan put it:

“When the retarded money comes back, they’re all going to go.”

$PLTR

Kristjan reiterated that the move in $PLTR (7.0% ADR, large cap) is what can happen with stocks that people either really love or really hate:

We’ve definitely seen this before. $TSLA, anyone?

More stream notes

All my Qullamaggie notes are available here.

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More about Qullamaggie

To learn more about Kristjan Kullamägi, aka Qullamaggie, and the way he trades, visit qullamaggie.com.

All past streams are available on Kristjan’s YouTube channel.