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The 🔥 --- H.E.A.T.🔥 Formula THE DAILY --- H.E.A.T. Torching Wall Street’s Obsolete Playbook. Delivered straight to your inbox 5 days a week. Subscribe Home Posts The 🔥 --- H.E.A.T.🔥 Formula The 🔥 --- H.E.A.T.🔥 Formula AI Driven Insights to Spark Your Portfolio Feb 20, 2025 Subscribe now Share The --- H.E.A.T. Formula is a radically different way to look at investing your portfolio. ‍H- Hedges, you should always have hedges and be agnostic as to being long or short. Bonds are not a hedge ‍E-Edges, you should always look for edges. Preferably these are edges with some sort of psychological underpinning, structural edges, or some sort of barrier to entry. ‍A-Asymmetric. Everything you do, be it trades or your overall portfolio, should be designed so that heads you win a lot, tails you lose a little. ‍T-Themes. You should always be invested in the top themes. Most everything else is just noise. Our Next Webinar Uncovering Hidden Themes with AI: How DeepSeek Is Rewriting the Investment Playbook Thu, Feb 27, 2025 2:00 PM - 3:00 PM EST 1. Bullets From DeepSeek to Disruptors: Explore how one AI breakthrough (DeepSeek) reveals cost-effective strategies and under-the-radar opportunities beyond mainstream tech giants. 2. Finding Alpha in the Noise: Learn how AI-driven data-mining cuts through market hype and identifies genuine growth catalysts—even in emerging or overlooked sectors. 3. Comparing & Contrasting Strategies: Discover how to harness AI to evaluate different investment approaches. https://register.gotowebinar.com/register/1337947766275418457 Rebel Finance Podcast Today marks the first episode of the Rebel Finance Podcast. For now we are doing this on Go To Webinar and will post replays on our You Tube Channel: https://www.youtube.com/@TuttleCap To watch it live sign up here: https://attendee.gotowebinar.com/register/7794307532368013657 Market Recap Wall Street’s sugar high continued as the S&P 500 closed at yet another all-time high (6,144.15, +0.2%) , the Dow eked out a gain (+0.2%) , and the Nasdaq barely held the line (+0.1%) . But don’t let the muted price action fool you— beneath the surface, the market is shifting. 🔥 The AI Frenzy Isn’t Dead, But It’s Slowing Microsoft (MSFT) stole the show , unveiling Majorana 1, its new quantum computing chip that could redefine computing timelines. Palantir (PLTR) pulled back after Trump made a comment about defense spending The big picture? The AI trade isn’t over —but the market is finally forcing a distinction between hype and reality. Not a surprise….. Fed officials are worried about tariffs’ impact on inflation and see rate cuts on hold, minutes show -CNBC.com This is going to be a big issue as Wall Street is all over the place on their predictions. This morning Jefferies is predicting two cuts this year while Mike O’Rourke is talking about rates being steady for years….. ❝ There is no surprise that the overwhelming consensus within the market and among Federal Reserve officials that FOMC easing is on indefinite hold. On Monday night, we noted there is a strong case to be made that the Fed Funds rate should not move for years. Our premise is that if the FOMC can't and won't raise rates during a Donald Trump presidency, they should avoid lowing rates unless absolutely imperative. As it stands, current Fed officials have embraced being on hold for the time being while still articulating a willingness to ease should inflation moderate. Federal Reserve officials have continued to be 6-12 months behind the evolution of the world for which they set policy. The FOMC minutes today reiterated the consensus view that policy needs to remain on hold amidst the uncertain environment. 🚀 Final Takeaways: This Market Is Still a Liquidity Game—For Now 📌 The AI bull market isn’t over, but it’s being forced to prove itself. 📌 The Fed just slammed the brakes on rate cut euphoria. 📌 Rotation into defensive names suggests a slow but growing risk-off shift. What’s Next? NVDA earnings are the market’s next make-or-break event. If rates keep rising, expect a deeper correction in high-growth stocks. AI stocks must prove their earnings power or get repriced lower. This isn’t 2021 anymore — it’s not enough to say ‘AI’ and watch your stock go up. 🚀 SPY Chart Analysis – February 19, 2025: Is the Market Overheating? The S&P 500 ETF (SPY) closed at 612.93 (+0.24%) , extending its melt-up rally and notching yet another all-time high . But beneath the bullish momentum, warning signs are flashing. 📊 Key Technical Indicators 1️⃣ Price Action & Moving Averages SPY is trading well above its key moving averages: 10-day MA: 606.87 ✅ 20-day EMA: 604.55 ✅ 50-day MA: 598.82 ✅ 200-day MA: 565.10 ✅ Bullish trend remains intact , but the rally is becoming overextended. 2️⃣ Momentum Indicators – Red Flags RSI ( • 4) = 79.84 🚨 (Severely Overbought) Above 70 = Overbought , typically precedes a pullback. The last few times RSI approached 80, SPY saw 3-5% corrections before continuing higher. Williams %R ( • 14) = -6.19 (Extreme Overbought) A reading near 0 suggests a short-term pullback is imminent . The last 3 times Williams %R hit this level, SPY pulled back within a week. 3️⃣ Volume & Market Strength Volume: 30.9M ✅ Slightly above average, confirming the rally. Volume surges on green days indicate institutional buying is still strong. 🚨 Key Support & Resistance Levels 🚀 Resistance: 615-620 (psychological & fib extension level) 📉 Short-term support: 605 (10-day MA), 598 (50-day MA) 🚨 Critical breakdown level: 565 (200-day MA) 🔥 Final Verdict: Cautiously Bullish but Overextended ✅ Trend is still bullish , but momentum indicators scream overbought . ✅ Short-term traders should consider taking profits or hedging. ✅ Long-term investors should expect a pullback before higher highs. 📌 Recommended Trading Strategy 📉 For Short-Term Traders: Sell partial positions near 615-620 if reached. Buy pullbacks near 605-598 (first support zone). Avoid new long positions until a cooldown. 📈 For Long-Term Investors: Hold core positions but prepare for a healthy 3-5% pullback. Buy aggressively if SPY dips near the 50-day MA (~598). 🚨 Risk Alert: If SPY breaks below 598 with heavy volume , expect a test of the 200-day MA ( • 565) . 🚀 Bottom Line: The Market Needs to Cool Off Before the Next Move Up 📌 SPY is too extended for fresh longs. Wait for a dip. 📌 If you’re holding, tighten stops or hedge. 📌 The bull market isn’t over—but the easy money has been made (for now). Apple Unveils Cheaper iPhone With In-House Chip That Cost Billions -WSJ I tried something a bit different to try to judge whether a news item is significant or not. I asked GPT to rate AAPL prior to this news, and after, bottom line GPT sees this as a significant positive development….. Rating Change for Apple (AAPL) 📊 Before This News: 7.5/10 📊 After This News: 8.5/10 🔹 Why the Upgrade? In-house chip development strengthens Apple’s vertical integration strategy. Apple is making a high-risk, high-reward play that could significantly boost profitability. If the modem performs well, Qualcomm loses a major revenue source, and Apple gains pricing power. 🚨 But Watch for Short-Term Volatility Investors may hesitate if the modem doesn’t meet expectations —the stock could see short-term headwinds if reports surface about connectivity issues. GPT also indicated that QCOM is a big loser here, so I asked if I should short it. GPTs answer, not yet…. Final Call: Watch, Don’t Short Yet If QCOM rallies 15-20% from here , I’d start scaling into a short position . At $143, the downside risk isn’t big enough yet. Wait for Apple’s modem performance reports —if it’s competitive, THEN QCOM becomes a great short. 🚀 Verdict: QCOM isn’t a short today, but it’s on my radar. Microsoft’s Majorana 1 chip carves new path for quantum computin g Bottom line I have no idea what quantum computing is, beyond that it will be game changer. The question is how far away is it? Below is the answer ( I added to my MSFT position just in case)….. Quantum Computing Just Got Real – Here’s What Microsoft’s Breakthrough Means for the Future Satya Nadella’s comments confirm what many in the tech world have suspected for years: Quantum computing is arriving much sooner than expected. For years, the consensus was that practical, industry-scale quantum computing was decades away —perhaps not until 2040 or beyond . But Microsoft’s Majorana 1 quantum processing unit (QPU) just shattered that timeline . So, Is Quantum Computing Closer to Reality? 🚀 Yes. Quantum computing is no longer just theoretical. It’s moving into commercial development at an accelerated pace. Here’s why this is such a huge leap forward and what it means for the future of computing. What Makes This Breakthrough So Important? 🔥 1. Microsoft Has Created a New State of Matter Topoconductors —a new class of material —allow for the creation of stable, scalable qubits . Until now, qubits were fragile and error-prone , making quantum computers highly unstable . This is equivalent to discovering the transistor for the quantum age. ⚡ 2. Microsoft’s Majorana 1 Chip Is a Massive Leap Over Existing Quantum Systems Qubits are now 1/100th of a millimeter , meaning Microsoft has a clear path to building a million-qubit processor. Current quantum systems struggle to go beyond 100-500 qubits , let alone a million. This level of scale could make quantum computing truly useful for solving real-world problems. 🏎 3. Quantum Computing Could Be Here in “Years, Not Decades” The old assumption? Meaningful quantum computing was decades away. Nadella is now saying, "Not in decades, but in years." This means practical applications of quantum computing could arrive within the next 5-10 years —not 20-30. How Will Quantum Computing Change the World? 💊 Revolutionizing Drug Discovery & Healthcare AI + quantum computing could model complex biological systems instantly —enabling rapid new drug discoveries . Quantum simulations could replace years of trial and error in pharma. 🌍 Solving Climate & Environmental Challenges Quantum computers could model catalysts that break down carbon emissions or microplastics , unlocking breakthrough solutions for pollution and climate change. 🔑 Breaking Traditional Cybersecurity (and Creating New Cryptography) Traditional encryption will be obsolete once quantum computers scale. Quantum computers can break RSA encryption in seconds —forcing a new age of quantum-secure cryptography. 💰 Transforming Finance & AI Optimization Financial modeling could shift from approximation to near-perfect predictions. AI models trained using quantum computing could vastly outperform anything possible today. What’s Next? 🔮 The race to build a usable quantum computer just accelerated. Microsoft now has a clear technological lead , but Google, IBM, and Amazon won’t be far behind. Quantum AI is now a reality —expect this to be a massive new investment theme. 🚀 Quantum is coming much sooner than anyone thought. The implications are staggering —and the companies that capitalize on it will be the biggest winners of the next decade. Key Takeaways ✅ Microsoft (MSFT) is the biggest winner —quantum computing is now a core part of Azure. ✅ Nvidia (NVDA), TSMC (TSM), and AI/cloud giants like GOOGL & AMZN must respond. ✅ Cybersecurity companies must pivot to quantum-resistant encryption—fast. ✅ Quantum computing startups will see more funding, but the bar for success just got higher. 🚀 Quantum computing is now in an accelerated race—expect massive disruptions in AI, cloud computing, and cybersecurity over the next decade. Palantir Stock Is Off the Charts. Why It’s Time to Sell. -Barron’s PLTR is a core holding, so I ran Barron’s thesis by GPT, luckily I did it a couple of hours before PLTR tanked 10%….. My Take: They’re Right About Valuation—But Wrong About the Long-Term Thesis ✅ PLTR’s AI Growth Is Still in the Early Stages The government and enterprises are ramping AI spending , and PLTR is uniquely positioned. AI-powered decision intelligence is a secular trend , not a short-term hype cycle. While growth will slow somewhat, AI adoption across industries still has a long runway . ✅ Profitability Is Real, Not Just a Story Stock Anymore PLTR was profitable for all of 2024 and is now a true cash-generating company . FCF margins are expanding , meaning earnings can outgrow revenue in the long term . ✅ PLTR’s Defense & Government Contracts Provide Stability Unlike high-flying software startups, PLTR has deep government ties that provide recurring revenue . As geopolitical tensions increase , PLTR’s intelligence & defense AI software becomes even more critical . ✅ Selling Now Could Mean Missing Out on PLTR’s Expansion Beyond Gov Contracts The commercial sector is PLTR’s next growth wave , with AI-powered analytics for industries like finance, healthcare, and energy. If Palantir starts winning big enterprise deals, the growth story isn’t over yet. Final Verdict: Should You Sell PLTR? Short-Term? YES. Long-Term? NO. 📌 If you’ve been holding PLTR since 2022, this is a great time to take some profits. 📌 PLTR is overbought and a 10-20% pullback wouldn’t be surprising. 📌 But the AI-driven growth story is far from over, and I would NOT exit completely. Rating PLTR Before & After This Analysis 📊 Before This News: 8.5/10 📊 After This News: 7.5/10 (Short-term overbought, but still a strong AI play) How to Trade PLTR Now If you’re up big , take some profits and trim 25-50% of your position . If you’re a long-term believer , hold onto a core position and buy back on pullbacks below $100 . If you’re looking for a trade , wait for a dip back to $90-$100 before re-entering. 🚀 PLTR’s long-term AI thesis is intact, but the stock is due for a correction. Sell some, but don’t abandon the ship. Makers of Low-End Chips Are Giving High Returns -Barron’s ❝ Stocks of companies that make commodity-grade semiconductors have been rallying since early last week as Wall Street begins to wonder whether a prolonged downturn for the business is ending. I did something a bit different here. I have a lot of semi conductor exposure and not really looking to add anything that’s marginal or doesn’t really move the needle. So I asked GPT to review this article from the standpoint of which stocks, if any, had the potential to double in the next 12-18 months…. 🚀 Which Stock Has the Best Shot at Doubling? 🏆 Winner: ON Semiconductor (ON) – Rating: 8.5/10 ✅ ON is a major player in automotive & industrial AI chips —sectors expected to grow rapidly. ✅ EVs need more power-efficient chips —ON supplies SiC (Silicon Carbide) chips , crucial for Tesla, Rivian, and other automakers . ✅ Stock has been beaten down hard —if demand flips to a shortage, ON’s margins will expand fast , sending shares surging. 🔥 ON is my top pick to double over the next 12-18 months. AI health-care startup OpenEvidence raises funding from Sequoia at $1 billion valuation -CNBC.com Still think AI in healthcare is going to be huge. GPT agrees….. Final Verdict: AI Healthcare Investing Just Got Real AI is no longer just a concept in healthcare—it’s being adopted at scale. Winners: NVDA, MSFT, AMZN, UNH, ORCL (Cerner) Losers: TDOC, AMN, CCRN, MDRX (unless they integrate AI fast). 🚀 AI in healthcare is here to stay. This is a megatrend. Time to position portfolios accordingly. Bill Ackman Wants to Create a Modern Day Berkshire Hathaway. Why He’s No Warren Buffett. -Barron’s Nobody is Warren Buffett, not even Warren Buffet. This is an important point, Warren Buffett rose to fame during a time before the internet, Bloomberg, etc. Back then if you worked hard and were smart you could uncover all sorts of stuff that others couldn’t. Now, we all have access to the same information, you may be smarter about how you analyze it, but are you really going to continue to find undervalued companies that Wall Street doesn’t know about? No way. Using AI to Parse Brokerage Research As I have said before I feed brokerage research into GPT every morning and ask if there is anything I should pay attention to. Yesterday I put in Stifel’s morning tech note and GPT suggested I sell ANET and buy CLS. I don’t know whether this is going to turn out to be correct, nobody bats anywhere near 100%, but again, the ability to get well thought out, personalized and no biased investment advice is a game changer…. Why CLS (Celestica) Looks Like the Stronger Play 1️⃣ CLS is Stealing Market Share from ANET Meta (META) and other hyperscalers are shifting some AI networking spend to CLS because CLS offers more customized white-box solutions at lower costs. ANET’s AI revenue target ($1.5B) didn’t increase , while CLS is winning new hyperscaler business . New $1B+ customer (Groq) for CLS suggests stronger AI-driven upside than ANET currently has. 2️⃣ CLS Has More Runway for Growth CLS is less well-known than ANET , meaning there’s more room for price appreciation. CLS’s valuation is significantly lower than ANET , despite its AI and hyperscaler momentum. Stifel just upped its price target to $150 on CLS— suggesting significant upside from current levels . 3️⃣ CLS is Buying Back Stock While ANET Faces More Competition CLS actively repurchasing shares after its dip = strong conviction from management . ANET still has a great AI networking business , but if META spends more on CLS, ANET’s growth might slow . Reasons to Keep ANET Instead ANET still dominates high-end networking for AI data centers —if it retains its key customers (MSFT, META), it will still be a long-term winner . If you’re looking for lower risk, ANET is more established and carries less volatility than CLS. CLS is still a mid-cap name, meaning it has less institutional support than ANET. Final Verdict: Swap or Hold? If you want more explosive AI infrastructure upside, swap ANET for CLS. If you prefer a safer, well-established AI networking stock, keep ANET. 📌 What I Would Do? Swap at least a portion of ANET for CLS to gain exposure to CLS’s hyperscaler expansion and white-box networking growth. 🚀 Everything Else Europe risks becoming a ‘museum’ if it doesn’t innovate in AI and deregulate, Swedish PM says -CNBC.com Before you go: Here are ways I can help ‍ ETFs : We offer innovative ETFs that cover all aspects of The --- H.E.A.T. Formula, Hedges, Edges, and Themes. Consulting: I'm happy to jump on the phone with financial advisors at no charge. I've built a wealth management firm and helped other advisors grow their practices through the use of substantially differentiated investment strategies. If you want to talk just send me an email at [email protected] Monthly investing webinars Rebel Finance Podcast Wealth Management-Coming Soon All rights reserved. Keep Reading No posts found View more caret-right 0