TMTB Weekly
Happy Sunday. To no one’s surprise Iran headlines continue to dominate investors attention this weekend with the Iran-backed Houthis in Yemen entering the war for the first time, firing missiles and drones at Israel and threatening to blockade the Bab al-Mandab Strait. Reports indicate Trump and team might be preparing for weeks of ground operating in Iran while Vance said we don’t plan to be there for “a year or two years.” Doesn’t sound that comforting. Oil up another 2-3% over the weekend with Crude popping above $100 now.
I couldn’t be any more bored with the war — I think many reading this think the same thing. Lots of interesting things happening in Tech right now and frustrating just sitting here twiddling thumbs running low gross/net, waiting for more clarity on Trump, ground troops, and oil. Energy names up close to 20% MTD while every chart in Tech looks to be cliff diving. Patience/defense the name of the game for us — we take solace in thinking back to last year when the first few months were equally — if not more — frustrating having to follow every Trump tweet around Tariffs.
Our short-term book was already performing the best this year before the war broke out, and the performance divergence has only increased. This week was a reminder for us it is not the environment to be layering on a lot of new gross on medium-term trades and not to overstay our welcome on short-term trades (we got a little too excited hoping AMD/INTC was finally activated on the CPU thesis following ARM’s announcement). In conversations with other investors, generally we get the sense most are running much lower gross/nets as well, although the prime data still says gross is elevated across the board. While the market is beginning to exhibit some signs of an oversold condition, downside volume of 65% and a down/up volume ratio of 2:1 fall well short of the kind of aggressive liquidation.
I recommend checking out MacroCharts — as always, he has a good run down of when charts will signal a bottom. Still seems like a bit more ways to go. Could we get a bounce on Monday post a sell off? Possibly, but…
Trump’s TACOs are being ignored by stocks as it takes two to TACO in this scenario — investors increasingly doubting whether Trump can actually control the war. From here we either get: 1) some sort of early deal (seems unlikely); 2) Trump walking away on no deal (most likely rt now); 3) ground troop escalation (unlikely but getting more likely with every report we hear).
#1 obviously the best scenario for equities and would be clearest signal to add risk aggressively as oil would likely plummet. We think in that scenario we go back to where we were before the war: QQQs somewhat range bound after a big bounce, but AI Semi leadership still has green light to go higher.
We likely see a bounce on #2 given stocks are so oversold and vol would reset, but that scenario likely comes with oil staying bid, yields high, and fed expectations not shifting much. More likely a fade the 5-7 bounce and expect market to remain choppy.
#3 likely comes with a big swoosh and with the most uncertainty. Unclear what Iran’s response is in a scenario of escalation like that. Oil likely stays bid for longer then you get increasingly bearish views on macro, consumer, etc. which will cascade all the way down to the AI trade. Lots of potential permutations here so we’ll save those for another day. Is there scenario where boots on the ground actually succeed in securing Hormuz/other action that could lead to oil situation being more stable or de-escalation? While hard to imagine from where I sit, one would think the U.S. military is using their imagination for that very outcome bc why else go in if not for that goal?
Ok, enough war talk. Let’s move on to the only thing looking more dire than the war prospects: tech charts.
QQQs now down 12% from peak:
SOX looking like it wants to follow QQQs dn…
NVDA breaking it’s range lower — do the rest of semis catch down?
AVGO: rolling over too
Does gravity end up seeping into leading sectors? Our sense is it does early in the week (assuming market down) despite demand checks/token growth continuing to sound great:
A lot of leading AI semi stocks (which we still like fundamentally) looking toppy:
Here’s STX. Checks continue to sound great: edgew was out this week saying pricing outlook for CY27 strengthening with their estimates now 15-20% y/y price growth. We love the medium-term story, but chart looks toppy, showing same neg RSI divergence we saw on memory:
WDC similar looking:
LITE: Love the story (getting better), mgmt sounds great, plenty of eps upside. Mindful of the chart:
SNDK/MU: We’ve been writing about the shifting dynamics in the memory trade in our weekday write ups. Investors preferring NAND over DRAM given better near-term pricing checks / more eps/GM upside for SNDK. Some saying DRAM weakness in DDR4 only given consumer elec pushback, but here’s DDR5 spot, flat to down for the last 2 months (contract pricing checks still strong however):
Here’s WCCFTech:
Over at Amazon US, Corsair memory modules have seen a rather impressive price drop, with the VENGEANCE DDR5 SKUs featuring 32 GB capacity and speeds up to 6400 MHz now retailing for around $379.99, a decent drop from their recent highs of around $490. The drop also extends to 16 GB modules, with the DDR5-5200 SKU retailing for $219.99, which is yet again with a modest discount, following its all-time high prices of around $260. It's important to note that these drops are more aggressive, as prices were near the higher end just a week ago.
You all know I love the SNDK story (we think Turboquant just noise), but in the fog of the Iran war, have to respect the charts and the growing chorus of memory skeptics (we don’t buy it and but in a risk off environment, bears get louder). Risk manage appropriately. We like the r/r below $600 (<5x our $125 CY26 #), but again in no rush to add gross here (or many places) right now unless we get a great set up on the chart or clearing event. Playing defense.
MU: Already down 25% since peak.
BE: another leader looking toppy. We still like it, but again just flagging chart.
NBIS: Breaking down below support after big announcements:
AMD: Continues to hold 200d well. Continue to like r/r near $200. Ideal entry spot for adding is below 200d near 190 at previous support.
GOOGL: Stock finally rolling over this week. High frequency data still looks really good across search, YT, and GCP. So far UBS ad checks pointing to travel vertical only one showing any weakness, but as we get into April, checks also said budgets across other sectors would be pulled back. Google was the hypersscaler that was holding in the best and rolled over despite good data — begs the question: do leading semis — who have been holding in — roll over despite massively positive trends? Along with many other names in Tech, r/r looks juicy but war permutations make it difficult because now have to layer in p(x) of oil higher for longer/consumer weak/macro fears. Multiples undershoot to the downside when those fears pop up so harder now to say with confidence 20x $13.5 is the downside case. Thoughts on narrative here from us early in the week:
TSM has held up the best, but reminds us of GOOGL before the fall: