A 35% move-up in one day certainly gets one’s attention. The move was prompted by Microsoft’s (MSFT), Google (GOOGL), and Amazon’s (AMZN) move into the nuclear industry to supply electricity for AI data centers over the past two weeks.
Building on my early career at the Atomic Energy Commission in the 1970’s, I have been covering this company since 2012, and it has been a long and windy road. In one shot, they have solved the dozen problems that held the industry back in the 1950’s.
But thanks to Three Mile Island, Chernobyl, and Fukushima, nuclear had the kiss of death on it, making it impossible for the company to raise capital. The Company finally went public in May 2022 at $10.55 with major backing from Bill Gates, with the ticker symbol of (SMR) for “small modular reactor.”
Then, it rallied 60% when it obtained its first order. It then crashed to $1.80 in 2023 when that single order was canceled. It has doubled since September 1, when the new nuclear movement gained traction.
Nuscale’s design eliminates the risk of a meltdown by refining uranium into small pellets and then encasing them with five layers of zirconium. The heat generated is enough to boil water but not go supercritical. The cost of huge billion-dollar containment structures is eliminated by putting the plants underground.
Below, find my original 2012 research piece.
“On my recent trip to Oregon, I met with venture capital investors in NuScale Power, which is trailblazing the brave new world of “new” nuclear. Their technology has been pioneered by Dr. Jose Reyes, dean of the School of Engineering at Oregon State University in Corvallis.
This is definitely not your father’s nuclear power plant. The company has applied for design certification with the Nuclear Regulatory Commission for a mini-light water reactor with a passive cooling system rated at 45 megawatts. The idea is to site a dozen of these together, which in aggregate can generate 540 Megawatts, little more than half the size of the old 1-gigawatt monsters.
Running a dozen small reactors instead of one big one makes for vastly easier operation and maintenance, as individual units can be brought on and offline as needed. Small size also eliminates the need for gargantuan, expensive containment structures.
This power source runs at night when solar and wind plants are offline. Modular design makes mass production of these units economical. Once certification, approval, permitting, and construction are complete, we can expect to see the NuScale plants running by 2018.
After all, if something similar works in nuclear-powered submarines and aircraft carriers, why not in industrial zones on the outskirts of town? For more on NuScale’s innovative efforts, visit their website by clicking here.”
While the stock has already had a great run from the bottom up tenfold, it's probably not too late to buy. This could be another Nvidia-type situation.
https://www.madhedgefundtrader.com/wp-content/uploads/2024/10/old-jeep.png8221096april@madhedgefundtrader.comhttps://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.pngapril@madhedgefundtrader.com2024-10-17 09:02:102024-10-17 10:22:30This is Not Your Father’s Nuclear Power Plant.
https://www.madhedgefundtrader.com/wp-content/uploads/2014/04/William-T.-Sherman.jpg260260DougDhttps://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.pngDougD2024-10-17 09:00:242024-10-17 10:22:01October 17, 2024 - Quote of the Day
This certainly is an October without stock market precedence.
Instead of a crash and revisit to a Volatility Index ($VIX) in the thirties, here we are at all-time highs for the Dow ($INDU), the S&P 500 (SPY), and the ($VIX) at $20. NASDAQ is a hair’s breadth from new highs. All indexes are on track to meet my lofty one-year targets.
So why is this happening? Why did the perennial October crash do a no-show?
My argument all along has been that the investor base is wildly underestimating the impact of technology in general and AI specifically. It seems that every earnings announcement in the industries I care about delivers an upside surprise.
But there is another factor.
The Great Unknown in 2024 is the presidential election, with the public polls in a dead heat. The closer this election gets, the more this uncertainty disappears. The great majority of investing institutions are holding on to usual amounts of cash, which they will not commit until the election is decided, whenever that is.
With the data undeniably showing that the US has the strongest major economy in the world, there may be a post-election melt-up in share prices. And let me tell you one more thing. Of the 6,000 followers of the Mad Hedge Fund Trader that I speak to on a daily basis, some 90% are Republican. I can pass on to you what they are telling me, and that is that the election was actually decided months ago.
No uncertainty here.
We are starting to see the election having an actual impact on the economy. Delta Airlines (DAL) last week gave a warning that earnings would be impaired this quarter due to an election-driven postponement of travel. Companies are delaying action on capital spending as well. With the policies between the two parties so diametrically opposed, the election outcome can make a big difference whether you invest or not.
What this sets up is a slowdown now and a speedup post-election. The stock market is watching this carefully.
In what was the most hyped corporate event of the year, Elon Musk finally brought out his Tesla Robotaxi (TSLA). The shares had risen 40% in expectation of the show.
For sheer entertainment value, he did not disappoint, delivering a sophisticated production worthy of the Hollywood where it took place. He brought 50 Robotaxis with him to give rides to party guests in a Warner Brothers simulated city. Musk, who arrived at the stage in one of the robotaxis - called a Cybercab - said production will start in 2027.
They will cost 20 cents a mile to operate. The vehicle will eventually be for sale for under $30,000. Optimus robots served drinks, and the entire event was covered by video drones. The Robotaxis uses Inductive charging, where they just park over the pad, and it gets wirelessly recharged.
While Elon certainly can put on a show, hard data on future sales and profits were completely missing in action. Nor was there any news about the next generation Model 2, thought to be the next leapfrog in Tesla profits. With profits for the project not arriving until 2028, it all amounted to a 19% SELL from the recent $265 high.
This sets up a new test of the $202 moving average best case and the old $170 low worse case. Long term, we go to new highs as the AI value of the company is realized. The company is making progress on all its products. One drag on the stock will be Musk’s new bromance with Donald Trump. Your classic Tesla EV buyer is not exactly a Trump supporter.
We closed out September with a blockbuster +10.28% profit. So far in October, we have given back -1.49%.My 2024 year-to-date performance is at +43.75%.The S&P 500 (SPY) is up +21.59%so far in 2024. My trailing one-year return reached a nosebleed +62.24. That brings my 16-year total return to +720.38%.My average annualized return has recovered to +52.06%.
With my Mad Hedge Market Timing Index at the 70 handles for the first time in five months, I am remaining cautious with 50% and 50% cash. I added a new long in (TSLA) on the post-Robotaxi 15% selloff. I also added a new long in (JPM) in the wake of their blockbuster earnings report. Some three of my five positions expire on the Friday, October 18 options expiration.
Some 63 of my 70 round trips, or 90%, were profitable in 2023. Some 58 of 74 trades have been profitable so far in 2024, and several of those losses were really break-even. Some 16 out of the last 19 trade alerts were profitable. That is a success rate of +78.78%.
Try beating that anywhere.
Risk On
(NEM) 10/$47-$50 call spread 10.00%
(TSLA) 10/$200-$210 call spread 10.00%
(DHI) 10/$165-$175 call spread 10.00%
(TSLA) 11/$165-$175 call spread 10.00%
(JPM) 11/$195-$205 call spread 10.00%
Risk Off
NO POSITIONS 0.00%
Total Net Position 50.00%
Total Aggregate Position 50.00%
CPI Comes in Warm at 0.3% for September and 2.4% YOY. Food was up, and shelter was down. Inflation is dying, but not dead. Coming on the heels of the surprisingly strong September employment data, this report encourages the Fed to maintain a cautious stance with the pace of the easing cycle. The likely path is still a quarter-point rate cut in November and another December quarter-point cut.
PPI Comes in Flat and up 1.8% YOY. A 0.2% decline in final demand goods prices offset a 0.2% increase in services. The release indicates that inflation is off its blistering pace that peaked more than two years ago but still mostly holds slightly above the Federal Reserve’s 2% target.
Weekly Jobless Claims Come in Hot at 258,000, the biggest weekly jump in three years. Initial claims for state unemployment benefits increased 33,000 last week to a seasonally adjusted 258,000 for the week ended October. 5, the Labor Department said. The number of Americans filing new applications for unemployment benefits surged last week, partially boosted by Hurricane Helene and furloughs at Boeing (BA) amid a nearly four-week-old strike at the U.S. planemaker. It’s a very pro-interest rate cut number.
Hurricane Milton Damage Estimated at $75 billion, less than expected. The storm backed off to a category 3 just before it hit land. Tampa lost its football stadium. The shutdown of the Florida economy, 5% of the US total, will likely shave a couple of basis points off Q3 GDP.
Junk Bond Yields Hit 17-Year Low, on top of a monster rally this year powered by yield-hungry investors. Default rates on this misnamed asset class are generally less than 2%.
Rio Tinto Buys Arcadium for $6.7 Billion in a bid to become one of the world’s largest lithium producers. The deal delivers a suite of lithium filtration technologies that are poised to revolutionize how the metal is produced for the electronics and electric vehicle industries. It’s a big bet on the recovery of fading EV sales. Follow the big money,
Money Pours into Gold ETFs, with five consecutive months of inflows. Gold ETFs store bullion for investors and account for a significant amount of investment demand for the precious metal that touched a record high of $2,685.42 an ounce on Sept. 26, buoyed by the start of U.S. interest rate cuts. Buy (GLD) and (NEM) on dips.
My Ten-Year View
When we come out the other side of the recession, we will be perfectly poised to launch into my new American Golden Age or the next Roaring Twenties. The economy is decarbonizing, and technology hyper accelerating, creating enormous investment opportunities. The Dow Average will rise by 600% to 240,000 or more in the coming decade. The new America will be far more efficient and profitable than the old.
Dow 240,000, here we come!
On Monday, October 14 at 8:30 AM EST, the New York Empire State Manufacturing Index is out On Tuesday, October 15 at 6:00 AM, the New York Empire State Manufacturing Index is out.
On Wednesday, October 16 at 11:00 PM, the MBA 30-Year Mortgage Rate is printed.
On Thursday, October 17 at 8:30 AM, the Weekly Jobless Claims are announced. We also get US Retail Sales.
On Friday, October 18 at 8:30 AM, the US Building Permits are announced. At 2:00 PM the Baker Hughes Rig Count is printed.
As for me, Iwas recently in Los Angeles visiting old friends, and I am reminded of one of the weirdest chapters of my life.
There were not a lot of jobs in the summer of 1971, but Thomas Noguchi, the LA County Coroner, was hiring. The famed USC student jobs board had delivered! Better yet, the job included hours at night and free housing at the coroner's department.
I got the graveyard shift from midnight to 8:00 AM. All I had to do was buy a black suit from Robert Halls, for $25.
Noguchi was known as the “coroner to the stars” having famously done the autopsies on Marilyn Monroe and Jane Mansfield. He did not disappoint.
For three months, whenever there was a death from unnatural causes, I was there to pick up the bodies. If there was a suicide, gangland shooting, or horrific car accident, I was your man.
Charles Manson had recently been arrested, and I was tasked with digging up the victims. One cowboy stuntman, Shorty Shay, had his head cut off and neatly placed in between his ankles.
The first time I ever saw a full set of women’s underclothing, a girdle, and pantyhose was when I excavated a desert roadside grave that the coyotes had dug up. She was pretty far gone.
Once, me and another driver were sent to pick up a teenage boy who had committed suicide in Beverly Hills. The father came out and asked us to take the mattress as well. I regretted that we were not allowed to do favors on city time. He then said, “Can you take it for $200?”, then an astronomical sum.
A few minutes later found a hearse driving down the Santa Monica Freeway on the way to the dump with a double mattress expertly tied on the roof with Boy Scout knots with a giant blood spot in the middle.
Once, I was sent to a cheap motel where a drug deal gone wrong had produced several shootings. I found $10,000 in a brown paper bag under the bed. The other driver found another ten grand and a bag of drugs and kept them. He went to jail. I didn’t.
The worst pick-up of the summer was also the most disgusting and even made the old veterans sick. A 300-pound man had died of a heart attack and was not discovered for a month. We decided to each grab an arm or leg and all tug on the count of three. One, two, three, and all four limbs came off!
Eventually, I figured out that handling dead bodies could be hazardous to your health, so I asked for rubber gloves. I was fired.
Still, I ended up with some of the best summer job stories ever.
Good Luck and Good Trading,
John Thomas
CEO & Publisher
The Diary of a Mad Hedge Fund Trader
https://www.madhedgefundtrader.com/wp-content/uploads/2024/10/John-Thomas-hammer.png1000718april@madhedgefundtrader.comhttps://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.pngapril@madhedgefundtrader.com2024-10-14 09:02:322024-10-14 10:50:54The Market Outlook for the Week Ahead, or Buy Now and Beat the Post Election Rush
Listen to all 22 speakers opine on the best strategies, tactics, and instruments to use in these volatile markets. It is a true smorgasbord of investment strategies. Find the best one to suit your own goals.
The product discounts offered last week are still valid. Start, stop, and pause the videos at your leisure. Best of all, access to the videos is FREE. Access them all by clicking here.
We look forward to working with you and the next summit is scheduled for December.
https://www.madhedgefundtrader.com/wp-content/uploads/2020/05/mr-john-thomas.png1024813april@madhedgefundtrader.comhttps://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.pngapril@madhedgefundtrader.com2024-10-11 09:04:152024-10-11 10:13:36The Mad Hedge September 17-19 Summit Replays are Up
Below please find subscribers’ Q&A for the October 9 Mad Hedge Fund Trader Global Strategy Webinar, broadcast from Lake Tahoe, Nevada.
Q: Is the iShares 20+ Year Treasury Bond ETF (TLT) a buy here?
A: I think we are testing the 200-day moving average, which is at 92.75. Let’s see if that holds, and if it does, we want to do at-the-money LEAPS one year out because the Fed has basically said it’s going to keep lowering interest rates until June, and bonds can’t lose on that. That would also be a nine-point pullback from the recent high.
Q: I found a YouTube video about your Uncle Mitchell Paige, who won the first Medal of Honor in WWII.
A: Yes, there’s a ton of stuff on the internet about Uncle Mitch, even though he passed away 22 years ago. There’s even a Mattel G.I Joe version of Uncle Mitch that you can buy, which he gave me. I also inherited his samurai swords.
Q: When will small caps turn around?
A: That’s the iShares Russell 2000 (IWM). Small caps are joined at the hips with interest rates, so when interest rates go up, and bond prices go down, small caps also go down. That is because small caps are much more dependent on borrowed money than any other section of the market, 60% lose money, 40% are regional banks, and they have much weaker credit ratings. They are a leverage play on everything going great—when interest rates are rising, they aren’t great. I would hold off on the (IWM). Even when interest rates start going back down again, which I expect they will do going into the next Fed meeting, (IWM) will be about number ten on the list of interesting things to do.
Q: The hiring numbers were great with the nonfarm payroll on Friday, so will the recession be pushed back to 2026?
A: I don’t think we’re going to have a recession. I think we have a growth scare, a growth slowdown, and then we reaccelerate again as more companies start booking AI profits to their bottom lines. Also, the recovery of China would be nice, recovery of Europe would be nice—so there are many other factors at play here. The fact is the United States has the world’s strongest economy, and we are going from strength to strength. That’s why everybody in the world is sending their money over here.
Q: Do you expect heightened volatility going into the year-end?
A: I expect heightened volatility going into the election; after that, it may collapse. Right now, the Volatility Index ($VIX) is in the low $20s, which is the high end of the recent range. I expect that to fall, and then we get a ballistic market after the election once all the uncertainty is gone.
Q: Should I buy utilities and industrials now?
A: Yes, these are two of the most interest-sensitive sectors in the market—especially utilities, which are very heavy borrowers. They’ve already had tremendous runs—things like Duke Energy (DUK) and NextEra (NEE). However, I think I’m going up more if we’re going to get interest rates down to 3%. Even if we get them down to 3.5 or 4%, the rallies in all the interest-sensitive sectors will continue.
Q: If the global economy recovers, would that lead to increased inflation and an increase in interest rates?
A: In an old-fashioned economy—one driven by, for instance, the car industry—yes, that would be happening. Back then, wage settlements with the United Auto Workers had the biggest impact on your portfolio. In the modern economy, technology is dropping prices so fast that even during periods of high growth, prices are still falling. The example I give is: the cheapest PC you could get in 1990 cost $5,000, which was a Compact. Now you could get the same computer for $300. You can bet going forward that eliminating all port workers will also be highly disinflationary; we won’t have to pay those $200,000 salaries for port workers, so that goes to zero. You can cite literally hundreds of examples in the economy where technology is collapsing prices.
Q: Should I go with a safe strategy now or increase my risk?
A: I think if we don’t sell off in the next two weeks, you have to buy the hell out of the market because we have had every excuse to sell off, and the market just won’t do it. Middle Eastern war, uncertainty in the election, gigantic hurricanes which will definitely shrink economic growth this year, the port strike and the Boeing strike, which will take a month out of GDP growth on the coast—and it still won’t go down. So, if you throw bad news on a market and it still won’t go down, you buy the heck out of it. The last chance for this to go down is literally this month. After that, the seasonals turn strongly positive. What’s the opposite of “sell in May, and go away”? It’s “buy in October and ring the cash register.”
Q: Will gold (GLD) go to 3,000/oz soon?
A: Yes. That’ll happen on the next Fed interest rate cuts as we go into the end of the year. We'll probably get two more cuts of 25 basis point cuts. Gold loves that. And guess what? Chinese have nowhere else to save their money except gold. So, yes, I'm looking for $3,000 and then $4,500 after that. You definitely want to own gold.
Q: Should I dump Chinese (FXI) stocks after this short-term spike?
A: Yes, for the short term, but not for the long term. Some kind of recovery will come, because if this Chinese stimulus package fails, they'll bring another one, and you'll get another one of those monster rallies. So, if you're a long-term holder, then I would stay in. The blue-chip stocks are incredibly cheap. But I still believe the best China plays are in the US, in oil (USO), copper (FCX), iron ore (BHP), and gold (GLD).
Q: Is oil headed down after the Israel and Lebanon war?
A: That really isn’t the main factor in the oil market. These people have been fighting for a century, literally, and any geopolitical influence has not had any sustainable impact on the price of oil. Really, the sole driver for oil prices now is China. You get China back in the game, oil goes back to $95 a barrel. If China remains in recession, then oil stays low and goes back to the $60s. It’s purely a China play. The US economy will continue to grow, but most of our oil consumption is domestic now—we are the world’s largest oil producer at 13.5 million barrels a day. We do not need any Middle Eastern oil anymore, really, we’re just running out our existing contracts.
Q: Do you think cryptocurrencies will have a bull market with the stock market?
A: No, I don’t. Cryptocurrencies did well when we had a liquidity surplus and an asset shortage. Now, we have the opposite; we have a liquidity shortage and an asset surplus, and the theft problem is still rampant with the cryptocurrencies keeping most institutional and individual investors out of that market.
To watch a replay of this webinar with all the charts, bells, whistles, and classic rock music, just log in to www.madhedgefundtrader.com, go to MY ACCOUNT, select your subscription (GLOBAL TRADING DISPATCH, TECHNOLOGY LETTER, or Jacquie's Post), then click on WEBINARS, and all the webinars from the last 12 years are there in all their glory
Good Luck and Good Trading,
John Thomas
CEO & Publisher
The Diary of a Mad Hedge Fund Trader
"Everything is expensive now. Worries about the future can cause safe assets to become highly-priced. I call it the 'Titanic Effect.' When the Titanic was going down, people would pay a fortune for anything that floats. We may be in a Titanic situation now," said my buddy, Nobel Prize winner Robert Shiller.
https://www.madhedgefundtrader.com/wp-content/uploads/2014/08/Sinking-Ship.jpg227359Mad Hedge Fund Traderhttps://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.pngMad Hedge Fund Trader2024-10-11 09:00:342024-10-11 10:13:08October 11, 2024 - Quote of the Day
There is a very high degree of risk involved in trading. Past results are not indicative of future returns. MadHedgeFundTrader.com and all individuals affiliated with this site assume no responsibilities for your trading and investment results. The indicators, strategies, columns, articles and all other features are for educational purposes only and should not be construed as investment advice. Information for futures trading observations are obtained from sources believed to be reliable, but we do not warrant its completeness or accuracy, or warrant any results from the use of the information. Your use of the trading observations is entirely at your own risk and it is your sole responsibility to evaluate the accuracy, completeness and usefulness of the information. You must assess the risk of any trade with your broker and make your own independent decisions regarding any securities mentioned herein. Affiliates of MadHedgeFundTrader.com may have a position or effect transactions in the securities described herein (or options thereon) and/or otherwise employ trading strategies that may be consistent or inconsistent with the provided strategies.
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