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CNBC
05-08-2025
- Business
- CNBC
A technical look at Wall Street's 'fear gauge' and how to hedge against potential volatility
As Fundstrat's Tom Lee says, this is the most hated bull market of all time, yet it continues to power higher. There are plenty of overhanging uncertainties that could derail this rally that I'll discuss below, but first let's talk about technical condition of this rally. This V-shape recovery-turned-rally from April lows has been unrelenting. Any minor pullbacks are bought up and those left on the sideline are still waiting for a sizable pullback to enter. It could continue to power higher leaving those on the sideline chasing momentum and entries at new highs, or, the numerous overhanging threats to this market could begin to manifest and pullback may be ahead of us. We can't know. No one knows the future. All we can do is control our process in the present and plan accordingly. To avoid the concern that we need to be able to predict the future to successfully invest in the markets, we recently deployed a VIX hedge to our Active Opps portfolio at Inside Edge Capital with a favorable risk-reward ratio. If the market does pullback the VIX hedge will provide some protection to our portfolio while we're able to hold onto the strong names we've been building here with you every Tuesday on CNBC Pro. The S & P broke out from the late 2024 highs at around 6,140 and have not yet re-tested that breakout zone as support. It's not required, but it would be nice to see this checkback to this significant technical level. Also located in this zone is the 50 period moving average (dotted purple). You'll also notice the rate of change indicator below that has been in a decisive downtrend. To use a baseball analogy as I'm running travel baseball tryouts tonight, if you throw a ball in the air the speed of ascent will decelerate until the rate of change is zero and gravity takes over and pulls the ball back to the ground. The same thing here. At some point buyers will exhaust themselves and sellers will come in. Looking at the Volatility Index (VIX) overlay with the S & P 500 you'll notice that there is a clear inverse relationship between the two. As the stock market falls, fear and the accompanying price of option insurance goes up. Home insurance on a house with a smoldering foundation is going to be a lot more expensive than a calm clear day. The VIX at 17 is still relatively cheap so insurance is still reasonable. Plus you'll notice that I've outlined a divergence between late 2024 and now. With the S & P 500 at new highs, the VIX should be sub-15, but as mentioned above there are so many overhanging threats to the market investors are buying up the insurance policy keeping the VIX somewhat elevated. Specifically, we went to the VIX September monthly call options and bought the 23 strike and then sold the 29 call. The difference between the two should be around $1.50 for that $6 spread so that means you're risking $150 to make $450 if the VIX is above 29 on Sept. 17. As mentioned, there are threats to the market that we all know about including a Fed that may not be ready to drop rates despite many calling for it, persistent inflation driven by strong demand tariff pressures, Geopolitical tensions, narrowing breadth in the market as mega-cap hyper scalers are starting to lead once again, and finally seasonality. September is historically the worst month for the S & P 500. Hopefully we won't need the hedge and will close it at a loss. But if we do need it and the market is going to pullback, we can maintain our strong portfolio and not dislodge the low cost basis of names we've been building this year. -Todd Gordon, Founder of Inside Edge Capital, LLC We offer active portfolio management and regular subscriber updates like the idea presented above. DISCLOSURES: (Gordon owns VIX call spreads personally and in his wealth management company Inside Edge Capital) All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL'S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.
CNBC
15-07-2025
- Business
- CNBC
The charts are showing app stock Life360 has more room to run
Two weeks ago, my wife and I finally gave in and bought our twin boys iPhones. My wife's sister has three older daughters in high school and college and she insisted that we look into the app Life360 . She proclaimed that the app is a must have for pre-teens and teens and many parents use it. So, we signed up. One week in, I cannot remember a time when software so quickly integrated into our lives. I started studying the company and found that it was publicly traded, and the technicals and fundamentals look great. I added the position to my Active Opps portfolio yesterday. This company is the world's largest family-focused social network that allows users to track each other's precise location, personal belongings, even pets. Life360 also offers features to track driving speed, crash alerts, roadside assistance and has even partnered with Uber for airport arrival ride booking. The app regularly ranks in the top 10 most popular social-networking apps and is in the top-25 of daily active users for all applications. Looking at the daily chart you can see the stock came to "life" in April, rallying 100% into June. The stock is consolidating, but the best sellers could do was force the stock into a consolidation that still trended higher. That's a rare technical pattern indicative of continued buying interest. The stock popped over 6% on Monday and is now pulling back to support. In May, June and now July — you can see several blue volume bars above the 50-day moving average of volume uncovering institutional demand. As I first started researching this company, I thought with Apple's location sharing and Air Tag device finder, why wouldn't this company become obsolete with Apple's features? I've found the software is so incredibly feature rich and is targeting a market that Apple is not really focused on and benefits from cross-platform appeal due to its availability on Android. Non-GAAP EPS totaled 62 cents per share in 2024 and is expected to go to $1.03 per share in 2026. The company's operating revenue turned positive in the fourth quarter of 2024 and runs a high 80% gross margin (benefit of fixed cost SaaS companies). The stock has a pretty high forward valuation, so I'm going to keep this breakout on a short leash while above the $66 pivot point. In our Active Opps portfolio (linked below) we hold a 3.58% allocation and looking to increase my position size with evidence that support is being held. We offer active portfolio management and regular subscriber updates like the idea presented above . -Todd Gordon, Founder of Inside Edge Capital, LLC DISCLOSURES: Gordon owns LIF personally and in his wealth management company Inside Edge Capital. All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL'S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.
CNBC
01-07-2025
- Business
- CNBC
The charts are showing this burger chain can soon blow through its all-time highs
I believe Shake Shack is on the attack for a continuation to and through all-time highs, possibly once and for all. I last wrote about SHAK in February of last year and first added this company to our growth portfolio on Feb. 2, 2024. It's been a volatile ride since then, as the company navigates expansion in a competitive fast casual dining space, as well as a rich valuation that has some reluctant to chase into all-time highs. Looking at the weekly chart, first we see a third attempt since 2021 to break through the $140 region. Looking at the lower volume chart, we see a blue wall of volume mostly above the 50-week average volume (5.76 million shares per week) that screams institutional accumulation, despite the high valuation. Below that, we see consistent top-line revenue growth since 2021 ranging from 15% to 20%. Just above that, are the GAAP EPS figures that show a nasty decline in 2024 of 48.81%. Non-GAAP earnings, however, surged 148.6% year over year. The discrepancy was from the September 2024 earnings — where management listed several key "one-time" items. As we move to the daily chart, you can see discrepancy in Q3 2024 GAAP vs non-GAAP earnings at the bottom of the chart. Looking at the price bars on the far left of the chart, you'll see the stock gapped up that day. Turning back to the hard right edge of the chart, we see a test of the key $140-zone happening again with Q3 earnings set to be reported in 30 days. Before then, I would not be surprised to see a pullback towards the former resistance-turned-support zone around $130 that can be used for entries. Looking at the yearly change in EPS, the rich valuation can be overlooked in this momentum stock for now: 2023: +219% 2024: +148% 2025 expected: +44.8% 2026 expected: 24.9% I would buy the stock and forget about it for a few years, rather see if the recent upgrades from Barclays and Oppenheimer can materialize. The company has aggressive expansion plans of 45-50 company-operated outlets in 2025 and with global licensing deals expected. The company has 570 locations worldwide, according to the company website. Shake Shack is emphasizing digital sales with approximately 38% of total transactions are done on the app with additional functionality expected. We hold SHAK in two of our portfolios at Inside Edge Capital. In our flagship growth portfolio (Tactical Alpha Growth), we hold a 2.5% position after increasing from 1% on the May 28th 2025 reallocation. In our faster money "Active Opps" account, we hold a 5.23% allocation. If we can sustain a break above the $140.00 resistance level, I will look to increase the holding size in both while trailing my risk management levels higher. -Todd Gordon, Founder of Inside Edge Capital, LLC We offer active portfolio management and regular subscriber updates like the idea presented above. DISCLOSURES: Gordon owns SHAK personally and in his wealth management company Inside Edge Capital. All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL'S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.
CNBC
17-06-2025
- Business
- CNBC
This AI infrastructure leader is setting up for a move to all-time highs, according to the charts
Credo Technology is a relatively new company that came public in 2022 at an approximate $1.5 billion valuation. Amidst the AI boom in the past three years, this company has grown quickly to a $13 billion market cap company. From the looks of things, the stock is going higher. We added the name to our Active Opps portfolio based on technical and fundamental reasons I'll outline below. Fundamentals first: This company is a leader in several areas of the AI infrastructure buildout, particularly high-speed connectivity solutions. A data center is only as helpful as the individual processors and chips can quickly communicate with each other. The company builds both hardware and software stacks that increases the speed, reliability, and security of data via energy efficiencies and protocols to back up their systems. On conference calls, the company is guarded about who exactly the customers are, but large data center hyperscalers include Amazon and Microsoft. The bad news is they have relatively few clients, but the good news is these massive data center buildouts are probably going to continue the buildout for quarters to come. The growth of CRDO indicates that their customer roster may be expanding. Revenue growth (shown below the weekly chart below) in the past four years has been 81.4%, +72.99%, +4.76% and 126.34%; it's expected to grow another 85.37% to $809 million in 2026. The company is also maintaining 62%-65% gross margins, the highest among their competitors. Turning to the technicals, the weekly chart shows a pending breakout above all-time highs at $86.49 that should set up a possible test of the first Fibonacci extension (compared to the 2025 decline) at $116.35. With 89 cents earnings per share (non-GAAP) expected in 2026 for a crazy rich forward valuation of 130 times, this company can't afford any stumbles. But the volume in the past three weeks indicates institutions are accumulating and creating support above the $60 area. Moving to the daily chart, there is a near-term breakout at around $83 that sets up a test of those all-time highs around $86.70. Using some of the advanced technical modeling we do, the immediate upside target is $101.61 to book some profits. But I do want to keep a chunk for the move up to that weekly $116.35 target. Near-term risk/stop loss for us will be a move back below $70.00 where I will start to reduce position sizing and manage risk . In our Active Opps portfolio, we hold a 5% allocation in CRDO. -Todd Gordon, founder of Inside Edge Capital, LLC We offer active portfolio management and regular subscriber updates like the idea presented above. DISCLOSURES: Gordon owns CRDO personally and in his wealth management company Inside Edge Capital All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL'S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.
CNBC
03-06-2025
- Business
- CNBC
This stock literally powering AI is setting up for a run to record levels, according to the charts
For this week's column, I was planning to do a simple analysis of the Nasdaq-100 showing a holding pattern that's been in place since May 13. Upon the completion of this consolidation, we should resolve to the upside testing the all-time highs — despite all the lingering macro headwinds. But when I learned about Meta Platforms signing a nuclear power deal with Constellation Energy , I decided to focus on the companies literally powering this revolution in artificial intelligence. I don't hold Constellation Energy, but I do own Oklo , GE Vernova , and Vistra in our Tactical Alpha Growth (T.A.G.) portfolio at Inside Edge Capital . As the AI buildout powers ahead, this will be one of the key drivers to break QQQ from the three-week consolidation setting up all-time highs. Today we're going to focus on Vistra Corp (VST), a stock that I also hold in our "fast money" account Active Opps with a 3.6% weighting. Based on today's news, many of the power generation and equipment suppliers are trading higher along with the semiconductors. I will increase my position size in VST to approximately 5% of my holdings in Active Opps based on the tactics I outline below. But first, let's talk about the company. Vistra is an integrated power generation and retail electricity company that has positioned itself in a pivotal role to support the AI technology buildout by filling the significant energy demands of AI-driven data centers. In 2024, Vistra acquired Energy Harbor for $3.4 billion — adding four nuclear power plants to its portfolio. Vistra has also made investments in natural gas assets as well as solar facilities, which allowed them to enter into power purchase agreements (PPA's) with Amazon and Microsoft. VST has grown revenue consistently since 2021 and GAAP EPS aggressively, until this year where analysts see a 11.79% contraction. Non-GAAP EPS is showing growth rates since 2022 of 378%, 88%, 54% and 43% according to S & P Global Capital IQ. The weekly chart shows nearby resistance in the $172-$177 zone. I would feel better increasing my position size if we can get a daily close above $180 setting up a test of all-time highs just below $200. Turning to the daily chart, we see a gap up today into our resistance zone following the Constellation-Meta news. If we can get a move into $180 this week, I will be looking to add to my position and consider the pivot point that is now support at $165 as my risk containment level. We offer active portfolio management and regular subscriber updates like the idea presented above. -Todd Gordon, Founder of Inside Edge Capital, LLC DISCLOSURES: Gordon owns VST personally and in his wealth management company Inside Edge Capital. All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL'S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.
