Sashimi bento and good conversation⦠[TradeSmith Daily]( The Profit Column: Top-Ticking the â23 Chip Trade
By Michael Salvatore, Editor, TradeSmith Daily As 2023 kicked off, it was clear that ChatGPT and other large language AI models would become both THE tech story and THE investment story of the year. It didnât take long for a few smart investors to figure out a great trade to make on that story. AI lives in computer chips, right? So… it stood to reason a bunch of capital would quickly make its way there. Sounds simple, but mind you, this trade took guts. The 2022 bear market nuked hundreds of billions of dollars in market cap from the top semiconductor companies. AMD plunged more than 62% peak-to-trough. Nvidia, one of this yearâs biggest winners, fell even more. Only the courageous hit the "buy" button after that carnage. Thatâs why so many investors got caught flat-footed by a rebound that rocketed Nvidia to new all-time highs and got appetites a-rumblinâ for tech stocks once again. Just a handful of investors were able to see this coming. And among them was my longtime friend and growth investing expert, Jason Bodner. I met Jason back in 2019, and we clicked immediately. Forget those dull-as-dishwater, put-you-to-sleep Wall Street screen readers. Jason is vibrant, passionate, friendly as all get out — and move-the-needle savvy. The manâs got âthe knack,â ya know? Thatâs why I had to grab hold of him for the newest edition of The Profit Column, your weekly spotlight on a big profit from the investing experts in our network… and a conversation about what made it happen. (If you missed the first dispatch, where we laid out what The Profit Column is all about, [go right here]( to catch up.) Our lives are busy… our schedules frenetic. But we still make time for regular lunch get-togethers at a great sushi place here in South Florida. And this time, in addition to the sashimi bento, I wanted to dig into the 34% chip-stock win he booked for his subscribers in just four months. Hereâs our conversation… RECOMMENDED LINK [R.I.P. for the American Dream? (Surprising answer inside...)](
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Michael Salvatore, Editor, TradeSmith Daily (MS): Whatâs up, Jason? Thanks for being part of the Profit Column. Jason Bodner, Editor, Quantum Edge Pro (JB): Oh anytime, Mike. MS: So, Iâm curious about this trade on Axcelis (ACLS) you made earlier this year. What was the thought process? JB: You know by now that every investment decision I make is systematic. I spent years working on a tool that would help me sniff out the best stocks in the market, backed by the biggest money on Wall Street. Now my subscribers and I have that tool, fine-tuned to peak precision. I call it the Quantum Edge. And, quite frankly, it does a lot of the work for us. MS: So, how did the Quantum Edge system find ACLS? JB: ACLS popped up on my Quantum Edge screener not just because it was a semiconductor stock during a great time to own them. Itâs because itâs one of the highest-quality semi stocks out there. At the time I recommended it, it was a fundamental fortress. Sales growth and earnings were both outstanding and growing fast, with the former at a 39% growth rate over three years, and the latter at a 124% jump over the same timeframe. The company was keeping 20 cents of every dollar it made, a strong profit margin for a company in growth mode. It had very little debt at just 8.8% of equity. Shares traded at just 22 times this yearâs expected earnings, which is pretty darned attractive for this kind of growth. All these are marks of fundamental quality you have to see in the type of stocks I recommend. And theyâre the datapoints that feed into my Quantum Edge system. All together, these datapoints combined to form a rock-solid score of 87.5 out of a possible 100. Thatâs an excellent fundamental score — at the time, it was in the top 0.6% of all stocks. MS: The top 1% of stocks sounds like exactly where you should be putting your money. Just for the audience, what type of stocks do you target? JB: Iâm a diehard optimist, Mike. History shows that I should be. Just look at any long-term chart of the stock market and youâll see that, 95% of the time, the market sides with optimism. Bears have their fun every decade or so, but not for long. So, I stay bullish. Lifeâs easier when youâre bullish. I say this because the best way to juice this mindset is to buy high-growth, smaller market cap companies with a huge runway for gains. I have a sweet spot I target — between about $2 and $20 billion market cap. Companies in that range have the best shot at multiplying your money over the long haul, without exposing you to undue risk. ACLS was at the low end of this range, making it an excellent target. MS: So, getting back to the system, fundamentals arenât the only thing you screen for. ACLS was also a strong technical picture, right? JB: It was. ACLS was trading near its 12- and 52-week high at the time. Shares were also above their 50-, 100-, and 200-day moving averages — a strong sign of momentum. But, it had consolidated between $125 and $135 for the previous eight weeks. It was clear to me that the next big move would be a breakout through the top of that range and on to new highs. Hereâs the chart from the day I recommended it. You can see what Iâm talking about…
Oh yeah, that stock was ready to fly. JB: Then given the market environment of the time… the rush into AI… and all these factors, it was a no brainer. But one final factor made it a trade we couldnât miss: the Big Money buy signal. This is the foundation of the Quantum Edge system. Itâs able to spot when major institutional capital is flowing into — or out of — any given stock. We spotted two Big Money buy signals earlier in the year, a sign that institutions saw the same thing we did… and at about the same price we bought it.
That gave me the conviction to pull the trigger. MS: Sounds like it all came together perfectly. But then, you sold it a few months later, just when it seemed like AI was about to take over the world… What led you to that decision? What happened to Mr. Optimism? JB: A trader whoâs optimistic, but irrational, will get played for a fool in any market. Thereâs much more to the Quantum Edge system than the individual ratings. Another broad market indicator I like to use all the time is the Big Money Index. This index shows the full market picture of where institutions are placing their bets. If theyâre bullish, the line goes up. If theyâre bearish, the line goes down. But if it gets too extended in either direction, we get a strong signal of either to take profits, or get ready to buy. Hereâs the Big Money Index from the day I sold ACLS back in August…
The BMI went overbought about a week prior, and started to turn down. We know now that this signaled the beginning of two brutal months of falling stock prices. That was my signal to get out. So we sold not just ACLS that day for a 37% gain, but another 59% winner, a 21% winner, a 15% winner, and one small, 15% loss. My friend, colleague and collaborator Lucas Downey has been talking about it in the Daily quite a lot lately, because today itâs actually sending buy signal… one of the most oversold readings ever. Safe to say, Iâm set to recommend a ton of stocks to my readers right now. MS: Thatâs awesome to hear, Jason. Yeah, prices are quite a bit more attractive today than they were when your BMI went overbought. So how can folks join in on that action? JB: The doors are open right now to [join me at Quantum Edge Pro](. Like I said, my watchlist is stacked with names set to take off through the end of the year. I think we could really see some 2023 close out with a bang. MS: Sounds great, Jason. I know Iâll be following along. Thanks again for catching up today. JB: Thanks for having me! --------------------------------------------------------------- RECOMMENDED LINK [A.I. takes companyâs stock market predictive power to the next level](
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Michael here… If youâre interested in investing alongside Jasonâs proven Quantum Edge system, be sure to [go here and check out a Quantum Edge Pro membership](. The next couple months may turn out to be the best time to own stocks all year long, and theyâre trading at fire sale prices. [Get all the details on Jasonâs investing approach right here.]( Thatâll wrap it for this weekâs Profit Column. Have a wonderful weekend! To your health and wealth, Michael Salvatore
Editor, TradeSmith Daily Get Instant Access
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