How to Trade AI, Crypto, and Data Center Stocks

TL;DR

The presenter’s risk-on plan favors recently corrected data center, crypto-related, rare earth, power, and non-Mag 7 AI software stocks. The bullish thesis depends on a breakout above the October 10 range, a VIX below 17, a likely Fed rate cut, reduced quantitative tightening, continued AI capital spending, strong major technology earnings, and progress toward a United States-China trade agreement.

Transcript

What is going on traders? So much has changed over the course of the last week. You definitely want to pay attention. This will be the only video you need to get you prepared for the upcoming week in the stock market. Now, we had that October 10th daunting candle here and we were trading inside of that for almost 2 weeks. We finally broke out of th... Read More

Key Insights

• The market broke above the October 10 candle after trading within its range for almost two weeks. The presenter treats that breakout, together with the VIX falling below 17, as confirmation that risk appetite may be returning for the fourth quarter.
• A preliminary United States-China trade consensus may delay China’s planned rare earth export licensing regime for one year. The presenter believes the delay could give the United States time to accelerate domestic rare earth refining and reduce its dependence on China.
• The presenter’s rare earth watchlist includes Energy Fuels, MP, METC, and US. He views further sustained weakness in these stocks as a potential opportunity because he expects the administration to push aggressively for United States refining investment.
• CPI was reported at 3%, below the forecasted 3.1%. The presenter connects that reading to his expectation that the Federal Reserve will cut rates at its next meeting and may also announce a reduction in quantitative tightening.
• Quantitative tightening works by allowing assets to roll off the Federal Reserve’s balance sheet. The presenter expects policymakers first to stop or reduce those roll-offs, followed potentially by renewed Treasury purchases next year to improve liquidity and bring down rates.
• Major technology earnings will test the durability of AI spending. Meta, Microsoft, and Alphabet report Wednesday after the market closes, while Amazon and Apple report Thursday, with particular attention placed on Amazon Web Services and corporate AI capital expenditure.
• AI capital spending is the presenter’s primary indicator for when the bubble may weaken. He expects spending to remain steady or increase during this earnings cycle, but believes broad reductions in AI capital expenditure would signal that bubble-popping conditions are approaching.
• Data center investment supports the presenter’s bullish thesis because AI applications require hardware, GPUs, compute capacity, and power. He argues that companies are building this infrastructure before expanding AI into healthcare, autonomous driving, and other real-world applications and revenue models.

Questions & Answers

Q: How is the presenter preparing for the upcoming stock market week?

The presenter is using a risk-on plan focused on power, data center, crypto-related, rare earth, and non-Mag 7 AI software stocks that experienced significant pullbacks or corrections during the previous couple of weeks. His plan depends on the market holding its breakout above the October 10 range, the VIX remaining below 17, supportive Federal Reserve policy, major technology earnings, and progress in United States-China trade negotiations.

Q: Why does the October 10 trading range matter?

The October 10 candle defined a difficult range in which the market traded for almost two weeks. The market finally moved above that candle on Friday, while the VIX fell below 17, its October 10 level. The presenter interprets the combination as a bullish technical signal that the fourth-quarter risk-on scenario is beginning, although he acknowledges that headlines can still drive price action.

Q: What does the preliminary United States-China trade consensus mean for rare earth stocks?

The preliminary consensus may delay China’s proposed global export licensing regime for rare earths by one year and could remove the threat of 100% tariffs. The presenter reasons that a delay may prompt the administration to support domestic rare earth refining more aggressively. He therefore sees possible opportunities in Energy Fuels, MP, METC, and US, particularly if those shares experience additional sustained weakness.

Q: Why does the presenter expect the Federal Reserve to cut rates?

CPI came in at 3%, compared with a forecast of 3.1%, which the presenter considers sufficiently supportive of a rate cut at the next Federal Reserve meeting. He also expects a possible announcement reducing quantitative tightening. His broader thesis is that lower rates and slower balance-sheet runoff would create easier monetary conditions and provide another tailwind for momentum stocks and the wider market.

Q: What would reduced quantitative tightening mean for markets?

Quantitative tightening is described as allowing assets to roll off the Federal Reserve’s balance sheet. A reduction would mean slowing or stopping that runoff, which the presenter views as a move toward easier money. He expects the process to occur in stages, beginning with ending asset roll-offs and potentially progressing next year to Treasury purchases intended to improve market liquidity and bring down rates.

Q: What should traders watch in major technology earnings?

The presenter expects Meta, Microsoft, Alphabet, Amazon, and Apple to beat revenue and earnings expectations, but his main concern is future AI spending. He specifically plans to watch Amazon Web Services results and whether Meta, Microsoft, Alphabet, and Amazon maintain, increase, or reduce AI capital expenditure. Continued spending supports data center and infrastructure stocks, while reductions would threaten the bullish AI thesis.

Q: Why does the presenter believe the AI bubble can continue?

The presenter believes the industry remains in an arms-race stage in which companies need more compute power, GPUs, data centers, and electricity before they can build broader AI applications. He argues that chatbots alone cannot justify current spending, but expects future applications across healthcare, autonomous driving, and other parts of daily life to create new businesses and revenue models on top of the hardware layer.

Q: Which stock groups does the presenter favor after the recent correction?

The favored groups are power stocks, data center companies, crypto-related plays, rare earth producers, and AI software companies outside the Mag 7. Many of these areas experienced significant pullbacks or corrections over the previous couple of weeks. The presenter views that retracement as a possible setup for year-end opportunities, provided the market breakout, lower VIX, trade developments, earnings, and Federal Reserve policy remain supportive.

Summary & Key Takeaways

• The market broke above the October 10 candle after trading inside its range for almost two weeks, while the VIX fell below 17. The presenter interprets those signals, combined with earnings, easier monetary policy, and possible trade progress, as support for a risk-on fourth-quarter scenario that could continue into 2026.

• A preliminary United States-China consensus could delay China’s rare earth export licensing regime for one year and potentially remove threatened 100% tariffs. The presenter believes a delay may encourage greater United States investment in domestic rare earth refining, creating possible opportunities in Energy Fuels, MP, METC, and US after their recent declines.

• The trading plan centers on stocks that recently corrected, including data center, power, crypto-related, rare earth, and non-Mag 7 AI software names. Major technology earnings are treated as a critical test because continued AI capital spending supports data centers, GPUs, power demand, and the presenter’s view that the AI bubble can keep expanding.