Yo Pit Crazies,

Well, that was a humdinger of a week.

AI saved stocks, even though no one has made any money from the tech or had real growth yet except Palantir Technologies (Ticker: PLTR).

That is the crazy part since earnings are mostly the same this year over last year. Stocks are rallying on what could happen next year as companies use AI to increase productivity. That is easily the catalyst for the next bull market.

My short time creating financial software in 2007-2010 introduced me to the acronym TAM (Total Available Market). Any business on the planet could potentially benefit from AI. That is some TAM. the Dot-com Boom, Semiconductor Boom, PC Boom, Computer Boom … all had similar trajectories.

Two-year QQQ chart

The short answer is don’t short this Invesco QQQ Trust (Ticker: QQQ) rally yet.  Better to look for companies that could jump on the wave. After all, the QQQ is only up 25% this year, just need to find a stock and a way to match that return.

Here we go.

The Good News Is Most of the Market Has Not Participated in This Rally

I was pleasantly surprised that IBM actually had growing revenue this last report. Around the same as Google and Microsoft.

The most sure bet into the next earnings cycle is how they highlight their long term AI projects. Mostly $150 is a reasonable upside target since it started the year there.

I like this as a Div+ stock. IBM at the closing price on Friday yields just over 5%.  Not too bad and I can create a call kicker strategy with a protective put to get us to a 25% return if I get the move in one quarter. I can also reduce 90% or more of the equity risk.

This is the kind of trading and investing we will highlight in part of our OP Mentoring program as we roll out changes to help our students use options in smart ways to reduce risk and increase returns.

Finally, don’t forget to join Mark and I live Tuesday at 7 p.m. ET.

To Your Trading Success,

AG