Stargate vs Deepseek

Welcome to a new Trading week, where we analyze the key market trends and catalysts impacting the trading week. Here’s your comprehensive breakdown:
Major Highlights
- AI Investment Announcements:
- The Trump administration unveiled a $500 billion AI investment initiative alongside leaders from SoftBank, Oracle, and OpenAI.
- However, skepticism emerged, with Elon Musk noting the feasibility of such investments and hinting at a lower potential commitment.
- The announcement sparked debates on the U.S.’s competitiveness in AI versus China’s emerging AI project, “Deepseek.”
- China’s AI “Deeps”:
- Significant investment in “Deepseek,” an AI initiative from China, showcases their competitive stance in the global AI race.
- Implications for U.S. companies include increased competition and potential margin pressures.
Market Performance Recap
Week-to-Date Asset Performance:
- U.S. Stocks: Up ~2%.
- USD Weakness: The dollar fell 2% against major currencies, driven by extreme positioning and some macro data improvements in Europe and China.
- Energy Sector: Trump’s focus on pressuring OPEC led to underperformance in energy stocks.
- Strong Performers: Healthcare (+3%), Telecom (+3%), and Solar sectors.
- 10-Year U.S. Treasury Yield: Decreased slightly to 4.62%, following a recent peak of 4.8%.
Sector Highlights:
- Earnings Performance:
- Communications, Real Estate, and Utilities were the top-performing sectors.
- Artificial intelligence continues driving demand in utilities due to energy needs.
Volatility Trends:
- VIX: Below 15% for 30-day volatility; short-term trends indicate a resemblance to the low volatility levels of 2017.
Key Catalysts Ahead
- Central Bank Actions:
- FOMC Meeting (Wednesday): No rate cuts expected, with the market pricing two cuts for 2025.
- Other rate decisions include the Bank of Canada (Wednesday) and the ECB (Thursday).
- Major Earnings Releases:
- Wednesday: Tesla, Meta, Microsoft.
- Thursday: Apple, Intel, Visa.
- These releases will significantly influence market sentiment.
- Macro Data:
- Chinese PMI Data (Sunday night/Monday morning): Key indicator for global growth trends.
- U.S. Q4 GDP (Thursday) and PCE Inflation Data (Friday).
- Political Developments:
- Trump’s daily announcements about U.S. projects and tariffs could drive market volatility.
- Trump’s daily announcements about U.S. projects and tariffs could drive market volatility.
Technical Analysis
- S&P 500:
- Testing new highs with decreasing volume and a “topish” RSI.
- Position: March put spreads (5-8% out of the money) offering a 9:1 risk-reward ratio.
- Euro/USD:
- Significant recovery from 1.03 to 1.05 last week, signaling strength in the Euro.
- Earnings Plays:
- Look at options pricing for names like Tesla and Meta. For instance, Meta’s implied move is ~7%, presenting opportunities if expectations misalign with reality.
- Look at options pricing for names like Tesla and Meta. For instance, Meta’s implied move is ~7%, presenting opportunities if expectations misalign with reality.
Upcoming Events & Trades
- End-of-Month Moves: Expect higher volatility during the last trading hour on Friday.
- Earnings Volatility Plays: Opportunities for implied volatility trades given recent compression.
- Mentorship Programs:
- Join our new Alpha Mentoring program with personalized sessions from experienced mentors.
- Learn risk management, options strategies, and more.
Join Our Community
- Discord: Engage with our vibrant trading community and access exclusive content. https://discord.gg/wrvGuF3M
- Mentorship Opportunities: Email Greg at greg@duponttrading for one-on-one mentoring or to join our 4×4 programs.
- Paywall Launch: Look out for new features and premium content in the coming weeks.
That’s all for this week. Best of luck in your trading endeavors!
Have a great trading week!
Greg
greg@duponttrading.com
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DUPONT TRADING
As a Professional Trader/Portfolio Manager/Hedge Fund Manager for almost 20 years, I know that learning how to Trade/Invest is a non-ending learning curve. This adventure is extremely exciting but needs to be ridden carefully.
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