Listen to the audio version of this article (generated by artificial intelligence).
Disappointing news from the Middle East… Quantum computing is in the crosshairs… The answer to today’s ‘buy and hold’… How much will bond custodians push the 10-year term?… Luc Lango’s counterintuitive proposal
As I write on Thursday, markets are digesting a handful of headlines. Let’s do a brief summary.
West Texas Intermediate crude rose nearly 3% – topping $100 a barrel. This comes after Reuters It was reported that Iran’s Supreme Leader ordered that the country’s enriched uranium remain within the Islamic Republic – a direct obstacle to any agreement with Washington.
The news is that although President Donald Trump commented yesterday that “we’re going to end that war very quickly,” the gap between negotiators remains wide.
Meanwhile, the Strait of Hormuz remains severely blocked, and the International Energy Agency warned today that global oil inventories will reach the “red zone” this summer if it is not reopened before seasonal demand picks up.
This affects bond yields, which we mentioned yesterday digest As the only variable that can derail a bull market. The 10-year Treasury yield rose 5 basis points to 4.62% as I write.
Meanwhile, Quantum computing stocks These companies are thriving on the news that the US government will award $2 billion in grants to nine companies in the field – and in return they will receive equity stakes. International Business Machinery Company (IBM) It is the largest beneficiary, receiving $1 billion from the Ministry of Commerce.
Turning to AI, President Trump postponed a planned executive order on AI this afternoon, telling reporters that he did not want to sign anything that “could be an obstacle” to US leadership in this area. For now, Washington remains firmly in the AI camp – which is important for the long-term bull case, even if the market isn’t celebrating today.
finally, nvidia (NVDA) It posted an impressive first-quarter financial report last night — massive revenue and earnings, $80 billion in buybacks, and data center revenues up nearly 100% year-over-year. In addition, a large number of Wall Street firms raised their price targets. However, the stock is down 2% as I write.
Now, this is not a bearish sign on Nvidia. But it’s a clear reflection of today’s market – its sky-high expectations, and how strong performance can be dampened when $100 oil and rising yields weigh on sentiment.
In a market like this, buy and hold alone leaves you completely at the mercy of the next headline.
Which brings us to how smart investors deal with these market environments…
AI trading is real… and so is the risk – here’s how to beat the stress
The case for the rise of AI is sound – Nvidia’s earnings last night make that clear.
Hyperscaler capex continues to climb. Morgan Stanley estimates that nearly $3 trillion in AI-related infrastructure investments will flow through the global economy by 2028, with more than 80% of this spending remaining in the future.
But as we covered here at digestMarket risks are real and difficult to ignore.
The S&P 500 CAPE ratio is at its second highest reading in 140 years…
Our macro expert Eric Fry has warned that too many investors are locked into the same top names in AI – a situation that has historically rarely ended well…
Even our own technology expert Luke Lango — as committed an AI proponent as you’ll find anywhere — has pointed out a concern worth taking seriously: The political winds could shift as the 2028 presidential election approaches, giving rise to anti-AI legislation that would hamper AI commerce.
This puts investors who buy and hold in a real bind.
The dot-com crash is a useful reminder that although the broad market has always recovered, investors who held out through it have waited more than a decade for it to break even. This assumes that the companies they own will survive at all, which would be at risk if Locke’s fears about anti-AI legislation come true.
The answer is not to abandon buy-and-hold, but to associate it with something that turns volatility from an enemy into an advantage – a trading approach where you remain active in the market, but with known and specific risks that you identify before you enter the trade.
That’s the idea behind the event that our trading expert Jonathan Rose will be hosting next Thursday, May 28, alongside Mark Chaikin, legendary market technician and founder of Chaikin Analytics.
How Jonathan and Mark solve today’s late-cycle buy-and-hold problem
For new readers, Jonathan is a trading veteran who has pulled millions out of the market over the past 10 years, while building one of the most impressive track records in our industry.
Mark needs little introduction to serious market watchers – his Power Gauge indicator has helped investors identify institutional money flows for decades, and his analytical tools are used by some of the biggest names on Wall Street.
Jonathan is not a buy-and-hold investor. But he’s not a market-timing tactician either.
He prefers trading with defined risks – capturing short-term movements in both directions while clearly defining the risks before the trade begins.
Think of it this way: While a traditional AI portfolio is entirely at the mercy of the next headline, this trading style allows you to stay active in the market while keeping the maximum loss of each position known in advance.
The numbers show how effective this approach is…
He has it Master of Commerce: Advanced Notice During the service, Jonathan recorded an average all-time gain of 95% on all trades – winners and losers – in an average dwell period of just 46 days. Since volatility spiked following Liberation Day last April, that number has risen to an average gain of 233% across all trades.
Now he and Mark are integrating two leading “smart money” signals for the first time ever.
Both systems follow institutional money. But from different angles – Jonathan’s quantitative tool reveals what the big players are doing before the move happens. Chaikin Fund Flow measures the actual flow of capital into or out of a stock in real time.
Together, they create a more complete picture of the real direction of institutional money. And when both signals align on the same trade, the results from nearly 200 back-tested trades are amazing: an 81% win rate and an average profit of 147%. Most importantly, the combined signal helped avoid two out of three losing trades.
For more details, mark next Thursday, May 28 at 8pm ET on your calendar. That’s when Jonathan and Mark guide you through…Convergence operator“It’s a free event. All you need is that.” Reserve your spot, which you can do here.
We will inform you of more about this matter in the coming days.
Speaking of risks to the AI bull market, bond vigilantes may have already sent a message to Warsh
As we noted earlier, the 10-year Treasury yield is back at 4.62% as I write.
That’s the level our technology expert, Luke Lango, told editor Innovation investordescribed as “uncomfortable but still manageable.”
But a runaway 10-year Treasury yield is the single biggest risk to today’s bull market.
Yesterday digestI’ve described Luke’s return roadmap, which links potential return levels to associated market pullbacks.
In short, things are starting to get serious above the 4.8% to 5% level, and a break above the 5.25% level starts to hamper the broader economy.
The question is what is driving this recent rise over the past ten years – and Locke’s reading goes far beyond the Iranian conflict.
He argues that the bond market is sending a clear message to incoming Fed Chairman Kevin Warsh – widely seen as Trump’s ally on cutting interest rates – that a currently dovish policy would be a big mistake.
Locke notes that inflation is heading towards 5% on a six-month trend basis, which already puts the Fed behind the curve. So bond vigilantes step in to do the Fed’s job, pushing real-time interest rates higher to combat inflation that the Fed won’t touch.
But his counterintuitive conclusion is that the rate to lift It may actually be the cleanest way out of this mess.
From Luke:
If I’m Warsh, I hike as quickly as possible.
Lift the short end of the curve to save the long end.
Warsh’s trustworthy anti-inflation stance satisfies the bond market, the guards step down, and long-term yields stabilize.
In other words, a painful move in the short term prevents a worse move in the long term.
But what about AI trading? Will high interest rates burst the “bubble”?
Back to Luke:
This is not the end of the AI bull market. This is what the AI bull market looks like when it catches its breath…
The summer of AI is never ending because the 10-year average is 4.7%. It pauses, consolidates, finds support at key moving averages, and resumes when it establishes credibility and returns stabilize.
Now, while rising prices could shake the market, Locke’s action move wouldn’t be “The crash has arrived! Take cover!” It’s the opposite:
Buy the bounce when it comes – In artificial intelligence infrastructure. The fundamentals have never been sounder.
So, if you have the nerve to do so, Locke’s roadmap is that the rise of AI continues on the other side of whatever fluctuations exist between now and then.
But if you’re nervous about that volatility and want more downside protection without shying away from AI trading altogether – well, this brings us back to… Jonathan and Mark’s event is next Thursday.
AI has upside, specific risk downside.
I wish you a good evening,
Jeff Remsburg
