Trading Observations

• Full audience back today and tech strong out of the gates - combo of MSFT data center Fri, Foxconn data center commentary over the weekend, and anticipation ahead of NVDA presentation at CES tonight

• Closed right at 50-day (5944) Fri and conditions in place to rally if can hold early

• AAII Bulls lowest since Apr

• Jobs Fri

• Without the “Magnificent 7”, the S&P 500 would have only gained 4.1% in 2023 and 6.3% in 2024 on a price return basis. The index’s actual price returns were 24.2% and 23.3%, respectively

Jan 7-10 is CES…. CES - The Most Powerful Tech Event in the World [ces.tech]

Futures

DOW +131

S&P +36

Nasdaq +161

10-Year Yield

Oil

BITCOIN

Consumer/Financial/Healthcare

We get earnings from GS and MS soon… Analysts have raised forecasts for US investment bank profits since Trump’s election win, but they increased 2026 estimates more aggressively than 2025 forecasts.

Preannouncement Season – GS says 26% of all pre-announcements have come in January historically, mostly which are consumer discretionary and healthcare.

GS out with a note on Investment Banks and Brokers and “where to go from here” after strong 2024 appreciation. They are downgrading PIPR to neutral, constructive on HLI, HOOD and IBKR, and like EVR and JEF with EVER on the conviction buy list.

GS on Capital Markets – Capital markets stocks were up 31% in 2024, and alternative asset managers were up 51% on acceleration of activity hopes. They are downgrading OWL to neutral and HLNE to sell, with KKR and TPG as top picks. The are also upgrading RJF to buy, positive on LPLA, and upgrading BEN and JHG to neutral from sell. They are also downgrading AMG and CBOE. They like BK and STT on the trust bank side.

FIS – Downgraded to outperform from strong buy at Ray Jay.

BANC – Upgraded to overweight at WFC.

Technology

2025 MOVERS: only two sessions complete and already have seen some big moves. Leaders to upside: MSTR +17%, ARM +13%, COHR +12%, SNAP/HOOD/LYFT/VRT+11%, SMCI/SITM/AFRM/COIN+9%, RDDT+8.5%, NVDA/SQ/ALGM/APP/MELI/WOLF/GEV+8%, WDC/CHWY/U/UBER/MRVL/SMTC/MU/PINS/NET+7% ...... versus .... CVNA -13% (Hindenburg first victim of '25), ADBE/CHKP/AAPL-3%, WDAY/SAP-2%

AI names have EXPLODED out of gate in '25 with enthusiasm ramping into CES and once again, GenAI will be the dominant theme (2 yrs removed from the launch of ChatGPT) .... EARLY 2025 WINNERS: NVDA +8%, MRVL/MU+7%, PLTR/TSM+6%, ANET/DELL/AMD+4%

AMD: event @ 2pm ET .. stock extremely washed out as stock has been source of funds for ASIC trade (ie MRVL AVGO) ....

CRWD: +VE FT article .. has rebounded fully from the Jul tech outage, and has turned the incident into a competitive advantage

CYBER SECURITY: ongoing China probing as the recent Chinese hack hit more companies than previously believed, including AT&T, Verizon, Lumen Tech, and T-Mobile, and it also affected large network routers from Cisco

DKNG: testing out a new subscription service (dubbed DraftKings Sportsbook+) that will offer higher odds for $20/month (CNBC)

FTNT: +3.8% upgrade @ Piper - survey results across channel partners and CIOs both point to the firewall cycle ramping in 2025

LYFT: +5% upgrade @ Benchmark; both Lyft/Uber to benefit from NYC congestion .. follows AMZN aquisition chatter late last week

RIDE-SHARE: Uber, Lyft spent millions pushing for NYC congestion pricing —and stand to make killing (NYPost) .. passing costs / tolls on customers; new tolls fit “right into” Uber and Lyft’s “business model to charge a premium for access to the scarcest street — those in core Manhattan”

MSTR: MicroStrategy to Target Capital Raise of Up to $2B of Preferred Stock

MRVL: mentioned positively in an article by The Information, w/the report claiming it could be a bigger beneficiary of the AI boom than Broadcom over the coming years

NVDA: Jensen keynote @ 930pm ET (note shrs have lagged both AVGO/MRVL by ~30% since election) ... we arent expecting major updates on datacenter/AI front but any color around the edges will be much welcomed as Blackwell ramp upon us.

PINS: Edgewater out positive saying Performance+ driving improved CTRs/CPCs

VRT: +4.5% picks up new bull in MS - says the stock offers material EPS upside, with data center capex holding firm; assigns PT of $150

Industrials 

KTOS - Last week KTOS received a major award under the first task area of phase two of the Defense of Department (DoD) hypersonic test bed program known as the Multi-Service Advanced Capability Hypersonic Test Bed (MACH-TB) 2.0 program.

Amcor (AMCR) upgraded to buy from hold at Truist and upgraded to buy at Citi

American Airlines Group (AAL) upgraded to buy from hold at TD Cowen and upgraded to buy from hold at Jefferies

Boeing (BA) upgraded to overweight from equal weight at Barclays

Booz Allen Hamilton (BAH) upgraded to equal weight from underweight at Barclays

Canadian Pacific Kansas City (CP) upgraded to overweight from equal-weight at Stephens

CNH Industrial (CNH) upgraded to outperform from market perform at Bernstein

General Dynamics (GD) downgraded to hold from buy at Vertical Research

Graphic Packaging (GPK) upgraded to equal weight from underweight at Wells Fargo Securities and downgraded to neutral from buy at Citi

Hayward Holdings (HAYW) downgraded to sector weight from overweight at KeyBanc

Pentair (PNR) downgraded to sector weight from overweight at KeyBanc

Republic Services (RSG) upgraded to outperform from sector perform at RBC Capital Markets

SolarEdge Technologies (SEDG) discloses further restructuring plan; expects to reduce its headcount by ~400 employees globally - 8-K

Teradyne (TER) upgraded to outperform at Northland

Textron (TXT) upgraded to buy from hold at Vertical Research

TransDigm Group (TDG) downgraded to equal weight from overweight at Barclays

SOX breakout …. Set to gap above negative trend line in place since October