Parabolic Paratroopers

Rolling spikes and the next narratives to chase. Also, a ton of warrants.

Back in June, I was astonished that had run from 2 to 12:

It’s still on a good run, but at the same time we had CRWV going parabolic:

And CRCL had a hot IPO:

I remember having lunch with my family at a local down home restaurant. You know the kind, where the sweet tea is at diabetic levels and they call you “sugar” without the slightest bit of irony.

I had the fried catfish plate and was splitting time between that and my phone. I know, terrible. But I was trying to close out some weekly puts on APLD and I screwed up the order and ended up twice the size.

Once I cleared out of it, I thought that this latest push would put in a top in the markets. It was peak momentum, clearly.

Spoiler: It wasn’t.

A decade ago, I would have stayed stubborn and tried to fade every little uptick. Now, if the setup is there I take it.

Momentum has been incredible in this market, rotating from one hot theme to another.

Today’s big winner was USAR, running 26% today:

This stock reminds me of how Tempus (TEM) trades. It was stubborn for months and it finally moved. USAR is one of the rare-earth (REE) trades, where they are developing a full end-to-end mining and refining setup. They also have an interesting play with magnet recycling.

The robotics revolution is about to kick off, and you need REE’s for the servos, electric motors, actuators, and sensors.

Currently 90% of all rare earth processing is in China, which is a massive leverage point they have in trade discussions. It’s why USGOV bought into MP, and why USAR has some solid tailwinds behind it.

This idea was recommended to Convex Spaces clients on September 18th, looking at the March 18/24 Bull Call Spread, and the entire spread is about to go in-the-money.

We’re starting to see another rotation into drone tech again. The news that kicked this off was that DJI, a Chinese drone maker, lost its appeal to sell to the DoD.

It’s why we’re seeing a short squeeze in DPRO:

On September 21st, back when I told you it was starting to feel like 2021, I wrote this to CS Clients:

This is a trashy dilutive stock, but when it goes, it goes. It just had a reverse split, they completed a warrant exercise in August, and it’s starting to roll up.

The April 7.5 Calls at 0.90 are a good convex bet. This thing can push $12 easily, provided company leadership doesn’t kill it with dumping more shares on the market.

Can you be bullish and completely cynical? Of course— we’re not just looking at the cards on the table, we’re looking at the players at the table… and they’re all drunk.

Those call options traded today at 3.40, hitting a 277% return.

All of these setups are available for CS Clients on The Trade Sheet, so you can see them indexed in one easy to view page. I just realized that the Sheet has been publicly available, so until about 5 minutes ago you had a chance to see all of our trade setups.

For those of you that saw it: I bet you’re impressed. We’ve been killing it, and there’s plenty of names that look ready to rip. You can become a Client here.

What’s The Next Play?

The USAR breakout could be a drone/robotics metasignal as it’s one of the larger “input” plays for that space.

And there’s a few names that are starting to remount key breakout levels. RCAT is a solid example:

After the failed breakout I was expecting the stock to fully round trip and fill the gap. But buyers continued to show up, and it’s taking another shot to the upside.

What about Cyber? We haven’t heard from that space in a while:

It looks ready to bust to new highs. Dig into the components of the ETF, and you’ll be surprised at the breakout trades.

And we haven’t heard from space trades recently, maybe RKLB is ready to go hot:

I can give you a million reasons to be bearish. You’ve got a blowup with the First Brands bankruptcy, continued revisions in UR, and how liquidity could flip on a dime given how fast things move in modern markets.

Yet the price action is solid. You can put on a little hedging in the Nasdaq and keep playing the momentum until it stops.

Up Next For Convex Spaces Clients

Yesterday, we talked about some of the SPACs that could get hot, and now we’re looking at buying some upside tails in these names. I’ve also got a sensor play that is entering the drone arena, and a crypto play that’s dropped off the radar for many traders.