Extraordinary momentum dominates a handful of specialized sectors; just happening to be in the heart of the ‘new generation’ of focus we emphasized.You may recall certain analysts and pundits minimizing or warning about what was shaping-up in Quantum Computing, SoundHound, BigBear and so on; for now they still call all that signs of excess, but they won’t admit they missed the runs! Hah. Well these stocks all ran, we were right, the guys focusing only on expensive ‘already played’ stocks were not, and well, at some point in this very special saga, of course we’ll trim the sails a bit and wait for future moves (or just sell parts and play with ‘house money’).These were not for the ‘faint of heart’, as I’ve said all along, and some of them are partnered (or will be) with the very huge overworked mega-caps that were good buys a year ago. So if you have had the courage to venture into them, of course good for you, good for us, and let’s see how the history is written now that we know the patience was validated. Like the old saying: ‘sometimes it’s time in the market and not market timing’ that decides the outcome. True, and that was the case a year or so ago for mega-caps; true this year for small-cap tech. Not all, but many. Not all will mature into long-term big-caps. A few will.We’ve avoided the expensive stocks that the financial industry presses upon investors to buy (often wonder if that’s so Wall St. can distribute shares); and sure that creates risks of early-entry; and definitely not all will work out. Some may be swept along with a given ‘theme’ (drones are an example); but there will be a handful that actually succeed. And there will be at least one big IPO we’ll be watching, which is Anduril. However that will be expensive; run-up, and hopefully dip after-lock-up restrictions expire, then we’ll likely jump on it.However the expensive stocks don’t offer the big return potential like the more speculative ones. So we have a sprinkling of the riskier new-era techs solely in trading accounts, which may have started as entertainment, but they went up which is great, but then become more serious money requiring watching. It is a good problem to have, that’s for sure. More on all this next week and we shall see if this persists, plus my arm will be better after today’s ‘procedure’.Market X-ray: hilarity rules as media ‘pretends’ that ‘the market’ was down a bit (sort of opposite how they looked at a half dozen mega-caps for months, being up, and ‘pretended’ that the market was up to records. It was not; just the S&P was. Now you have what we wanted, the crucial broadening-out.For next week, CPI and so on matters; but not much for our new-era techs. An AI ‘czar’ that media says will restrain AI and crypto is fine; we don’t see it as inhibiting what we follow. One reader points out: option volume has a 60% chance for a gamma squeeze in both Palantir & Tesla next week. Unsure of that, but if they both open higher, sell-off just a bit to shake-out weaker hands and attract shorts, then skyrocket to trap that crowd, some like SOUN or our BBAI might follow. Such things happened to GameStop back in the day. We would not touch that one; just pointing-out what can transpire. Probably some of that would favorably impact Quantum Computing stocks too. Good luck!Action has been extraordinary; pullbacks minimal and constructive, for most of the speculative stocks (emphasize that word speculative) we’ve followed for a long-time, or just added in the last few weeks.(By the way scientists have found a trove of ‘rare metals & minerals’ needed for clean energy; inside US toxic coal waste, which could help reduce the problem with banned metals or minerals coming from China. This is in-line with replacement requirements such as LightPath’s unique mineral that replaces germanium. In this case it’s Univ. of Texas Austin geoscientists.)Back to stocks, in what was perhaps the best couple weeks of the year:Quantum Computing stocks like QUBT, QTBS, RGTI and even IONQ (that latter one we trimmed too soon but for a good gain) were at the helm, and in a few cases their Warrants were also noted as being strong (better leverage).It is impossible for me to determine how high these stocks can get near-term; at the same time they could all compete (or who knows, a couple even merge for that matter) in the fullness of time. I think if you’re in them you trend-follow and as we work higher this month (and perhaps into early January) there will be spikes (upside thrusts) providing opportunity to either hedge, take profits, or (as I’m fond of doing sometimes too soon) selling enough so as to be more comfortable by recovering your original ‘bet’; thus playing with house money.Notice I said ‘bet’, not investment, because that’s what these were … some of course may mature into reasonably good long-term investment; but that’s the decision everyone has to make .. and having a zero-cost basis makes that an easier choice. Phenomenal winners like long-held SoundHound even fits that bill, because everyone will question how high it can get now; while accepting the reality that should they continue executing well, it could be a 5-x or 10-x stock from here even, ‘in theory’, over a long time. Again ‘if’ the phenomenal numbers the CEO and CFO have trotted-out actually arrive down the road.It’s feasible that the reason it doesn’t correct much; or drops as bears trot-out absurd arguments such as absence of earnings, may be that institutional guys have actually figured out where these numbers could take SOUN longer-term.It’s feasible that the reason it doesn’t correct much; or drops as bears trot-out absurd arguments such as absence of earnings, may be that institutional guys have actually figured out where these numbers could take SOUN longer-term.I am ‘not’ touting the shares; own plenty and pondering myself ‘what to do with it’ now. My average cost is around $2 a share (maybe a few pennies higher); I could easily shave-off part to recover investment; as some insiders have done and typically too soon. But you don’t go broke by booking profits, so sure, we understand that, and at an undetermined point plan to do either that a little bit at a time, or more creatively protect longs with Puts (not a big fan); or write a few out-of-the-money Calls (although that too limits you gain if called away). I think part of what we’ve been seeing is short-covering and exercised Calls as shares were called away, while institutions meanwhile envision higher prices.I am honored that we recognized the ‘transition’ within early SoundHound just a couple years ago; and the improved grasp of responsibility by insiders, as they also replaced their accounting firm, and embraced normal procedures I personally urged them to do. I have no idea if my conversations inspired any of that; but I do appreciate that they listened and regardless sort of feel like I contributed some logic to how they handle things if they really had the goods that they apparently do. Now; imagine ‘if’ at CES they were to announce yet another amazing deal, such as with Nvidia and even Tesla; but we really do not know of anything like that; but if you want an argument for higher . . that might be more pertinent than ‘if’ they captured ‘McDonald’s’ and I ponder if they don’t get that chain it sets up a retreat. But might not matter long-term. If they get either ‘Big Mac’ or Tesla, shares could double yet-again.Now a longer-term view of BigBear; having followed BBAI throughout:Incidentally I suspect you might see a ‘run’ by BigBear.ai ‘if’ we discover that our theory about insider sales is equivalent to ‘direct placement’ (like a PIPE in a sense) raising money without dilution; and gearing-up for a big new year. I don’t want to appear greedy, but we have waited a long time and somehow just being (already) double our cost suddenly seems like it’s just starting. As the AE Industrial Partners guys are very savvy; and given the new hiring they are involved with, plus the nature of National Security and Border / Aviation projects, well I suspect BBAI ‘could’ be one of 2025’s best performers.Stock of the year? I don’t usually pick single-out a particular issue now; plus there are several other candidates. Obviously SOUN was this year’s number 1 performer; perhaps BBAI will be in 2025. But, speaking of doubling, we’ve already got that in D-Wave Quantum; more so than Quantum Computing Inc., and almost already in Rigetti Computing, only aboard a couple weeks. And while I do believe Quantum (as a sector) is going to be huge; I doubt the sector analysts can definitively cull-out which will prevail; or which approach. At least not yet. And then there’s IBM; something tells me they’re hunting.Bottom-line: fantastic week ‘if’ you speculated in the hot small-cap stocks; for the most part we picked selections right in the thick of upside movement. We suspect there’s more on-tap; and of course the need to maintain a modicum of discipline; not allowing oneself to throw caution to the wind. Nevertheless enjoy the move; don’t expect it to last forever, but the history of most stocks that go higher than analysts expect (targets); surprise by going even higher.We’ll keep out wits about ourselves (best week, month and essentially period of speculation in ages); because while here and there we’ve had home-runs, I don’t recall this many simultaneous successes compressed into a short time.More By This Author:Market Briefing For Monday, Dec. 2
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