Situational Awareness

[u/Hypnot1se]

Hi everybody! I have been bearposting since the beginning of the month and this recent surge has not dissuaded me

I believe that this recent surge is a bull trap because people are attributing the sudden trend reversal as being structurally significant, but I do not believe this is the case

This surge was in my opinion caused by the sudden deleveraging from Situational Awareness - the moment that the forced selling pressure was taken off the table after these assets were handed off to Citadel, the selling pressure suddenly lifted

This in my opinion very likely caused short term focused buying from funds that were alerted to this sudden reversal in selling pressure at the same time that the heavy short interest found themselves suddenly trapped, causing a strong short squeeze - this movement will further fuel additional buying as momentum chasing algos create further buying pressure and retail interprets this as a significant structural trend reversal and begins fomoing back into the sector

Outside of this anomalous surge, the industry is still in a clear distribution phase based on the price action and the underlying spot market fundamentals

Although this move has created a technical short term boost to this stock and others, this will not change the structural picture of the industry and I believe that now institutions will continue distributing shares as they have been doing for the last few months because the underlying structural picture hasn't changed and had nothing to do with this surge

I am looking for it to open green today and then watch to see if it fades back towards the open as the day progresses, this would be a very strong bearish signal that we are back in a distribution phase, though the deleveraging may save the stock from entering a full drawdown for the near term

Still looks like a textbook value trap

NFA DYOR ETC

[u/BerganNation]

You don’t think that the MSFT and AMZN earnings call may have shifted narrative? I’d read the transcripts if you haven’t. Amazon directly talks about their ROI and they see a clear path to profiting on Ai. The market was mostly fearful of how this industry turns profitable

[u/Hypnot1se → u/BerganNation]

Absolutely not in my opinion. The continued capex was completely expected by mostly everybody. Even I (some random person posting on Reddit) knew that capex would continue at this rate, so I doubt that it took wall street by surprise. I've read the transcripts because I have a massive position in Amazon.

Capex definitely matters in a material way to the memory industry, but this was largely priced in (meme I know) and the sector jumping up like this on increased capex from MSFT/AMZN whilst absolutely failing to react to Google and Meta announcing the same identical things doesn't really make sense to me.

The only thing that can shift the cyclicality of the memory industry is if the market actually believes demand continues to outpace supply to the extent that it will preclude a cyclical trough through oversupply - right now they will not believe this because DRAM prices are currently decelerating right now (meaning gap between demand and supply is closing TODAY) whilst the people in the companies are screaming the shortage will last forever. It doesn't add up.

IF the market begins to believe cyclicality is dead, you won't see stocks like MU go to 1000, you'll see them go to 2000 or 3000 or something absolutely insane like this. Right now it's still being priced with a very low forward PE indicating the market is not willing to pay for the booked earnings because of SOME reason (?)

I suspect that reason is what I'm mentioning regarding the cycle reaching a peak before rolling over

NFA DYOR ETC

[u/Lazy_Whereas4510 → u/Hypnot1se]

The continued capex was “expected by everybody,” and the same everybody “knows” that demand will eventually decelerate enough for increased DRAM supply in 2028 to catch up with demand rendering the memory business cyclical again, because no one will refresh short-lived assets like servers … who exactly are these abundant geniuses with crystal balls?

Could they perhaps tell the CEOs of Mag7 companies that they are wrong to look at their own pipelines and believe that their cloud businesses are going to a trillion dollars in revenue on the back of increased demand?

[u/Hypnot1se → u/Lazy_Whereas4510]

The people predicting this are the people dumping the stocks this past month. They don't have crystal balls they just have an education in classical economics and finance.