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Chart Breakout Part 2 – the Year Ahead

December 20, 2023

Subscribers may have noticed that I go through different fads in my approach to investing. My latest enthusiasm is for six month candle stick charts and the associated moving averages. In particular I have noticed that the buy signals triggered by moving averages on these charts coincide closely with Coppock buy signals making them particularly powerful.

Above we can see that bitcoin, no less, is giving a buy signal and has a very promising chart. As noted in earlier alerts it would not be a bad idea to have some exposure to bitcoin.

An investment which seems to perform similarly to bitcoin, for obvious reasons, is Coinbase Global. It seems reasonable to suppose that if bitcoin rises dramatically that Coinbase Global will continue to do well.

Subscribers will know that I have been keen on Nvidia as the obvious way to invest in the generative AI boom. On a shorter term chart with monthly candlesticks we have just seen a new buy signal.

Going back to the longer term 6m candlestick charts there is a buy signal for another key player in the semiconductor sector, Advanced Micro Devices.

Do you need to invest in both Nvidia and AMD, probably not unless you are building a wide ranging portfolio. AMD is not on fire like Nvidia but still looks promising on the fundamental front.

We executed well in the third quarter, delivering strong top-line and bottom-line growth, achieving multiple milestones on our AI hardware and software road maps, and significantly accelerating our momentum with customers for our AI solutions. In PCs, there are now more than 50 notebook designs powered by Ryzen AI in market, and we are working closely with Microsoft on the next generation of Windows that will take advantage of our on-chip AI Engine to enable the biggest advances in the Windows user experience in more than 20 years. In the Data Centre, multiple large hyperscale customers committed to deploy Instinct MI300 accelerators, supported by our latest ROCm software suite and the growing adoption of an open hardware-agnostic software ecosystem.

Looking at the third quarter financial results, revenue grew 4pc year over year and 8pc sequentially to $5.8bn, driven by record server CPU revenue and strong Ryzen processor sales. Turning to the segment results. Data Center segment revenue of $1.6bn was flat year over year and up 21pc sequentially as solid demand for both third- and fourth-gen EPYC processor families resulted in record quarterly server processor revenue. We gained server CPU revenue share in the quarter as fourth-gen EPYC CPU revenue grew more than 50pc sequentially, crossing over to represent a majority of our server processor revenue and unit shipments.

Based on the rapid progress we are making with our AI road map execution and purchase commitments from cloud customers, we now expect Data Centre GPU revenue to be approximately $400m in the fourth quarter and exceed $2bn in 2024 as revenue ramps throughout the year. This growth would make MI300 the fastest product to ramp to $1bn in sales in AMD history.

Lisa Zu, CEO, Advanced Micro Devices, Q3 2023, 31 October 2023

In a less demanding world one would say that AMD was an exciting business and Lisa Su, who is a first cousin once removed, of Jensen Huang of Nvidia, is an impressive CEO.

Above is a promising chart for a longtime favourite stock of mine, The Trade Desk, run by Jeff Green, a CEO so exuberant he makes even Salesforce CEO, Marc Benioff, seem low key. This chart is like a mighty springboard poised to help TTD shares explode higher. TTD continues to perform well.

We posted very strong growth in the third quarter. We reported revenue of $493m, growing 25pc compared with last year. Our third quarter again accelerated over the second quarter as we continued to significantly outperform the digital advertising industry.

We’re growing our revenues and maintaining profitability and a strong balance sheet and making large investments and, most importantly, we’re gaining market share as we’re outperforming our advertising peers, both big and small. From a global view, our industry is nearing the $1 trillion TAM we predicted when we launched as a public company seven years ago. Inflation, a global pandemic, the streaming wars and retail media have all accelerated the expansion of that global TAM but it’s especially accelerated the speed of the pace setter, the U.S. market.

Magna Global estimates that the overall U.S. advertising industry is growing at 5pc this year and digital spend or the digital ad market pie is expected to grow by 10pc. Clearly, we are significantly outperforming the rest of the advertising market. This builds on our market share gains from last year when we grew 20pc-plus each quarter and our competitors were posting negative to low single-digit growth.

Jeff Green, CEO, The Trade Desk, Q3 2023, 10 November 2023

World Conquest Ahead

As usual Jeff Green sees world conquest ahead. All investors have to do is believe him and he has done very well to date.

Everything we do, including our latest Kokai innovations, are pointed at helping brands and advertisers get the maximum bang for every advertising dollar. I could not be more confident or excited about how we are positioned for 2024 and beyond because of the many growth drivers that we’ve discussed today.

We will continue to innovate to lead the market and I’m confident that the world’s leading advertisers will continue to default to our platform as they seek to drive their own business growth via advertising.

Jeff Green, CEO, The Trade Desk, Q3 2023, 10 November 2023

Strategy – 2024 Could be a Vintage Year for Investors

People are starting to dream of falling interest in 2024, in the UK as well as the US, as the recent spike in inflation shows signs of fading. The chart shows, not only a golden cross buy signal for the S&P 500 index but also that shares are testing the old peaks even before interest rates have begun to fall. The beast is straining at the gate ready to chart.

What happens if this bull market really starts to run. All that sidelined cash, approaching $6 trillion at the latest count, is going to hit equity markets one day and what can also happen in a strong market, just as can be seen at turning points in property markets, is that suddenly nobody wants to sell any more. We could see a perfect storm driving share values higher. When could this happen; I don’t know but I am beginning to suspect it could be sooner rather than later.

Then into this mix we have to throw all the excitement around AI, which could really help the pot to boil. I believe there is a growing risk attached to being out of this market.

Share and Crypto Recommendations

Bitcoin. BTCUSD. Buy @ $43,800

Coinbase Global COIN. Buy @ $166

Nvidia NVDA. Buy @ $497

Advanced Micro Devices AMD. Buy @ $139

The Trade Desk. TTD. Buy @ $77.50

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