The red line signals on this chart of the Russell 1000 index work amazingly well. Think of each red line pair of signals ( buy the up-facing triangle and sell the next down-facing triangle) as a single long trade, and they virtually all work pretty well. Forget the first down triangle, which has no up-triangle to start the trade.
The current position is that there was a red triangle buy signal in March 2023 for which there has not yet been a sell signal.
The Russell 1000 Index is a benchmark index tracking the 1,000 largest U.S. publicly traded companies, representing roughly 93% of the total U.S. equity market. It is a subset of the Russell 3000 Index and acts as a key indicator for large-cap stock performance. It is rebalanced annually and weighted by market cap.
To make this strategy work, you need to buy on a buy signal, so you would have done nothing since March 2023, at least as far as the index is concerned. The velocity strategy (only buying and holding when the red line is rising sharply) may not apply to indices.
The key point is that if the index is rising strongly, there are likely to be plenty of individual shares with strong velocity.
Here is a chart of a share, Western Digital, showing spectacular velocity, with the red line, all the lines, rising almost vertically. What made the latest buy signal especially exciting was that the shares rapidly moved to a new all-time high. The shares were signalled as a buy in June 2025.
So what is happening?
Western Digital (WDC) shares have experienced a dramatic, multi-hundred percent rise over the past year—often outpacing rival Seagate Technology and the broader tech market—driven by a strategic pivot to becoming a dedicated hard disk drive (HDD) supplier for the booming AI and cloud computing markets.
Key reasons for this strong performance as of early 2026 include:
- Surging AI-Driven Data Center Demand: The massive expansion of AI requires unprecedented amounts of data storage. High-capacity HDDs (ePMR and HAMR technology) are recognized as the most cost-effective solution for storing the “unstructured” data required for training and operating AI models.
- Sold-Out Capacity and Long-Term Contracts: Western Digital has confirmed that its HDD manufacturing capacity is sold out for the remainder of 2026 under multi-year agreements with major cloud/hyperscale customers. This provides high revenue visibility and indicates that demand is outpacing supply, creating a favorable pricing environment.
- Successful Corporate Restructuring: The spin-off of its NAND flash-memory business (SanDisk) into a separate entity allows Western Digital to operate as a pure-play HDD leader, allowing investors to focus solely on the high-demand storage business.
- Strong Earnings and Upbeat Guidance: WDC has consistently surpassed earnings expectations, providing robust financial results due to improved margins from high-capacity drive sales (e.g., 32TB UltraSMR).
- Shareholder Returns and Analyst Upgrades: The company has launched significant share buyback programs, increased dividends, and earned a “Strong Buy” consensus among many analysts who have consistently hikedprice targets following impressive data center demand updates.
- In summary, the market sees Western Digital as a critical, underappreciated infrastructure player in the AI ecosystem, transitioning from a volatile hardware manufacturer to a steady supplier with reliable earnings visibility.
Based on my red line buy and sell strategy, it is way too late to buy shares in Western Digital, which doesn’t mean it is too late, but that would be a buy and hope strategy.
What I need to do is put the machinery in place so we spot opportunities like Western Digital when they are timely to buy.
WDC does look exciting and has a massive ‘something new’ in the form of a new CEO.
Irving Tan is a Singaporean technology executive currently serving as the CEO of Western Digital Corporation (WDC), a position he assumed in early 2025. He is known for driving the company’s focus on AI-driven data storage solutions, following a 13-year tenure at Cisco and a successful career in global operations.
