Here's My Game Plan as Stargate AI Project Triggers Market Rotation

The announcement of the Stargate AI project is triggering a rotation into big-cap technology and out of the rest of the market. The Nasdaq 100 QQQ and Magnificent Seven MAGS names are trading up around 1.3%, while the DJIA is up 0.25% and the Russell 2000 IWM is down 0.2% Wednesday morning. Breadth is running negative, with around 4,200 gainers and 4,700 decliners.

Investors love an excuse to pile back into the mega-cap names, and they have one today. The Stargate project will take years and face many challenges, but it offers a very attractive headline with $500 billion invested in AI development. Arm Holdings ARM is the big winner, with the semiconductor name leading the upward move.

The space stocks that led Tuesday are seeing some profit-taking today, and bitcoin-related names are also weaker. I’ll be looking to buy Redwire RDW and other space stocks on dips. This is a big-cap-driven action like we saw so many times last year.

Small-caps have had a big move over the last six sessions, so they need to rest before the Russell 2000 can attack its 50-day simple moving average, which is the next upside hurdle. I’m optimistic that some consolidation here will provide a very strong foundation for good action when small-cap earnings season hits in a couple of weeks. For now, the mega-caps are back in charge.

My game plan is to cut some laggards and watch for support levels. An example of one name I’m looking at right now at support is ADMA Biologics ADMA. This was one of my big winners last year, and it has come down to some strong support of around $16. The company has already preannounced revenue growth of about 50% for the fourth quarter.

There are other similar names with good valuations, but they are still trying to find support and have not attracted attention yet. Stock pickers should start to find them during earnings season.

At the time of publication, Rev Shark was long ADMA.