The Insider Report: Both Bulls and Bears Pause to Catch Their Breath

Market Overview

It was a rather quiet week for stocks, which finished marginally lower. There was a lot to digest after Fed Chair Powell indicated a data dependent Fed, along with the announcement of an almost-complete trade deal with the United Kingdom. But the biggest headline in my view was the easing of restrictions on chip exports. I wouldn't be surprised to see stocks chop around for a few more sessions here, but in the meantime, we're seeing absolutely huge moves in crypto and especially Ethereum. Precious metals look coiled for another leg higher as well. The pain trade seems to be higher still.

Stocks I Like

CrowdStrike CRWD – 46% Return Potential

What's Happening

• CrowdStrike Holdings, Inc. (CRWD) is a leading cybersecurity company, focused on providing cloud-native endpoint protection, threat intelligence, and incident response services, with a significant emphasis on its AI-driven Falcon platform as a core part of its security solutions strategy.
• The company's revenue and earnings trends are strong. They're mostly increasing with each passing quarter. The latest one showed revenue at $1.06 billion and earnings at $260.95 million.
• This valuation on CRWD is steep. Its Book Value is just 13.23, its Price-to-Sales is 27.45, and its EV to EBITDA is at 360.89.
• At a technical level, CRWD has been coiling within a massive ascending triangle formation. This is signaling that another massive rally is readying.

Why It's Happening

• Through its joint accelerator with AWS and NVIDIA, CrowdStrike is nurturing the next generation of AI and cloud security startups. This not only strengthens its ecosystem but also ensures early access to cutting-edge innovations and potential acquisition targets, keeping CrowdStrike at the forefront of cybersecurity advancement.
• CrowdStrike was awarded Google Cloud's 2025 Security Partner of the Year for Workload Security and recently expanded its partnership with Google Cloud to secure AI innovation initiatives. 
• CrowdStrike was named a Leader and Fast Mover in the 2025 GigaOm Radar Report for XDR, earning the highest average score in emerging features and perfect scores in threat detection, cloud security integration, and scalability. Its AI-powered Falcon platform unifies data and automates workflows, giving security teams unmatched speed and precision-critical as cyber threats grow more sophisticated. 
• The Falcon platform, CrowdStrike's flagship product, boasts a GAAP subscription gross margin of 78%. Its modular design is driving customer adoption, especially as enterprises increasingly subscribe to additional modules after initial trials. This high-margin, expanding platform not only boosts profitability but also deepens customer lock-in, making future revenue streams more secure and predictable. 
• CrowdStrike just reported a 33% year-over-year revenue increase for Q1 FY2025, reaching $921 million, with subscription revenue up 34% to $872.2 million. 
• Analyst Ratings:
• JMP Securities: Market Outperform
• Roth Capital: Buy
• Morgan Stanley: Overweight

My Action Plan (46% Return Potential)

• I am bullish on CRWD above $370.00-$375.00. My upside target is $600.00-$620.00.

AppLovin APP – 58% Return Potential

What's Happening

• AppLovin Corporation (APP) is a leading mobile technology company, focused on providing app monetization, marketing, and analytics solutions, with a significant emphasis on its AI-driven AppDiscovery platform as a core part of its growth strategy.
• This company is growing revenue and earnings at a strong rate. Its latest report showed revenue of $1.37 billion and earnings of $718.22 million.
• Valuation in APP is steep, but it keeps delivering the numbers to help justify the growth. P/E is at 66.63, Price-to-Sales is at 22.29, and EV to EBITDA is at 44.79.
• From a charting perspective, APP is forming a broadening bottom formation, which could lead to an end to the correction sooner rather than later.

Why It's Happening

• ​​​​AppLovin's strategic pivot away from game development, highlighted by the $900 million sale of its Apps business, marks a pivotal shift to focus exclusively on its high-margin ad tech platform. This divestment reduces operational complexity, frees up capital for innovation, and positions AppLovin as a direct competitor to ad tech giants like Google and Meta, but with the agility of a disruptor.
• AppLovin's AI advertising solutions are now gaining significant traction with e-commerce brands, as evidenced by a surge in holiday ad spend and strong ROI for retail advertisers in Q4 2024. The company's move to launch self-serve, AI-powered ad tools in 2025 is poised to unlock exponential growth, allowing thousands of new businesses to join the platform with minimal friction.
• The AXON 2.0 platform is at the core of AppLovin's success, enabling precise ad targeting and optimization at scale. The company is also developing generative AI tools for automated ad creative production, which will further enhance engagement and campaign performance for advertisers. 
• The stock enjoys a "Moderate Buy" consensus among analysts, with an average price target of $415.15-implying a 44% upside from recent levels. Notably, Jefferies and Morgan Stanley have issued targets as high as $425, reflecting broad confidence in AppLovin's strategic direction and execution.
• AppLovin is uniquely positioned to capitalize on the booming digital ad market, including the $17.7 billion in-game advertising opportunity projected by 2030. As brands shift more budget to performance-based, AI-optimized campaigns, AppLovin's scalable platform stands to capture a growing share of this secular trend.
• AppLovin is projected to deliver $1.38 billion in Q1 2025 revenue, representing a 30% year-over-year surge.
• Analyst Ratings:
  • JP Morgan: Neutral
  • Needham: Hold
  • Goldman Sachs: Neutral

My Action Plan (58% Return Potential)

• I am bullish on APP above $255.00-$26.00. My upside target is $520.00-$525.00.

Broadcom AVGO – 30% Return Potential

What's Happening

• Broadcom Inc. (AVGO) is a leading semiconductor and infrastructure software company, focused on providing solutions for networking, wireless, broadband, storage, and industrial applications, with a significant emphasis on its AI-driven chipsets and software integrations as a core part of its growth strategy.
• This company has also been growing its revenue and earnings. The latest report showed $14.92 billion in revenue and $7.82 billion in earnings.
• AVGO has a high valuation. Its P/E is at 92.92, its Price-to-Sales is at 17.74, and its EV to EBITDA is at 36.01.
• From a technical viewpoint, AVGO broke out from the descending price channel a couple weeks back. If it makes a higher-low on a pullback here, it would reinforce a new uptrend.

Why It's Happening

• ​​Broadcom's acquisition of VMware has rapidly transformed its software business, with 70% of its top 10,000 customers already adopting VMware Cloud Foundation. The shift from perpetual licenses to a subscription model is driving recurring revenue and expanding margins. 
• With increasing restrictions on Nvidia's AI chips in certain markets, especially China, Broadcom's custom AI accelerators are gaining traction as viable alternatives. This strategic positioning enables Broadcom to capture market share that might otherwise be lost to regulatory headwinds, ensuring resilient growth even in a fragmented global landscape.
• Broadcom paid a quarterly dividend of $0.59 per share in Q1 FY25, totaling $2.77 billion, and eliminated 8.7 million shares through equity award settlements. The company's commitment to growing its dividend and reducing share count directly boosts per-share earnings and provides a tangible return for investors. This disciplined capital allocation strategy is a hallmark of shareholder-friendly management.
• Broadcom has exceeded analysts' earnings estimates in each of the past four quarters, most recently delivering Q1 EPS that beat expectations by 10.2%. This track record of consistent outperformance reflects management's ability to execute and adapt in dynamic markets. Continued earnings surprises could serve as catalysts for multiple expansion and renewed investor enthusiasm.
• Broadcom generated $6.0 billion in free cash flow in Q1 FY25, representing 40% of revenue and a 28% increase year-over-year. This robust cash generation allows the company to invest aggressively in R&D, pursue strategic acquisitions, and return significant capital to shareholders through dividends and buybacks. 
• Broadcom's AI-related revenue soared to $4.1 billion in Q1 FY25, representing a staggering 77% year-over-year increase-far outpacing the broader AI chip market's 31.2% growth.
• Analyst Ratings:
  • Seaport Global: Buy
  • Barclays: Overweight
  • B of A Securities: Buy

My Action Plan (30% Return Potential)

I am bullish on AVGO above $165.00-$170.00. My upside target is $270.00-$280.00.

Market-Moving Catalysts for the Week Ahead

Why Chips Matter More than the Fed for Now

We saw the "AI diffusion" rule dropped last week by the Trump Administration. This absolutely monumental development for the state of the overall market, considering the importance that semiconductors and tech have on the indices.

The timing of this development couldn't be better, and it's not only because mega-cap companies like Nvidia stand to benefit. Basically, the export restriction on certain chips was revised, and is no longer restrictive.

Coming out of market bottoms, it's absolutely key for sectors like semiconductors to lead. After all, they are known to be a leading sector in terms of market performance. There's a reason why chips peaked back in July and the rest of the market did several months later. If we see chips accelerate here, look out above.

What More Does the Fed Need?

Powell stated last week that concerns remain on the stagflation front – but is this the Fed's new "transitory inflation" gaffe? I've expressed before how tariffs are by no means automatically inflationary, and if we eliminated this preconception, the market is clearly not signaling that inflation is a problem – yet.

This week, we're back to inflation data in the form of CPI. Inflation is already well below interest rates, so the Fed has room to move when they feel they are ready. My concern with tariffs is actually on the unemployment front.

The rate cut odds for June have tumbled, but I'm not ruling it out completely yet, especially if we get some soft inflation data this week. I think the Fed is stubbornly waiting for the jobs market to weaken, which means they are playing a very dangerous game here.

Sector & Industry Strength

The sector performance rankings that we see this week are a reminder that timeframe matters. The year-to-date rankings still suggest some caution in this tape, with sectors like utilities (XLU) and consumer staples (XLP) at the top of the pack.

Bulls are going to need to see the tech sector (XLK) and consumer discretionary (XLY) make an epic comeback in order to flip the script completely bullish. But the thing is, if you zoom out across a longer time horizon, those sectors still look strong.

Financials (XLF) are also hanging out near the top of the pack, along with industrials (XLI). These are not bearish developments either. Healthcare (XLV) is slipping some, while energy (XLE) remains tamed.

Editor's Note: Short-term momentum stays in favor of the bulls.

Live by Tech, Die by Tech (Sector ETF: XLK/SPY) 

It's the largest and most important sector of the S&P 500, and it makes up roughly 30% of the index. In case there were any doubts, I'm talking about technology. With a sector weighting this large, U.S. stocks would face a serious headwind if this innovative sector is not generating returns.

We're looking at the ratio here between the tech sector (XLK) and the S&P 500 (SPY). Basically, we need to see this ratio rising and making higher-highs and higher-lows in order for us to be in a risk-on environment. Note how it peaked back in June 2024.

We may have experienced a false-breakdown in this ratio over the past couple of months, as the ratio broke below the lower trendline of the rectangle formation. As the saying goes, "From false moves, come fast moves." If we see this ratio rip to the upside, we could be dealing with a face-ripping rally in stocks throughout the rest of this year.

Is Ethereum Dead Money? (Sector ETF: ETH/BTC) 

With Bitcoin within a spitting distance of its all-time highs already, I wanted to share the ratio between a seemingly forgotten, but nonetheless still important crypto – Ethereum (ETH) – as it stacks up against the big-dog Bitcoin (BTC).

The defi (decentralized finance) crowd has been frustrated over the past couple of years, as this this ratio has been tumbling lower. There were a couple bouts of strong performance by Ethereum over the past couple of years, but the trend never stuck.

Now we have a situation where the ratio is back to levels not seen since 2020. For what it's worth, that was certainly a good time to be buying Ethereum. It's not a matter of history simply repeating itself, but if the Fed is going to become more dovish in the future, it could be good for Ethereum in time.

Can the Fed Narrow Spreads Further? (Sector ETF: LQD/IEI) 

The Fed is walking a fine line on the liquidity trail, and although their influence is mainly limited to short-term interest rates (outside periods of QE), then do like to monitor credit spreads, or the interest rate differential between two bonds of similar maturities.

This week, we're back to looking at the ratio between investment-grade corporate debt (LQD) and 3-7 Year Treasuries (IEI). With the way this ratio is set up, a rising line suggests liquidity conditions are improving as LQD outperforms, while a declining line suggests liquidity conditions are dropping as IEI outperforms.

It's been a very long time that we've been monitoring the rounding bottom pattern in this ratio. If and when the Fed starts cutting again, I would look for another breakout to the upside, but note how it's been mostly declining since last September. Hence, the greater volatility in markets.

My Take:

The Fed kept rates steady and is taking a "wait and see" approach. At this point, it seems rather inappropriate given the weak GDP reading and inflation data. The job market is strong, but the central bank has cut into full employment before. Unfortunately, it seems that the decision is becoming political.

Aside from credit spreads, my other concern is with the yield curve. I'm still not ruling out a cut in June, but we'll have to see some deterioration in the labor market to get this Fed moving. Let's hope they don't wait too long to act again this time.

Cryptocurrency 

Bitcoin’s technical structure has strengthened considerably as it establishes solid support above the crucial $94,000 level, which previously acted as resistance during the February-March period. This price zone has now been successfully retested multiple times, demonstrating that former resistance has effectively transformed into new support.

The bottoming pattern that formed between February and April creates an excellent foundation for continued upside momentum. This broad base, with its series of higher lows connecting from the March bottom, indicates persistent accumulation by stronger hands. 

From a risk management perspective, the technical structure remains firmly bullish as long as Bitcoin maintains support above $94,000, providing traders with a clear invalidation point. After months of corrective action, the weight of technical evidence suggests Bitcoin may have completed its bearish cycle and is now positioning for its next substantial advance. The target near-term is in the $110,000-$115,000 zone.

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