The Insider Report: Sideways Market Near the Highs? Good for the Bulls

Market Overview

It was another week of action-packed headlines and even a Fed meeting, but that couldn't keep most of the market down. Who knows what's going to happen in the Middle East in the coming days, but fortunately, we rely on indicators like price to make decisions in the market. Only the S&P 500 finished lower, closing down 0.15% on the week. The Nasdaq led the rally, finishing up 0.21%, while the Dow Jones Industrial Average was up 0.02%. Energy is still leading the tape but that could be on shaky footing, as tech is still displaying resiliency, along with financials.

Stocks I Like

Embraer ERJ – 28% Return Potential

What's Happening

• Embraer S.A. (ERJ) is a global aerospace company specializing in the design, manufacture, and sale of commercial, executive, and defense aircraft, as well as providing aviation services and support solutions.
• The business results for ERJ have been pretty volatile. The most recent quarterly report showed revenue of $1.1 billion but a loss of $73.6 million.
• This valuation on ERJ is only slightly elevated. P/E is at 23.60, Price-to-Sales is at 1.42, and EV to EBITDA is at 9.67.
• From a technical standpoint, ERJ is trying to breakout from an ascending triangle formation. This could lead to a rally to new highs in time.

Why It's Happening

• Embraer's 2025 Market Outlook projects global demand for 10,500 new sub-150-seat jets and turboprops over the next 20 years, valued at $680 billion8. As countries and airlines seek greater regional connectivity and fleet flexibility, Embraer's product lineup is ideally suited to capture a significant share of this market. The company's strategic positioning in this segment offers investors a compelling long-term growth story.
• Despite new U.S. tariffs on imports, Embraer's first quarter results were unaffected, and management expects only a limited impact on margins for the rest of the year. The company's globalized production chain, with substantial U.S. content, helps mitigate tariff exposure. Embraer's proactive cost-reduction initiatives and advocacy for zero-tariff policies further demonstrate its resilience and adaptability in a complex global environment
• Embraer continues to win significant contracts worldwide, including a new C-390 sale to Portugal and the addition of an aeromedical evacuation unit for the Netherlands. Portugal's option for 10 additional C-390s, potentially shared with other NATO members, and contracts for A-29N Super Tucano aircraft, highlight Embraer's expanding international footprint and potential for follow-on orders. 
• Wall Street remains bullish on ERJ, with Goldman Sachs recently raising its price target to $60 and maintaining a "Buy" rating. The average analyst price target is $50.40, forecasting further upside from current levels, and consensus ratings consistently point to "Buy" or "Outperform". Upward revisions in earnings and revenue estimates by analysts reflect growing confidence in Embraer's ability to deliver on its ambitious growth plans.
• The company's firm order backlog soared to an all-time high of $26.4 billion in Q1 2025, up 25% from the prior year. This massive backlog provides clear visibility into future revenues and underscores the trust customers place in Embraer's products. Investors can take comfort in the fact that this backlog insulates earnings against near-term market fluctuations and sets the stage for sustained growth.
• Embraer delivered a stellar 35% year-over-year jump in first quarter revenue for 2025, reaching $323 million in executive aviation alone, and a total Q1 revenue of $1.1 billion—the company's best first quarter since 2016.
• Analyst Ratings:
• HSBC: Buy
• Goldman Sachs: Buy
• UBS: Sell

My Action Plan (28% Return Potential)

• I am bullish on ERJ above $44.00-$45.00. My upside target is $72.00-$74.00.

Silicon Laboratories SLAB – 42% Return Potential

What's Happening

• Silicon Laboratories Inc. (SLAB) is a global semiconductor company specializing in the design and development of mixed-signal integrated circuits and software solutions for IoT, industrial, automotive, and consumer electronics applications.
• Business results have been trending in the right direction. We're seeing revenue growth in SLAB, and it's on the verge of profitability. The latest quarterly report showed revenue of $177.71, but a loss of $2.74 million.
• Valuation in SLAB is high. Price-to-Sales is at 7.06 and Book Value is just 32.80.
• From a technical perspective, SLAB is seeking a breakout from a saucer formation, which would lead to an acceleration in upside momentum.

Why It's Happening

• ​​​​​​​​​​​​Management projects a long-term revenue growth rate of 20%, outpacing the expected mid-teens CAGR for the broader IoT industry. With targeted investments in high-growth verticals like connected healthcare, smart cities, and industrial automation, Silicon Labs is aligning its resources for maximum impact. This focus should translate into above-market returns for shareholders as these segments mature.
• Silicon Labs is widely recognized as the leading innovator in low-power wireless solutions for IoT, with a comprehensive portfolio supporting Bluetooth, Zigbee, Thread, Wi-Fi, and Z-Wave. Its technology powers everything from smart meters and industrial sensors to connected medical devices and home automation. This leadership position enables Silicon Labs to command premium pricing and win high-value contracts, giving it a durable competitive moat.
• Silicon Labs boasts more than $10 billion in design wins over the past three years, with an annualized revenue potential of $2–2.5 billion. These wins reflect the company's deep relationships with global OEMs and its reputation for delivering reliable, innovative wireless solutions.
• Silicon Labs recently launched its Series 3 system-on-chips, built on advanced 22nm process technology, offering up to 100x the processing capability for edge AI and ML workloads. These chips support multi-protocol wireless connectivity, best-in-class security, and ultra-low power consumption. As IoT devices become more intelligent and secure, Series 3 SoCs are poised to become the backbone of future smart devices, driving new design wins and revenue streams.
• Silicon Labs delivered a stunning 68% year-over-year revenue increase in Q1 2025, surging from $106 million to $178 million—a clear sign that the company's products are in high demand across its key markets.
• The Home & Life segment posted a jaw-dropping 99% year-over-year revenue growth, reaching $82 million in Q1 2025.
• Analyst Ratings:
  • Benchmark: Buy
  • Susquehanna: Neutral
  • Needham: Buy

My Action Plan (42% Return Potential)

• I am bullish on SLAB above $121.00-$122.00. My upside target is $200.00-$210.00.

Snowflake SNOW – 20% Return Potential

What's Happening

• Snowflake Inc. (SNOW) is a technology company specializing in cloud-based data platform solutions, providing data storage, processing, and analytics services for businesses to manage and analyze large-scale data across multiple cloud environments.
• This company has solid business performance. The most recent quarterly report showed revenue of $1.04 billion and earnings of $87.28 million.
• Valuation is steep in SNOW is elevated. Price-to-Sales is at 18.11, and Book Value is just 7.22.
• From a charting viewpoint, SNOW is flagging within a bull flag formation, which could lead to another surge higher in prices.

Why It's Happening

• At the 2025 Snowflake Summit, the company unveiled its Standard Warehouse Generation 2, delivering analytics performance that's 2.1x faster than before. These compute innovations, paired with AI-powered security and governance, are not just incremental upgrades—they fundamentally enhance the value proposition for enterprise clients, making Snowflake's platform indispensable in the AI era and fueling future revenue growth.
• Snowflake's expanded collaboration with Acxiom and Interpublic Group is revolutionizing AI-powered marketing for global brands. By integrating advanced data and identity solutions directly into Snowflake environments, customers gain real-time insights and improved personalization. This partnership unlocks new revenue streams and cements Snowflake's status as a critical player in the digital transformation of marketing, which is likely to boost both adoption and investor sentiment.
• With over 10,000 partners worldwide—up from just 600 in 2022—Snowflake is rapidly expanding its channel ecosystem. This vast network enables the company to reach new customers, accelerate AI solution adoption, and drive a greater share of revenue through partners. As AI becomes central to business operations, Snowflake's partner-first strategy is poised to deliver sustained, compounding growth.
• Institutional ownership of Snowflake has surged to over 65%, with net inflows exceeding $10 billion in the last year alone. Heavy buying by leading funds like Vanguard and BlackRock underscores strong conviction in Snowflake's long-term prospects. Such institutional support provides a powerful tailwind for the stock, often preceding further price appreciation as more funds build positions.
• Snowflake's forward guidance remains bullish, with Q2 product revenue projected between $1.035 billion and $1.040 billion—above consensus estimates.
• Annual revenue for 2025 hit $3.63 billion, representing a robust 29% increase from the prior year.
• Analyst Ratings:
  • Wells Fargo: Overweight
  • Jeffries: Buy
  • Oppenheimer: Outperform

My Action Plan (20% Return Potential)

I am bullish on SNOW above $180.00-$185.00. My upside target is $255.00-$260.00.

Market-Moving Catalysts for the Week Ahead

Future Rate Cuts Hinge on Oil

The Fed kept rates unchanged last week as expected, but Fed Chair Powell reinforced the central bank's outlook on stagflation, and even raised their annual inflation target to around 3%. For weeks, I've been ragging on Powell and the Fed about inflation, but the recent spike in oil may have changed things.

You see, nothing has a greater impact on inflation expectations more than the price of crude oil. In other words, when crude oil is rising, it's going to put pressure on bond prices, because interest rates tend to track the price of energy, and bond prices move inverse to interest rates.

The Fed has diagnosed the symptoms, but not the cause. Tariffs are not fueling inflation at the moment, but rather, geopolitical tensions. It hasn't shown up in the data just yet, and unless crude oil prices reverse sharply, we could start to see it trickle in as soon as August.

There's Always Something to Worry About

Right now, the press wants you entirely focused on the geopolitical situation unfolding in the Middle East as the source of potential market volatility. I've always said that in the age of information, having a memory can be more of a curse than a blessing.

Just a couple of weeks ago, it was civil unrest in the United States that was unraveling. Before that, the concern was on bond vigilantes. Before that, it was tariffs and how they were going to collapse the economy. A little before that, it was the situation over in Ukraine.

This isn't meant to dismiss the significance of these events, but you'll notice that stocks held up remarkably well during this time. As a rule, when the market reacts to bad news in a positive way, it's bullish. Dips are still a gift in this tape.

Sector & Industry Strength

The market's internals continue to improve. I'm most excited about sustained resiliency from the tech sector (XLK). This is exactly what we want to see when it comes to the bullish case.

Energy (XLE) is also solidifying its place in positive territory year-to-date. The only sectors in negative territory this year are healthcare (XLV) and consumer discretionary (XLY). Seeing XLV down here is bullish, whereas seeing XLY down here is bearish.

The only defensive sector hovering near the highs of this tape is utilities (XLU). But as long as we keep seeing industrials (XLI) and communications (XLC) at the top, it can be argued that bulls have the advantage in this tape.

Editor's Note: Some risk still in this tape but it's not much given tech is still leading.

How Big is the Discount in Energy? (Sector ETF: XLE/SPY) 

The energy sector (XLE) has been absolutely decimated in the past couple of years. A quick glance at the ratio chart below stacking XLE against SPY will show that. But over the past couple of weeks, the sector has roared back to life.

The big question is whether this is a one-off event due to the geopolitical situation, or the start of a new trend for the stock market. Currently, my bias is a one-off event, because if this situation deescalates in the coming weeks, crude oil could reverse just as hard.

Still, we must closely monitor the wedge formation on this chart, because if it breaks above the upper trendline of the formation, it could signal the start of a new bull trend. But until then, we are still looking for XLE to underperform.

Quantum is Here to Stay (Sector ETF: QTUM/IGV) 

I totally understand some of the skepticism surrounding some of these quantum companies, as many of them don't have meaningful earnings or even revenue for that matter. But it's a stark reminder that perception matters more than reality when it comes to markets.

It certainly helps when you have the CEO of Nvidia, Jensen Huang, finally saying that quantum technology turning legit, and at some point, I think you're going to see a lot of M&A activity. But I want to stack the quantum sector (QTUM) against a more traditional sector in software (IGV) to see how they compare.

There was a massive breakout in this ratio at the end of 2024 in favor of QTUM. It's not digesting its gains within a broader uptrend in effect. This looks to be continuing higher and means that the quantum sector should be a big driver of alpha within tech going forward.

Is the Duration Trade Coming Back to Life? (Sector ETF: BIL/TLT) 

There's been no shortage of confusion over in the bond market, as interest rates on the long-end of the curve have been climbing year-to-date, despite inflationary pressures being contained. This tells us that the rise in rates was more a matter of credit risk than anything else.

But if the Fed actually moves to cut rates, be on the lookout for a massive rally in long-term bonds via TLT. We're looking at the ratio here between short-term Treasury Bills (BIL) against long-term Treasury Bonds (TLT).

If we're in an inflationary or rising rate environment, it's key to keep duration as short as possible by buying Treasury Bills, but if rates are dropping, there's typically more money to be made in duration via Treasury Bonds.

My Take:

This ratio has consolidated over the past couple of years within a triangle formation. But it looks like a lower-high is in play, which means the consolidation could go on for even longer now. I don't expect a major resolution in this ratio to the upside until inflation starts to meaningfully tick higher again.

The caveat here is that when the Fed lowers rates, it means money printing, and in time, some of this money will find its way to the commodity market which can increase inflation. We probably won't see the effects until towards the end of 2025 or early 2026, however.

Cryptocurrency 

Bitcoin’s recent pullback to represents a healthy correction within the broader bull market framework, as the cryptocurrency finds itself testing the critical $100,000-$105,00 support level that previously served as major resistance throughout early 2025.

Despite the decline, Bitcoin remains well above the psychologically important $100,000 threshold, suggesting that institutional demand continues to underpin the market at these elevated levels. 

The pullback has allowed Bitcoin to work off the overbought conditions that developed during its parabolic advance, creating a healthier technical backdrop for the next major move. Any decisive break above $108,000 would likely trigger a resumption of the primary uptrend, while the bullish thesis remains valid as long as Bitcoin holds above the $100,000-$105,000 support zone. The combination of strong underlying fundamentals and constructive technical consolidation creates a compelling risk-reward opportunity for patient long-term investors.

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