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5/28/2024 10:20:33 AM Eastern Time

INFLATION'S SHADOW INVOKES FEAR 
By Charles Payne, CEO & Principal Analyst

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The rally could move on for much longer and go much higher from here, but it's incredibly selective right now. The range has been limited as gains have consolidated. 

Market Breadth & Leadership 

There was lots of green on the screen Friday, although the volume was light it was decidedly bullish. Moreover, advancers swamped decliners, particularly on the New York Stock Exchange (NYSE).

Despite the current momentum of names in the NASDAQ Composite, there were more new lows than highs on Friday. 

Tech & Communication Services

It's all about Artificial Intelligence (AI) picks and shovels and those companies buying them the most. There is no care about valuations or valuation metrics. Right now, it’s a gold rush, and those running the fastest, no matter the expense, are being rewarded the most. 

Technology (XLK) is all about semiconductors and hardware. 

Keep an eye on these industries as the NASDAQ tries to build on its momentum. 

Portfolio Approach

We are adding a new position in Technology (ANET) in the Hotline Model Portfolio this morning.

Today’s Session

Is this the start of the summer rally?  Seasonality and AI might not be enough of a one-two punch to guarantee a summer rally, but there is no doubt the bias has returned to the upside.

Lack of participation can be seen as a plus or a minus – I think it’s a yellow flag, as more names should be participating.

Long Idea: Arista Networks, Inc. (ANET) @ $312.00
Industry: Technology; Communication Equipment
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BACKGROUND: Arista Networks, Inc. engages in the development, marketing, and sale of data-driven, client to cloud networking solutions for data center, campus, and routing environments in the Americas, Europe, the Middle East, Africa, and the Asia-Pacific. Its cloud networking solutions consist of Extensible Operating System (EOS), a publish-subscribe state-sharing networking operating system offered in combination with a set of network applications. The company offers data center and cloud networking systems, including newer artificial intelligence (AI) ethernet switching platforms; campus wired and wireless products, and routing systems addressing Core Routing, Edge Routing, Data Center Interconnect (DCI), Multi-cloud and Wide Area Networking (WAN) use cases; and a suite of value-add software solutions that leverage EOS to provide end-to-end orchestration, automation, analytics, network monitoring, and security. It also provides post contract customer support services, such as technical support, hardware repair and replacement parts beyond standard warranty, bug fixes, patches, and upgrade services. The company serves a range of industries comprising internet companies, service providers, financial services organizations, government agencies, media and entertainment companies, telecommunication service providers, and others. It markets and sells its products through distributors, system integrators, value-added resellers, and original equipment manufacturer partners, as well as through

SKINNY: Q1 results beat consensus and raised FY24 guidance as the company benefits from pricing power on AI infrastructure and solid revenue growth. The favorable enterprise mix led to an increase in gross margins and operating margins. Technically, the stock is bouncing off its resistance level and closing last weeks gap. Our target is $375.