AI Lows Are In — Here’s How to Position Before the Next Rally

Joining me now is Matthew Tuttle, CEO and CIO at Tuttle Capital Management. Matthew, not your first time on the show, but your first time in person. So welcome to the desk. Yeah, thank you very much for having me. All right. So let's get right into it. You say July 29th could mark the situational awareness low. For AI. Stocks. Explain what makes you so confident. Yeah. So I mean the AI stocks the past couple of weeks sold off hard. And you know, a lot of times when you want to stem a sell off like this, someone's got to get carried out on a stretcher. And unfortunately it was Leopold. And since that's happened since Ken Griffin bought his portfolio, we've seen a massive snapback rally in all of these stocks. You want to watch the lows? If those always get violated again, we're back to selloff. But as long as we stay above that level and things look like they're in an uptrend, I'd be a buyer. It looks like at least for now, the lows in okay. So keep an eye on the lows. If you're right. What happens to tech stocks from here. So tech stocks go back into rally mode. Now we're going to have corrections. We're going to have sell off. It's not you know we're rallying for four straight months into the end of the year. There's going to be rocks along the way. But you know I'd be I'd be a buyer here. And I'm definitely bullish. There are certain things we're watching. But if none of that stuff happens we're bullish. And you came with some picks which we will get to. But first I. Want to ask you about space X because space is moving. Quite a bit lower today after earnings. You looked at that. First earnings report. You heard what Elon. Musk had to. Say. Are you more or less. Bullish on space after. It. So you know I'm bullish on it I don't know if I'm more or less everyone expected Elon was going to have a blowout. You know better than expected. And he did you know. So we do a daily newsletter and tomorrow's edition. Unless something weird happens that interests me more is the AI CapEx debate goes to space. So I think what happened is Elon is spending a bunch of money on CapEx. And a couple of months ago, that'd be great. Now people are looking at that and saying, well, you know, where's the revenue? So I think they're getting hit based on that. But also remember it was up 9.5% or so yesterday. So, you know, I'm not seeing anything in here that surprises me. I'm not seeing anything that worries me. Certainly you've got, you know, the unlock of insider shares, it could be volatile for the next week or so, but, you know, long term you don't get rich betting against the Elon. We own it in three of our ETFs speci UFO day. And we're not buying more. We're not selling it either. Okay. So you're a buyer of. Tech but not a buyer of space on the dip. Show me the revenue story. It seems like. You're saying so who will be the beneficiaries of this? Show me the revenue story. What stocks would you be buying here? So a couple of names we really like. And we're looking at picks and shovels in the eye trade. And again like you said who are they going to be the beneficiaries not the spenders. So one of the ones we like a lot is is cadence. So you know they're at the forefront of a lot of what's going on with these chips. Them in synopsis have pretty much a monopoly on some of the kind of EDA, which is what all these chips have to go through. Another one we really like is Broadcom. You know we love the bottleneck trade. Broadcom is there in a bunch of different bottlenecks. So that's another one we like. And then close. They're helping the data centers kind of build out all of what they're doing. So those are three of kind of our favorite pick and shovel names. We have 26 names we own in Miami which is our best idea ETF. And those are three that we have right now. So you mentioned KLS Scholastica. Yes. Broadcom of course AB Geo cadence DNS. You like the the beneficiaries of the spending. More than. The spenders. What does that. Mean for your. Call on the Meg seven then. Because we know they're doing a lot of spending. They're doing a lot of spending. Yeah I do think the Meg seven is a must own. But I don't know. That's where you get, you know, a lot of alpha going forward for the rest of the year. I think what Wall Street is saying is, again, show me the revenue and you've got winners and losers in there. I mean, obviously Microsoft did what it did. Amazon did what it did. But then, you know. Which would you buy here? Which would you avoid. So Microsoft I would definitely buy here Google I would buy here. Apple is interesting. You know Apple is the one that's not spending. And Apple is the one that if they execute their position to really dominate a lot of what's going on with AI because, you know, we've got our iPhone. They haven't done it yet. We don't own it. We don't own it directly. But you know, that's one I'd keep an eye on. But Microsoft and Google would be my favorite. Okay, let's bring it out. Because it's not just tech InFocus. We have financials and industrials hitting all time highs. Is this. A broad bull market or is. This a bull market that's going to still be driven by AI. So it's going to be driven by AI. But what this selloff in I showed us is it's not just AI. So the AI stocks are selling off but the markets really weren't. So you know and I think that's going to continue I think we're in a broad based rally. And you know and I do think you've got a bull in the eye stocks with some of these other names because well so what this selloff showed us you have a portfolio of all AI stocks. That's a wild ride that probably most people can't stomach. So give us some of those other names that should be in the non-tech part. Of our portfolio. Yeah. So I love the idea of halo heavy asset low obsolescence. And we have an ETF for that. And the idea there on a broad base, it's traditional value names that are not going to be made obsolete by AI. And so more specifically it's energy. It's utilities, it's materials. It's industrials. Freeport-McMoRan is a great example of the name. We love copper. AI is not going to put copper out of business. But data centers still need copper you know ECT. For natural gas powering data centers, railroads or another area. Traditional value name railroads aren't going to be made obsolete by either. Are there areas of the market right now, though, that are too crowded. Outside of tech? Because we have seen industrials. I think now behind energy and tech is the. Third best performing sector year to date. So are. Have some. You know already seen. The most of the gains at this point. So I mean money's going to keep rotating around. You know certainly you saw a lot of money in this tech selloff move into those value areas. And now you're going to see a lot of that money come out of the value areas. Go back into the tech stocks I think that's why you need to own all of it. You know, what's your position sizing barbell the AI names and in these halo names. And then you don't worry about it as much because money is moving from one area to the other. But you know that that's how it works, especially with value. You know, the value type names will move up. Everyone will say, oh, value investing. And then it moves right. Pack out. Best value in the. Market right now. Best value in the market right now. Gold miners. So a name like Franco Nevada which we own, and our PCP ETF that is a gold miner. But it's a royalty company so they don't have to mine the gold. They don't have to spend all that money. They just make money off the royalties. Time to buy gold and gold miners is when nobody wants them. And you know, gold was the hottest thing a few weeks back. Now nobody cares. Now I'm interested. So I was taking a look at your notes. And, you know, we have a lot of people come on. Still bullish in the market because of the earnings story. It seems like you're actually paying more. Attention to the bond market though than earnings. The you say that. That's the real story here. Explain what you mean. Explain what levels you're looking at to keep you bullish and what would. Start changing your. Mind. So the fed meeting was interesting. You know, we didn't do anything. We call it Waco Warsh always chickens out. But the interesting thing was there were three dissenters. I don't think we've seen that in ten years. So you've got a real divide in the fed. But the real interesting thing is the bond vigilantes made interest rates go up. You know, the ten year, the 30 year, a longer term interest rates, which the fed doesn't control. That's a vote of no confidence basically in the fed. Hey we don't think the Fed's going to be able to handle inflation. At the same time you're seeing the potential of an unwind of the yen carry trade and is trying to support the yen. The Japanese are trying to support the yen. And one thing the Japanese may need to do is sell treasuries in order to buy yen. So we are laser focused on interest rates. Watch the ten year 5% is kind of our line in the sand. I am bullish on the market until we get if we get to 5%, if we get over 5%, I would start to get a little bit more worried about holding stocks. If we get a rate hike. Between now. And your end, is the bull market over? Not over because everyone is expecting it. What I would be concerned about is multiple rate hikes and a 2022 type of scenario, especially multiple rate hikes and inflation still going up. One of the areas on inflation we're watching is oil. So you know we've won the war again for like the 50th time. Oil is coming down I did that. Like I said before you know part of the halo trade are oil companies. I think you want to buy oil companies on the dip. But if we see the war come back intensify, Strait of Hormuz is close, oil prices going up and fed, raising interest rates. It's not a great backdrop for stocks. But here's the thing the. War. Hasn't actually gone anywhere, right. We haven't seen a resolution. So it doesn't need to come back. It's already here right. Well but you've got everyone now saying oh you know they're going to open up the strait. We've got a cease fire hearing that. But it seems. Like the market just keeps avoiding it or ignoring it. The market's ignoring it. They're looking at this war is short term and they're looking at AI. Is this long. You know, five 1015, 20 year thing. And we'll say, you. Know, when do geopolitics actually become. More bearish for this market? Every time oil ticks back into the high 80s, low 90s and above, that's when geopolitics start to matter again. Okay. So let's sum it. Up for the everyday retail. Investor that's tuning in saying oh shoot did I miss the tech bottom. And I'm a bit nervous to put money. To work with the market. In all time highs. What should their first moves be? You should be invested. But and it's not sexy. But watch your portfolio construction. So situational awareness taught us a lesson. You can be right. And you know he was right on what he was watching. He was wrong being short software and still get wiped out if your position sizing is off. So what we teach people is, look, you want to own these names. Don't worry as much about the valuations, but have it be a small or smaller part of your portfolio. Balance it out with the halo names, but then also add in things like gold, things like crypto, things like property and casualty stocks, which we use as a bond alternative, things like pre-merger SPACs, adding maybe some T-bills, do some things on tail risk, and then you can ride it out no matter what's going on, because your portfolio is not nearly as volatile. So if I have. Fresh money to put to work. Today. What's the first thing I buy? You gave a lot of options there. So. And you know, not to toot my own horn, we've got a fund. I should have said that's not one of your ETF. All right, so if it's not one of my ETFs, That's tough I guess I would be looking for, you know, some of these I pick and shovel names that have had a drop and are now starting to come back. One of them and I'm just trying to remember chart is is because Victor, that's a name that we actually just bought in our Mimi ETF yesterday. It undercut a key moving average pop back up. And that's kind of an eye power name. They make some of the technology that powers the chips. So that that'd be an interesting name to go into now. All right. And funny enough this was not an ETF spotlight, which we do have. But we did get many of these ETFs in there. We'll have to bring it back for an ETF spotlight. All right I think this is a great. Time to pivot. To our rapid fire round of this or that you've played before a quick. Questions quick answers no hedging. Are you ready. Yep. Overall market higher or lower by year end. Higher tech or the rest of the market. Tech AI rally. Sustainable or running on fumes. Sustainable. Bigger risk I bubble or. Missing the eye. Trade. Ooh, I bubble. Bigger risk over exposure to the mag seven or under exposure. Overexposure. Biggest eye winner from here. Chips, networking or software? Chips. Software name you'd buy here. Software. A name I'd buy here is ServiceNow. Moving to chips Nvidia. Before earnings buy now or wait it out. Buy now. Nvidia or. Broadcom. Broadcom mag seven you'd sell here. Meta. Sector. That's not tech that you think is the best output best positioned outperform this year. Gold miners highest conviction stock pick for the rest of 2026. Cadence design. One word to describe the market for the rest. Of 2026. Volatile. Bigger risk. To the. Bigger risk to the rally. Recession or inflation? Inflation. Leave it there. Matthew Tuttle, really appreciate it. Thanks so much for joining us. Thanks for having. Me. That's Matthew Tuttle, CEO and CIO at Tuttle Capital Management. If you enjoyed this street talk. Check out our full interview. With Paul Meeks. He outlines the best tech stocks to buy right now and has some different picks than Matthew.