Quantum stocks surged this week after NVIDIA Corporation (NASDAQ: NVDA) launched Ising, “the world’s first family of open source quantum AI models” on April 14.
Then something happened on April 15 that we’ve seen on every quantum sector run. And I believe it could signal the start of another.
The Big Picture
On Wednesday, a bunch of quantum stocks showed up on my Flux algo. All of them hit entries that afternoon. They were great trades, but more importantly they highlighted something we’ve seen before.
Every quantum stock run in the past two years started the same way. Right at the start of the run, buying volume increased on the heavily traded sector leaders. Now, that makes perfect sense.
But this is where it gets interesting. Specifically, buying pressure increased going into the close on the first day or two of the run.
Institutional traders and big investors try to “sneak” into these big positions in the afternoon. It’s almost like they’re building a position when “nobody’s watching.”
Why would they do that?
A lot of retail and even active traders focus on the morning and then leave for the day. So institutions tend to build their positions when it’s a little less active.
But there’s another reason.
If you or I want to buy 200 or even 2000 shares of any stock, we can initiate a position at any time. It’s not like we’re getting sniffed out by the algos or the market makers.
Now, if you’re buying 100s of thousands or millions of shares, you gotta keep those under wraps as much as you can. Because if not, you’ll influence the price of the stock.
If you buy 100,000 shares of a stock with a market order, that stock’s gonna spike massively because everybody’s gonna sniff it out.
So, they break it up into a lot of small orders. And they have to fill their position by the end of the day.
Now, if they haven’t filled the entire position coming into the close, it ramps up the urgency. They buy faster, which drives the price up.
This is exactly what we saw on Wednesday with the quantum sector leader featured in the watchlist below.
My Take
Create a new watchlist called “quantum stocks” and add the tickers below.
Then, trade the patterns. If they’re low-priced stocks, all the patterns apply. That includes weak open red-to-green, dip & rips, VWAP hold and RCTs. For bigger stocks, you won’t usually see RCTs.
Watchlist
Quantum sector leader IonQ Inc. (NYSE: IONQ) has been a banger so far this week.
Source StocksToTrade IONQ, 4/15-16/26
IONQ triggered the Flux algo on Tuesday and the Oracle algo on Wednesday.
Notice how the buying pressure increased going into the close on April 15.
Yesterday, it bounced off the key Oracle support level and reclaimed VWAP, trading sideways into the afternoon.
Other Quantum Sector Stocks to Watch
- D-Wave Quantum Inc. (NYSE: QBTS) signaled on both Flux and Oracle algos
- SEALSQ Corp. (NASDAQ: LAES) also triggered Flux and Oracle
- Quantum-Si Incorporated (NASDAQ: QSI) was a Rubicon Codex play
For my full quantum watchlist, join Daily Income Trader.
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On My Radar
- No Babel fish necessary: DeepL just released AI-assisted voice-to-voice translation. I think Arthur Dent would be proud.
- NASA plans to launch nuclear reactors into lunar orbit by 2028. Watch small modular reactor (SMR) plays.
- “Snake Bros” (yep, it’s a thing) keep getting bitten by their pets. Sometimes I just have to shake my head.