Themes likely setting up for a move higher
Its been a stock pickers/traders market since almost September 2025. The indexes are flat but certain themes like Memory, Optics, Defence, Semicap etc. drove significant returns since then.
While the index are still below most moving averages, the leading stocks started moving. For example, see the Optics sector - LITE 0.00%↑ , CIEN 0.00%↑ COHR 0.00%↑ , GLW 0.00%↑ FN 0.00%↑ barely lost the Moving Averages and already making the next leg higher. See LITE below. This is decent predictor of what we could expect from other sectors/themes and the broader market next week.
There are 3 themes that are setting up for a move next week that I am tracking:
(Note: This is not meant to be exhaustive list of themes nor names)
Memory - MU 0.00%↑ , SNDK 0.00%↑ , WDC 0.00%↑
Semicap - TER 0.00%↑ ACMR 0.00%↑ LRCX 0.00%↑ ENTG 0.00%↑
Defence - MRCY 0.00%↑ AVAV 0.00%↑ KTOS 0.00%↑
Its likely we will see Memory and Semi-cap go first followed by Defense. I will go into individual stocks and some additional small caps that could make significant moves here below.
Defence
I am watching several companies here and some are part of my LT Portfolio.
LPTH 0.00%↑ Important picks and shovels play for the Defense sector. Sitting right above the 10D and AVWAP. Can enter with a tight stop. This can easily go back to $15-16 quickly. I own this in my trading account and Long Term (LT) Account.
Look closely at the charts of AVAV, KTOS, MRCY , UMAC and LPTH. They are moving similarly. Pulled back, trended side ways and popped through that base and pulled back to the MAs again. This is a very common pattern how stocks move. We could see some more sideways move from here before the next leg higher. I will leave it you to learn more about these companies using your favorite LLM.
IRDM 0.00%↑
They provide a GPS alternative that is resistant to jamming. While Starlink could emerge as a competitor I think they should grow from here. Have this in my LT Portfolio but there could be a good trade here. Enter as it take out the range here ~23.5 with stop as Low of Day.
LASR 0.00%↑ Leader in laser weapons. Stock could go much higher from here if they get direct orders from the DoD. Have this in my LT Portfolio.
DPRO 0.00%↑ Looks like it is setting up for a move higher. Small marketcap so can make large moves. I plan to add if it pulls back to the $7.6 area and keep a stop around $7.3.
CVU 0.00%↑ Looks promising here for a trade. Its a choppy name but it is sitting right above the 10D MA. Can try to get in with a tight stop. Has several tailwinds. Its possible they will be partnering with RTX to make hypersonic missiles.
Top trade ideas here are $CVU, $IRDM and $LPTH. Will be closely watching the other names as well.
Materials
This is more picks and shovel plays which are important to the defense industry.
IPX 0.00%↑ The only US Titanium manufacturer and they have a very different process to make titanium and received several grants from the DoD. Ive been accumulating in the box region highlighted. Will add if it breakthrough this or exit if it goes under. As you can see this stock can make big moves. Its looking like it might to start a new one soon.
HXL 0.00%↑ They have a near monopoly on Aerospace grade Carbon Fiber which is much needed in space and defense. I own it in LT Port.
It broke out on Friday, If it comes closer to ~89.5 I will look to enter for a trade as well. This is the 30 minute chart. The box area is where I would like to enter if it holds up.
SOLS 0.00%↑ While not exactly defense related, this is an interesting name in Uranium enrichment. It is consolidating here after earnings. I own some in my LT Port.
Semicap
I’m no expert in semiconductor but hold several names here. Highlighting a few I think still have room to run.
TER 0.00%↑ Its up significantly this year and post earnings. But it looks like it still has room to run.
All these names are up significantly year to date but so is Hyperscaler CAPEX and these names will be the beneficiaries. Any slow down in CAPEX will rerate them lower so be aware of that. Currenly own all these in LT Port and TER and ACMR in trading account.
Memory
The entire sector seems ready to go follow optics and go higher. I own SK Hynix in my LT Port. You would need an IBKR account to buy it. It is listed on the Frankfurt exchange as $HY9H and trades at the cheaper price compared to the actual stock. You you are technically getting discount.
$MU, $SNDK, and $WDC- All 3 look like they are ready to move higher.
Another name I am watching is PSTG 0.00%↑ . Its been consolidating for almost 3 months now. Will enter if it takes out the 75 level with a low of day stop. Looks pretty interesting here.
Optics
Own LITE and CIEN in LT Port.
POET 0.00%↑ is one name thats lagging and hasn’t moved with the group and could follow through next week. Will look to enter if it goes higher than $5.75 with a stop at Low of the day. Strictly looking for a trade here.
I know I covered a lot of names here. If you don’t want to trade them add the ones I highlighted as LT to your portfolio. You can start with a small amount of exposure say 1% for larger caps and 0.5% of your portfolio for smaller caps and increase exposure if the stock continues to perform well.
I also share names I am entering or considering in the substack chat which is for paid subscribers. If you find value consider subscribing, its just $14 dollars a month.