The Insider Report: Bears Can’t Hibernate in

the Spring
Market Overview
Bears are shell-shocked right now as the equity market’s short squeeze continued. Growth
stocks are performing well, but we saw industrials take leadership last week, which isn’t a bad
sign. The Nasdaq led the way higher, showcasing the market’s risk appetite near-term. It finished
up 3.42%. The Dow Jones Industrial Average followed, finishing 3% higher on the week. The S&P
500 was up 2.92%. GDP came in lower-than-expected as recession concerns swirl, but the labor
market is holding up alright. Crypto had a decent week again as we saw capital come back into
the Dollar some. Crude oil and commodity prices are still subdued for now.

Stocks I Like
MicroStrategy (MSTR) – 24% Return Potential

What’s Happening
• MicroStrategy Incorporated (MSTR) is a leading business intelligence company, focused
on providing enterprise analytics software and services, with a significant emphasis on its
substantial Bitcoin holdings as a core part of its corporate treasury strategy.
• Despite the company’s investment in Bitcoin, it still has negative earnings. Its latest
quarterly results showed revenue of $120.7 million, but lost $708.51 million.
• This valuation on MSTR is high, but the stock price has been delivering. Its Price-to-
Sales is at 153.41 and its Book Value is at 67.80.
• From a technical perspective, MSTR broke out from a saucer formation. This implies that
an acceleration of upside momentum is in the cards.

Why It’s Happening

• MicroStrategy’s aggressive Bitcoin acquisition strategy continues to set it apart as the
premier “Bitcoin proxy” on public markets. In late April 2025, the company completed
another major purchase, adding $1.42 billion worth of Bitcoin to its already massive
digital asset treasury. This not only deepens its leverage to Bitcoin’s upside but also
 positions MSTR as a unique vehicle for institutional and retail investors seeking direct
exposure to crypto market surges without the regulatory hurdles of holding spot Bitcoin.
• MicroStrategy’s recent $722 million fixed-income offering restructuring, which brought
in new co-lead underwriters, signals management’s proactive approach to optimizing its
capital structure.
• Analyst sentiment remains cautiously optimistic, with a consensus “Buy” rating
supported by 15 buys, 7 holds, and only 2 sells as of late April 2025. The average price
target sits at $548.91, implying a robust 62% upside from current levels.
• The company’s business intelligence software division, while overshadowed by its
Bitcoin strategy, provides a stable operational backbone. This legacy business generates
recurring revenue and helps offset some of the volatility from digital asset holdings,
offering a degree of diversification within the company’s income streams.
• While regulatory scrutiny and unrealized digital asset losses have introduced volatility,
these risks are well-known and, in many cases, already priced into the stock. The
market’s ability to absorb negative headlines and maintain a positive consensus suggests
that investors are focused on the long-term potential rather than short-term noise.
• Analyst Ratings:
o HC Wainwright: Buy
o Barclays: Overweight
o Maxim Group: Buy

My Action Plan (24% Return Potential)

• I am bullish on MSTR above $325.00-$326.00. My upside target is $490.00-$500.00.

D-Wave Quantum (QBTS) – 51% Return Potential

What’s Happening
• D-Wave Quantum Inc. (QBTS) is a leading quantum computing company, focused on
developing and delivering quantum computing systems, software, and services, with a
emphasis on solving complex optimization and machine learning problems across various
industries.
• This company isn’t profitable, but they did report revenue of $2.31 million in the last
quarter. They lost $17.81 million in their most recent quarter too.
• Valuation in QBTS is elevated. Price-to-Sales is at 160.42 and Book Value is at 0.21.
• From a charting standpoint, QBTS is coiling within a massive ascending triangle pattern.
If it clears resistance, look out above.

Why It’s Happening

• D-Wave’s 4,400+ qubit Advantage2 processor, set for imminent release on its Leap
Cloud, offers 20-way qubit connectivity and “Fast Anneal” features to reduce noise. This
hardware leap enables solving larger, real-world optimization problems (e.g., supply
chain routing, drug discovery) that classical computers struggle with.
• A March 2025 Science paper demonstrated D-Wave’s quantum annealer solving a
materials simulation 1 million times faster than classical supercomputers. This milestone-
endorsed by academic peers-dispels skepticism about annealing’s practicality and opens
doors to government/defense contracts seeking certified quantum advantage
• Collaborations with Zapata Computing, Schrödinger, and Davidson Technologies
integrate D-Wave’s quantum systems into high-value verticals like pharma R&D and
defense logistics. These partnerships de-risk adoption for enterprises and create sticky,
long-term revenue streams through joint go-to-market initiatives.
• D-Wave’s FY2024 bookings surged 128% YoY to $23.9 million, with Q4 bookings alone
hitting $18.3 million-a 502% quarterly jump. This explosive growth reflects rising
enterprise adoption of quantum solutions for optimization problems in logistics, finance,
and AI.
 • Management forecasts Q1 revenue exceeding $10 million-more than 165% higher than
Q4 2024’s $3.8 million. This leap is driven by the sale of an Advantage annealing
quantum system, a milestone proving commercial scalability.
• QBTS could experience a massive short squeeze with nearly 17% of its floated shares
being sold short.
• Analyst Ratings:
o Needham: Buy
o Roth MKM: Buy
o B. Riley Securities: Buy

My Action Plan (51% Return Potential)

• I am bullish on QBTS above $5.80-$6.00. My upside target is $12.00-$13.00.

Market-Moving Catalysts for the Week Ahead

Is Bad News Bullish?

Last week’s GDP report from the first quarter came in worse than expected, but not by that
much. What’s most interesting about the GDP report is that if you account for the surge in
imports due to companies trying to front-run tariffs, it actually would have been a positive print.

To be clear, that’s not an attempt to put a positive spin on a bad report. The U.S. is on the verge
of a recession, but what this does is blow the path wide open for the Fed to cut rates soon. I don’t
think they’ll do it this week, but the June meeting seems to be a lock at this point.

This means that the market is starting to price in more liquidity. I’m going to share an important
chart on this front below. When liquidity rises, those sharp moves lower, like we saw in March
and April, become less likely. It could turn into a slow grind higher instead.

Are Tariffs Inflationary or Deflationary?

There’s no shortage of noise in this market, but in reality, that’s always the case. It’s why I’m so
adamant to readers about letting price guide one’s actions above all else. Because if you try to
trade on the headlines in this tape, you’re going to get burned.

One of the biggest assumptions a lot of the press makes when it comes to the idea of tariffs being
inflationary is that consumers won’t substitute for other goods and services. It’s why I have to tip
my hat to the European Central Bank, which has called tariffs a “deflationary demand shock.”

The problem is that the topic of inflation has become totally political. Back in Econ 101, it was
taught that raising taxes is contractionary economic policy, or deflationary. Let’s not forget that
tariffs are a tax above all else. I think the economy can tread water in this goldilocks inflation
scenario for now, but once the Fed starts printing again, that could all change.
Sector & Industry Strength

Since we’re starting the 5th month of 2025, I want to tighten up the timeframe that we’ve been
using on the sector performance rankings. It’s going to be year-to-date now, and it paints a
starkly different picture from what we’ve been observing in the past couple months.

Nonetheless, there are some important observations to be made with this new timeframe. First,
we have all defensive-oriented sectors at the top of the list – utilities (XLU), consumer staples
(XLP), and real estate (XLRE).

But the epic surge that we’ve seen in both technology (XLK) and consumer discretionary (XLY)
off the market bottom cannot be ignored. The more these sectors climb, the more compelling the
case becomes that a market bottom is complete.

1 week 3 Weeks 13 Weeks 26 Weeks

Industrials Technology Utilities Communications

Editor’s Note: Short-term momentum remains in favor of the bulls.

This Ratio is Key for Tech (Sector ETF: SMH/QQQ)

I’ll be straight up with you here – this market is going to live and die by the tech sector. When it
comes to tech, few of the advancements can happen without new processing chips. That’s why
the ratio between chips (SMH) and the Nasdaq 100 (QQQ) is so important.

If this ratio is rising, I view it as a risk-on signal for the overall market. If this ratio is dropping, I
view it as a risk-off signal for the overall market. It’s easy to see how well stocks performed
since this ratio’s rise in 2022, but it’s been struggling since last summer.
The best-case scenario for the bullish case now is that a false-breakdown occurred from the
falling wedge. But now we are dealing with a potential lower-high in the trend, which leaves the
door open for a steeper correction.

Are Miners Still the Discount of the Market? (Sector ETF: GDX/GLD)
The spot price of gold has captured headlines year-to-date, as it’s blown the wheels off the S&P
500 in terms of performance. But the real alpha from the sector won’t come from the spot price,
it’s going to come from the miners.

We’re looking at the ratio between gold mining stocks (GDX) against gold (GLD) here. Since
2023, one could make a strong argument that the trend in this ratio has been consolidating, but
mostly in favor of GLD.

Gold mining stocks have underperformed for years, but since December, they’ve actually done
better than spot gold. There’s the threat of a breakdown from the inverted saucer formation, but
if there was a false-move downward in December, don’t rule out this ratio ripping higher and
mining stocks dominating going forward.
Credit Needs Help (Sector ETF: HYG/IEI)
The stock market tends to dominate the headlines in the financial press, but the real action takes
place in bonds and the currency market. There are many ways to observe the bond market and
arrive at macroeconomic conclusions. I want to stay focused on liquidity here.

The chart below looks at the ratio between junk bonds (HYG) and 3-7 Year Treasuries (IEI). In a
healthy market flush with liquidity, this ratio rises as HYG outperforms IEI. But when liquidity
conditions deteriorate, IEI outperforms and the ratio drops.

Note the false breakout that occurred towards the end of 2024 and into this year. The flush in
liquidity accelerated during the market rout, and the big concern now is that the recent low
exceeded the one from July 2024, and we could be dealing with another lower-high on our
hands.
My Take:
Junk bonds are known for trading like stocks when it comes to volatility. Remember, the appeal
of traditional bonds is that they are more conservative and have less volatility, but the junk bond
innovations of the 1980s added a new element to the fixed income asset class.

To compensate for their higher risk, junk bonds offer higher yields. When the difference, or
spread between yields widens against Treasuries, it signals liquidity issues. The Fed watches
credit spreads carefully. It looks like Powell and company are going to be spurred into action
come June, especially if we don’t see improvement in this ratio.

Cryptocurrency
Bitcoin's technical picture has improved dramatically over the past few weeks as it confirmed a
decisive breakout above the critical $88,000-$90,000 resistance level. The price action has taken
on a classic stair-stepping pattern since the March lows, with Bitcoin establishing a series of
higher lows and higher highs - the textbook definition of an uptrend that shows strengthening
bullish momentum.

From a risk management perspective, the technical structure remains robustly bullish as long as
Bitcoin maintains support above the $92,000 level, offering traders a clear invalidation point.
After months of consolidation following the January highs, this breakout suggests that the path
of least resistance has shifted decisively to the upside.

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