APLD faces downside risk; breaking below $23 could lead to a drop to $19-$20 driven by AI slowdown/valuation concerns.

Stocks in focus for today are Applied Digital rose 3.95% in pre-market trading on Thursday after posting better than expected financial results for the first quarter.

Take a look. Uh APLD is one we're talking about. It had earnings. So it's coming in. It's a post earnings play. Stock down from a high of 48. I got butchered in this after it being one of the best stocks on the way up.

I was in it below 10 or I think definitely below 12. Traded it all. No, definitely below 12. Anyhow, traded it all the way up. First time I traded it was like at four when it was getting hit on earnings and I was going to the sphere in Las Vegas.

Anyhow, went all the way up to 48. Came back down. Now it has earnings. Interesting. I find this to be interesting right now because it's just a it's kind of flat. You never see a stock flat on earnings.

It's like and I don't know what that means, but like what do you think is possible breakouts upside down side?

this is in that basket of stocks that just went on one of those crazy percentile year-to-day return. um you know these NeoCloud names you know they like this isn't that same basket as I and Hut and uh Cipher and you know certainly part of it is is you know the AI buildout is going to be beneficial for companies like this and when now with higher interest rate environments um the concerns of an AI slowdown uh this is where valuation concerns come into play this is where growth stocks get hit far more harder than let's say like the hyperscalers will.

And this is on the cusp right for me of a breakout to the downside which is towards uh breaking down below 23 that opens the door for a revisit down to 19 and 20.

And this is where we have to find retail traders because going on for nearly a year this has been the accumulation zone. This is where retail traders Wall Street had just been slowly buying up this name, accumulating shares and you know right now based on pre-market action uh we had a little bit of a move up.

Uh I think that the fade off right now is more attributed to the markets um and how the markets have moved lower. It looks like at least for the time being it's trying to react at 2326.

If I break this down into even a little bit more of a micro time frame, uh let me just maximize this. Yeah, you could see that, you know, this was the uh print low of uh the earnings reaction and buyers are immediately coming in referencing that level and that's a great sign.

Now, it's a great sign if it holds. If there is downside pressure and this breaks, that means that this could have that breakout potential to test that 20 evens price. And that's going to be a really key level.

Even though that 19 is that 52- week low, that $20 was a defensive level. And more importantly, it's a psychological level.

So I think right now it's really important at least if um we're looking to the upside that this price 2326 remains a hold you know not only today but going forward and like I said if it does it just becomes what it's been doing which is kind of that rinse wash repeat and just uh regurgitation in the last 3 months of going back and forth.

Uh the breakout north is just getting above the 200 day moving average. I know that you uh look at a lot of these uh smaller micro caps. We see explosive breakouts when they get above the 200 day uh moving average on the daily chart, especially if it's a high val move.

Um if it's a trendbased move, we actually see trends tend to accelerate once they get across over this threshold because more and more pe people get alerted to the news. more and more people are interested in the per performance and the demand.

Um so you know it's unfortunate that it's applying a lot of pressure to the downside here. You know you think about like a brick wall and I say this to my room all the time. Well you know a car you know could hit that brick wall you know once the brick wall holds and the car obviously sustains a lot of damage.

But if that car keeps reversing and keeps going into this brick wall, well eventually, you know, obviously the car doesn't break down, that brick wall will give way. It'll crumble and then the car will just blast through.

And that's kind of what's happening here. There's just a lot of a lot of pressure, but there's certainly at this point, you know, someone or a lot of individuals or a lot of firms in Wall Street that are more than willing to accumulate uh retail traders are kind of trading this in that rinse wash.

It's going to keep working until doesn't um approach. And that's why today with news, you know, we're seeing the defense of this price. That's a good sign. And that's why if it breaks through this level, I think that there could be a little bit of velocity and that you know,

what are the key numbers? 2320 is a is support. >> Yeah. Well, I think 2326 is the key price. I think 23 in general is going to be that key just even clean number. I think they slam it through that price then it's an easy 10% move to the downside minimum.

So down straight to 20. Maybe it'll be defensive and bounce at 20. Um that's what happened right around here. Uh the low of uh March 30th was shockingly $20 even uh right here.

This low that was literally $20 even to the penny.

So like I said, that for me is that key psychological moment. So if it breaks here, then we would expect it to come down here. And if it breaks that, we would expect it to come down there minimum.

So, and so 23. So, what's the number on the upside that it could break out of? >> Uh, it's way up there. I think the initial breakout is going to be above 29. >> So, would you >> I think I think the sustainable breakout would be above 32.

No, I it has to hold 23 for me. I I wouldn't it would my for me the shift right now I would be bullish looking for the play. This is a lowrisk opportunity. You know you're not allocating much.

We've seen the move usually be in the range from 2 to4 if if it holds this 2324 range. Okay. So I like this as a lowrisk highreward upside play. If it breaks down, then I'm looking for a momentum based trade and seeing just, you know, just seeing if there's a little bit of velocity, if there's demand more centered on the seller side.

I mean, quite honestly, it could break that that that 2326 and just have a small pullback and jump. But if the market is bearish and we start breaking down in a gap and go day, this stock breaks this 2326 level and then powers through 23 and I see velocity.

It just for me it's just like a I would be just looking for more of a lowhanging fruit momentum play to the downside and probably watching it on a really short time frame like a five minute 3 minute and just seeing if the trend sustain sustains and if it does I'm then I know that I could try and ride this out to $20 and you know there's there's it's a it's a great situation if you're willing to play both sides because there's a great opportunity where history wants to repeat itself.

And then, you know, like I said, these are basing patterns. And if it breaks down, then I know that the breakout potential could be in play. Especially, especially the most notable thing to look for, Adam, is if it breaks, comes back to 23, and the buyers that are trying to buy in get trapped, that's just going to be more fuel for the fire as buyers start realizing they're getting trapped, and then they panic, sell out of their shares.

an APLD now starting to move. Looking like looking like it wants to I'll bet this thing's 25 at the open and I saw some people are long in the chat post earnings. We'll we'll see.

But I I like the way it's trading um now starting to move with 30 minutes to go in the thing.

but um APLD taking up.

Um, and then what what we want to get ready for today, what I'm going to look at is APLD. Um, APLD is post earnings leaning up. I don't know. I don't know. I'm anxious to see the first move.

We have 7 minutes till the market opens and we'll see um we'll see whether this shoots higher or come back down. We got a good breakdown from Charlie. The next stop on the way up would be 29. Uh the support on the way down would be 23.

APLD is posted a major quarter 1 revenue beat and showed rapid AI data center expansion, but the markets is also focused on heavy debt funding and capital intensity. The company reported 341.9 million in revenue, signed large long-term hypers scale leases, and raise financing to support new capacity. while shares were also pressured by broader concerns around AI in AI infrastructure funding.

the other thing is that um I think I saw something where it says on Benzinga Pro where it said I put in AI as a search here APLD as a search and it said APLD CEO sees scarcity value driving AI data data center lease rates by over 15%. % need and maintains buy lowest price target to 70 apply digital's demand is near maximum that's interesting

But I do need a plan in APL days. I I don't really want to chase this up open, but I do think there's going to be some trading to be made here. I just got to figure out which direction.

And and I love the way I could put in APL and it gives me um it gives me all the news right there. That's pretty cool.

All right, let's see. APLD. What's the first move? Does it go test the 23 or does it go back down? We'll see.

I'm watching this APLD. I just want to see what that first move is. All right, I'm going to buy a put in it because Charlie got me thinking that psychologically they might want to test that 23 level.

So, I'll take one shot to the short side, but maybe it doesn't go down right away. So, then also maybe I take one shot to the long side. So, I just bought one call, one put, and I'm just looking for an extreme move either way. Either it runs up or it runs down.

that's that's what I'm looking at this morning. I want to see which way it goes. What I buy 2550 call 23 put my thinking is that one of these becomes worth 90 cents which outweighs the 30 cents I'm risking that one of these is like Yeah, we'll see which it is.

This is just a short-term trade on it right now because I think it's going to move. So, I have a call and a put, but we'll see.

Yeah. Yes, Brandy. I'm thinking it either makes a power move up. What would the levels try to give us? 23 or 29. So, I'm thinking one way or another we get some kind of extreme move, you know.

let's see. What's the low of the day on APLD? 2363. Let's keep an eye here. If it hits that low, right, could be like a real quick sell some at 55 cents on the puts for the 23 puts.

Okay. Wow, there we go. right through the lows on APLD. It's crazy when you put in an offer like far away and then the next thing you know you are the offer. So, I'm about to be the offer in APLD, the 55 cents in the options.

I don't really want to provide support. I think we could go lower. So, I'm moving back a little bit. We'll see what they're doing.

let's see this. APLD APLD. The only thing I did wrong was the call. these option prices 2350 APLD right now possibly looking like it could drop through another low. We'll see. We will see.

Sorry, I'm just looking to see if I could what I want to do with this order right here. I'm going to see if 47 cents gets filled. Oh, just missed it. Darn. All right, it's got sale for 42 cents for some of the puts.

Where did I buy those? 34 cents. That's not so good. But I have other ones, so we'll see. But now looks like it's fighting starting to fight up a little bit.

volumes in the calls for APLD so far today. Okay. We had good guests on this morning. Really good guests. High quality guests. We were ready on APLD. Nothing really going on.

well, for those of you who pay attention to the VWAP, APLD is below it.

We talked about APLD. He said 23 is the level to watch. We didn't get caught up in the initial up move. We're sitting on puts right now. If it is to break down, we could make a good pop in that one.

Um, so good strategy there with numbers to watch.