Huge profits thanks to a headstand

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  Martin Raab
  Investment-Stratege

The conventional narrative surrounding AI shares is simple: artificial intelligence is the next big thing. Companies operating in this sector are set to achieve phenomenal record profits. As a result, in April and May – just a few trading weeks ago – countless tech shares with AI exposure virtually skyrocketed. Both major blue-chips and “nobody stocks” soared rapidly thanks to massive buy orders on the share markets. Intraday price gains of 20% or more were not uncommon. As a result, both individual shares and relevant indices, such as South Korea’s KOSPI, recorded gains of 60% or even 300% within three to four weeks. It’s all about being in the game! Retail speculators, in particular, fuelled the frenzy massively.

However, anyone who looked closely at the year-to-date charts and switched off the financial news channels inevitably began to ask questions. Does it really make sense to buy a share or an index that has already skyrocketed? From then on, bold traders with a free spirit cashed in – thanks to short Mini-Futures on, for example, the hyped memory card manufacturer SanDisk or KOSPI. The derivatives market offers first-class opportunities. With skilful trading, it was possible to achieve counter-cyclical returns of 100% and more within a very short time.

Speaking of time: the timing for taking profits as a “shorty” is now ripe. Good news for anyone who missed this opportunity: provided the recovery trends of the corrected high-flying shares (including SanDisk) continue, technical “double tops” will soon emerge on the charts. Then the headstand with Mini-Shorts and the like could start afresh, with risk under control.