“AI” stands for artificial intelligence. But it also stands for aggressive investing. And absolute insanity. Which is what some might have determined is a good description of this, the path of a suddenly popular stock over the past 9 months.
www.barchart.com In the time it takes to create and deliver a brand new human being, the stock market has delivered a very controversial situation, in the form of an early 2025 spinoff from Western Digital (WDC), known as Sandisk (SNDK).
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Any stock that goes from around $40 a share to nearly $1,000 in such a short period of time is going to create bulls and bears. For the latter camp, Thursday was a pivotal moment.
On April 23, a new tool arrived for traders looking to bet against the “infinite growth” narrative of the artificial intelligence trade. The launch of the Tradr 2X Short SNDK Daily ETF (SNDQ) is more than just another addition to the pile of leveraged inverse products. In my view, if we see any type of dot-com bubble redux, even a tiny position in SNDQ could end up being the best single holding return for just about any investor who owns it.
The flip side? You can lose your shirt in products like this. But only up to a handful of buttons. And that is what intrigues me about inverse 2x leveraged ETFs, the funds that exist to help investors exploit wildly overvalued stocks.
The timing of the launch is precision-engineered to coincide with a major shift in the sentiment surrounding SNDK, a company that has become a proxy for the AI NAND demand surge. After a meteoric rally that culminated in its official inclusion in the Nasdaq-100 Index ($IUXX) on April 20, SNDK is currently facing its first real test of price exhaustion. Or put more properly, the sugar high that often wears off.
Wall Street analysts love the stock. But they love just about everything, so that’s no help to me.
www.barchart.com For months, the bull case for SNDK was simple: the massive expansion of AI data centers required an unprecedented amount of high-speed NAND flash storage. This drove the stock to triple-digit gains and earned it a seat at the table with the tech elite. It was added to the Nasdaq-100 earlier this month.
SNDQ: Sell the News or Just Keep Buying?
Now, the launch of SNDQ allows traders to capitalize on a classic “sell the news” cycle. Historically, the period immediately following index inclusion is marked by institutional profit-taking as the “pre-inclusion” buying pressure evaporates. By offering -200% daily exposure to SNDK, traders now have a way to press the downside as the hype cycle meets the reality of overbought conditions.
That said, despite a selloff Thursday, SNDK is not looking more than mildly overvalued technically. But this is a stock that has limited trading history.
www.barchart.com A 2-week stay around $900 a share is not exactly my definition of “the pause that refreshes.” This is still a helium-like stock. And like a balloon made of that gas, gravity eventually wins. That makes a case for SNDQ.
Chart courtesy of Rob Isbitts via PiTrade.com The ROAR Score for SNDK is tipping off some potential danger that the traditional technical chart does not. A stock like this is bound to create a “Chicken Little” persona out of any technical indicator. Note the many short bursts of “red zone” time that did not turn into big losses. And the stock is up so much so quickly, even the more bullish moves still translate to yellow (neutral risk) status, not green (lower risk).
This stock trades more like an option in some ways. Very high volatility. But the current score of 20 is historically a sign that something is awry here. A 30 score is more like a tap on the shoulder. 20 is more like raising your voice to interrupt. We’ll see how it turns out.
And while SNDQ does not have the runway to have a ROAR Score yet, the important thing to remember is this: with that new ETF now listed, SNDK bears have a new sandbox to play in.
Rob Isbitts created the ROAR Score, based on his 40+ years of technical analysis experience. ROAR helps DIY investors manage risk and create their own portfolios. For Rob’s written research, check out ETFYourself.com.
On the date of publication, Rob Isbitts did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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