We’ve heard about them for months…
“AI bubble” fears.
And some of the biggest names in the industry look ready to burst.
But we don’t hear much about the amazing trading opportunities that come from this massive money shift…
Some of 2025’s strongest AI names are trading way off their highs this year. $2 trillion was wiped from the software sector in early February alone.
The losers are self-identifying.
I’ve seen this a thousand times. Stocks go parabolic, the promoters pound the table, and then the rotation starts.
And that’s the key: Rotation.
This money doesn’t disappear. It moves.
Last week, a small-cap stock exploded +400% over multiple days after it announced a partnership with one of the biggest names in operational AI.
And this stock is still in play…
My Top AI Watch This Week
When large-cap AI names bleed out, that money has to go somewhere.
Small-cap AI stocks are first in line. Traders who know where to look are already cashing in.
The #1 stock I’m watching right now is Rackspace Technology (RXT).
On February 18, RXT announced a strategic partnership with Palantir Technologies Inc. (PLTR) to deploy and operate Palantir’s AI platforms at enterprise scale.
PLTR is still trading 34% off its highs in 2026 … but RXT spiked 407% after the news came out.
It hit a high of $2.08 per share on Friday, February 20.
And when a stock spikes 400%, it doesn’t take a perfect trade to pull 20%-30% gains.
That’s the plan…
• Focus on cheap stocks that can spike +100%.
• Use popular patterns to get in and out with quick gains.
• Move on to the next runner.
How I Trade These Setups
I’ve used the same patterns for over two decades.
They’re the same patterns my millionaire students use to trade.
And they don’t change.
Human beings behave similarly when they’re stressed. Like when they have money in a penny stock spiking 400%.
As a result, these patterns will continue to exist in the market, in tandem with fear and greed, until the end of time. Or at least until humanity stops trading.
For example: RXT already followed a perfect breakout setup:
Source: StocksToTrade
RXT chart multi-day, 1-minute candles.
These patterns rely on key areas of support and resistance that come from past price action on a stock chart.
That’s the point of identifying key price levels.
The high at $2.08 per share from February 20 is our new resistance and breakout level.
Then, watch where prices stabilize during consolidation: that’s your support.
The tighter the range, the more explosive the next move tends to be.
✅ Know your levels.
✅ Recognize the pattern.
✅ Take your profits into strength.
✅ And move on.
Don’t marry the move. I don’t care how good the story sounds or how loud the promoters get.
Price action is king.
When the move is done, you’re done.
The question isn’t whether there will be more small-cap AI spikes in 2026…
The question is how you’ll trade them.
If you have any questions, email me at [email protected].
Cheers,
Tim SykesEditor, Tim Sykes Daily
