Despite promises to make America great again, President Donald Trump’s decision to impose a sweeping set of tariffs — an event he termed “Liberation Day” — rattled global markets. Among the hardest-hit sectors was technology. Thanks to the interconnectedness of the global supply chain, aggressive trade wars are simply bad for business, at least in the near term.

Granted, the idea is that over the long run, the Trump tariffs should protect and bolster domestic enterprises. Investors will understand the efficacy of the measures soon enough. In the meantime, there are plenty of tech giants that have suffered heavy losses. It naturally raises the question: which names will rise above the muck?

One bullish candidate to keep on your radar is Pure Storage (PSTG). A specialist in all-flash data storage hardware and software products, Pure Storage represents one of the unsung heroes of artificial intelligence, delivering reliable, high-performance solutions for hyperscalers. These entities are giant cloud service providers operating massive data centers that demand gargantuan storage loads to handle advanced requests, such as AI training, analytics and real-time applications.

If cost were no consideration, all-flash solutions would be the most desirable for machine intelligence. In particular, latency with the flash format is near instantaneous, whereas hard disk drives (HDDs) are comparatively glacial. Further, rapidity in the storage pipeline keeps graphics processors running as efficiently as possible.

For the longest time, though, flash memory was simply too expensive per terabyte compared to HDDs. But as AI becomes further ingrained into society, poor performance is simply not tolerated. In addition, advanced technologies have improved protocol efficiencies, enabling a wider adoption of all-flash solutions.

With Pure Storage ranking among the leaders in flash memory, PSTG stock — while it looks ugly now — offers an enticing entry point for buy-and-hold investors.

Death Cross Brings Life to PSTG Stock

Along with the devastation that the new levies sparked, PSTG stock broadcasted a pattern that generally brings trepidation to mainstream investors: the dreaded death cross. Describing a circumstance where a shorter-running moving average slips below a longer-running one — typically the 50-day moving average below the 200 DMA — the death cross symbolizes a clear warning.

Continuing to buy into a security flashing this signal is risky as it may mark the beginning of a serious downturn or even an outright bear market. At the same time, the death cross offers a contrarian pull. Essentially, by the time an investor sees the negative intersection on the charts, most of the bad news could be baked in.

It’s here where many financial publication firms engage in a frustratingly opaque dialogue. Should the death cross be interpreted counterintuitively or at face value? For many publications, the answer comes down to…who knows?

From my perspective, the best way to answer the above inquiry is through statistics. Over the past decade, PSTG stock printed eight death crosses, listed below (along with the equity’s closing price at the time of the crossing):

• 22-Dec-2016: $11.58
• 26-Nov-2018: $17.65
• 10-Jun-2019: $15.61
• 20-Mar-2020: $9.73
• 2-Jun-2021: $19.20
• 10-Jun-2022: $26.07
• 3-Mar-2023: $24.56
• 18-Oct-2024: $57.07

Barchart Premier members — who have access to historical data — will note that one month following the death cross flashing, PSTG stock has a 62.5% chance of rising. The average positive return clocks in at an impressive 8.36%. Over a three-month period, this success ratio rises to 87.5%, with an average positive return of just over 31%.

However you want to play it, whether as a trade or an investment, these projected performance stats will make you stand up and take notice.

Leveraging Market Intelligence for Potentially Outsized Returns

For market participants who wish to secure the biggest return possible over the shortest period of time, they may want to consider the 40/45 bull call spread for the options chain expiring Aug. 15. This transaction may provide enough breadth for the potential rebound effect of the death cross.

Should PSTG stock hit the short strike target at expiration, the maximum reward would come to be the difference in the strike prices (multiplied by 100 shares) minus the net debit paid to enter the transaction. Nominally, the reward would be $300 or a payout of 150%.

According to Barchart’s profit-and-loss screener for this call spread, part of the reason why this trade is so potentially lucrative is the low probability of profit. At 37.9%, market makers assume a high likelihood that your wager will fail.

However, under the context of the death cross flashing, I would argue that PSTG stock has a solid chance of rising above breakeven, which in this case translates to a price per share of $42. In only one instance, three months removed from the death cross, did PSTG fail to rise.

As a contrarian bull, I really like these odds — odds that the market makers haven’t reflected in their risk modeling.