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Another painful week for tech and growth, I might as well just copy and paste what for last week's "What to Watch" -
"Last week was a painful one as the Nasdaq, tech and semiconductors retreated the most as bond interest rates rose and money shifted into post-pandemic stocks. Towards the end of the week, even the Dow Jones took a hit. Friday we saw bond yields cool off and the $QQQ saw a half of a percent gain."
The ten year treasury is up more and it is seemingly having a negative affect on our beloved tech and growth stocks. The only thing up is financial sector, which would supposedly benefit from high interest rates, and oil. Don't be fooled, in my opinion, this is a sign that our current dip will be short lived.
Financial and Energy will be most disrupted with the new innovation.
This is a good time to buy tech, growth and innovation.
We are not in a bubble. (my opinion)
The current length and slope of the September dip, which this cool off is being compared to all the time, is the same now. We might be in for one more red day if this is somewhat correlated. It might not be - take it with a grain of salt.
Nevertheless, keep this in mind.
The retail investors, the mom and pops, and the working mothers that are looking toward the stock market for secondary income will be the most affected from a dip like this. Eventually many people can't take the loss anymore and will cut their positions at the bottom. They can't afford to lose everything and not be able to feed their kids, meanwhile hedge funds and money managers seem to have endless money to keep buying the plummeting market.
I do feel like there is an uptick in online sentiment about buying tech and growth. However, I do believe that the ten year treasury will hit 2%. As you can see from the TNX chart below, the yield goes up and down periodically. This isn't something new and or surprising.
What is surprising is the overall agreement that this is somehow correlated to the decline in tech. Below is the QQQ (orange line), or NASDAQ ETF, that is tech heavy and the candle stick chart is the TNX (10 year treasury yield). As you can see, sometimes the QQQ goes up and the TNX goes down. Sometimes both go up or both go down. And sometimes QQQ is down and the TNX is up.
The argument is that these tech companies will be hurt from rising interest rates, but I wouldn't expect it would be so much. Opening the economy will help travel and leisure and the in person retail will improve. However, I don't buy for a minute that now that consumers are use to ordering everything online due to lockdowns, that they won't continue to do this and go back to big box, leaving behind online shopping as the past. This time is over, in my opinion. Covid helped innovation and disruptive stocks get some sort of a jump start and I don't see this rolling back. Look to the future for what will disrupt the norm now. Look for things that will totally change how we live everyday life. Don't follow benchmarks of the past.
If you haven't already listened to Cathie Wood's interview from March 5th, I highly recommend it.
With that said, these are the tickers I'm looking to next week.
Continuing the Dip:
$ERX: ERX provides 2x leveraged exposure to the S&P Energy Select Sector Index—a market-cap-weighted index of US energy companies from the S&P 500, heavily-weighted towards the handful of firms that dominate the energy sector. With oil prices rising since late last year, there is a decent opportunity to buy this for short term play to capture some profits during this dip. Not to mention $ERX has a dividend yield of 1.24%.
$GUSH: GUSH seeks to deliver 200% of the daily performance of the S&P Oil & Gas Exploration & Production Select Industry Index. Unlike State Street’s XOP—an unlevered fund tracking the same index—GUSH uses over-the-counter derivatives to achieve its objective. $GUSH doesn't provide as good as a dividend so I am bias toward $ERX. I've noticed that the performance over the past two weeks has been more or less the same.
$FAS: FAS provides 3x leveraged exposure to the Russell 100 Financial Services Index—a subset consisting of large-cap financial companies from the Russell 1000 Index. For example some of the top holdings are Berkshire Hathaway, JPMorgan, Bank of America, Wells Fargo, Black Rock, and Goldman Sachs. With rising bond yields the financial sector has been doing pretty well over the last two weeks. If the dip continues into next, I expect this to be a good short term play. More so it is not bad to have exposure to the financial sector in your portfolio.
Buying the Dip:
$TSLA: Tesla, the leader in the Electric Vehicle, battery and autonomous driving industry, is having a 30% sale and Cathie Wood's Ark Invest is buying it up. Remember, only buy the dip if you can see yourself holding these stocks for 5-20 years. If so, then it isn't a problem to see them fall a little. $TSLA is holding up on the 180MA, usually a very strong support. Let's see what next week has in store.
$BUZZ: VanEck Vectors Social Sentiment ETF (the “Fund”) seeks to track as closely as possible, before fees and expenses, the price and yield performance of the BUZZ NextGen AI US Sentiment Leaders Index (the “Sentiment Leaders Index”). I think this new ETF can hold up rather well during a dip and hopefully capture good growth. It is to new to perform TA on, but I'm interested in buying $BUZZ's top holdings anyway. I can't find any major 'meme stock' holdings in it.
$SOXL/$TECL: Both of these 3X bull ETFs have obviously taken huge hits over the last two weeks. That doesn't scare me off, and in fact I will be buying more. Not often do we get such chances. With such huge dips, that only means there is more room for growth going forward. Eventually the 10 year will get priced into the market and growth, tech and innovation will have money flowing back into them.
$ARK Invest ETFs: Most of the ARK ETFs have also approached the 180MA on the day candle stick chart. I believe that this cool off will be short lived and this provides us a great chance to buy into innovation. I wouldn't invest my entire portfolio into ARK ETFs, however, I am very interested in DCA into more LEAPS on these very soon.
$SPCX: SPCX is the first actively-managed Special Purpose Acquisitions Corporations (SPACs) ETF in the market. The fund seeks capital appreciation by holding a broad portfolio of SPACs or “blank check” companies and firms that have completed their initial public offering (IPO) within the last two years. I've invested in a lot of SPACs year to date, and there is a lot of information to digest, remember, and act on. Depending on the management, this could make that all very easy. After all, SPACs are beating the S&P500. Tread carefully here! I recommend dollar cost averaging only a few shares per day.
$RBLX: Roblox (NYSE:RBLX), an online gaming platform created in 2004, allows users to design and create multiplayer games and share them with friends and other users. Roblox offers a free-to-play multiplayer program supported through in-game purchases using “Robux,” the platform’s digital currency. There is a lot of excitement about this IPO. I will be watching it closely. A lot of times early investors take this time to sell off shares.
As for the 'buying the dip picks', I'd dollar cost average into them every other day, no matter up or down. The 'continuing the dip picks' are my short term plays that I'd sell off partial or all, after the 10 year is priced in.
Note: Risk (1 out of 5) is my opinion of how risky the stock and these plays are; 1 being the lowest and 5 is the highest.
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Disclaimer: The comments opinions and analysis expressed herein are for informational and educational purpose only and should not be considered as individual advice or recommendations. Prostockadvice.com is not responsible or liable in any way for opinions expressed here. This is not meant to be financial advice as we are not a licensed financial advisor.