5 Big Tech Names to Watch
SPY had a big gap and go on Thursday, giving some $385 to be long against. It cleared $390.39 to see $399.35 on Friday. We’ll see if it can digest above $393.61 to build a new flag to keep this active sequence going. The 20 day is above with a gap that might get filled up to $408ish. Now let’s dig into 5 big tech names on my radar: AAPL participated as everything ignited post-CPI. Now we’ll see if the $144 area holds to keep some commitment. The 200 day could be hard to get through above with Friday’s high at $150.01. TSLA’s bounce wasn’t great. After making a low of $177, it hit $196.52 on Friday. See if it holds $192-$194 to keep the oversold bounce going. It will be hard to get and stay above $204-$210 in the week ahead. MSFT had a better bounce pre-CPI and then was stronger than most names. It hit $247.99 Friday. Now see if it can digest above $241. AMZN had a decent bounce but these things need so much time to rebuild. Now see if it can hold the $96 area to stay a bit constructive. There’s a big gap above near $104. On Friday it hit a high of $101.19. GOOGL responded pretty well. Some news of Insider buying helped. Now see if it can digest above $93.92 to stay constructive. Scott Redler Positions Disclosure as of 2022-11-14 at 9.35.55 AM:
Continue Reading -->Coffee With Greta: Stocks Slip While Yields Pop
DJIA Futures: -31 (-0.1%) SPX Futures: -10 (-0.2%) NASDAQ Futures: -59 (-0.5%) Good morning friends! Futures are slipping as traders gear up for a busy week of earnings and economic data. Let’s get right to it! Yields Pop Higher Treasury yields are rising again today after the bond market was closed on Friday. The 2-year yield is up 9 basis points to 4.41% while the 10-year yield is up 4 basis points to 3.88%. Traders are looking ahead to the release of the New York Fed’s Survey of Consumer Expectations at 11:00 a.m. ET today. That survey includes consumers’ 1-year and 5-year expectations for inflation. Busy Week of Data Traders will get more insight into the inflation picture this week as well as some other key data on the housing market. The Bureau of Labor Statistics releases its October producer price index Tuesday morning while the New York Fed releases its November manufacturing index at the same time. Then the Commerce Department reports October retail sales Wednesday morning. The National Association of Homebuilders November sentiment index comes out later on Wednesday. The Census Bureau then reports October housing starts and building permits Thursday morning. And finally the National Association of Realtors reports October existing home sales on Friday. Key Retail Earnings Ahead The biggest retailers in the U.S. report Q3 earnings this week. Walmart (WMT) and Home Depot (HD) report ahead of the open on Tuesday. Then Target (TGT) and Lowe’s (LOW) report Wednesday morning. Macy’s (M) and Kohl’s (KSS) report Thursday morning with Gap (GPS) after the close. And then Foot Locker (FL) on Friday morning. Retail earnings have been key to gauge the impact of inflation on consumer activity. The market will be focused on future guidance from these retailers. Oil Prices Drop Amid China’s Covid Surge Oil prices are falling today on demand concerns as Covid cases surge in China. West Texas Intermediate crude futures are down 1.2% to under $88 bbl while Brent crude futures are down 1% to just under $95 bbl. Beijing and other big cities across China reported record new Covid infections today after easing restrictions last week. Tyson Tops Q4 Sales Expectations Tyson Foods (TSN) shares are up 1.7% ahead of the open after reporting stronger than expected Q4 sales. Here’s how the meat processor’s results compared to analysts’ expectations: Adjusted EPS: $1.63 vs $1.70 expected Revenue: $13.7 billion vs $13.5 billion expected The CEO said, “We delivered record sales and earnings for the full year, which was supported by our diverse portfolio and continued strength in consumer demand for protein.” Average prices rose 5.1% overall with chicken prices jumping 18.2% while beef prices fell 8.2%.
Continue Reading -->Coffee With Greta: Extending The CPI Rally
DJIA Futures: +160 (+0.5%) SPX Futures: +21 (+0.5%) NASDAQ Futures: +69 (+0.6%) Good morning friends! Futures are higher, extending the market’s big post-CPI rally. Let’s get right to it! Biggest One-Day Rally Since 2020 Stocks are rising again today after the major indexes skyrocketed on Thursday following the cooler-than-expected CPI. The Dow Jones jumped more than 1,200 points or 3.7% on Thursday. While the S&P 500 surged 5.5% and the Nasdaq skyrocketed 7.4%. It was the largest one-day gain for all three since 2020. ARKK’s Best Day Ever ARK Innovation ETF (ARKK) shares are slipping 0.2% ahead of the open after logging its best day ever on Thursday. The fund surged 14.5% as tech stocks rallied. Its biggest holding Zoom Video (ZM) jumped 14.5%, while Tesla (TSLA) rallied 7.4%, and Roku (ROKU) surged 15.4%. Trading volume also surged with more than 48 million ARKK shares being traded on Thursday vs the 30-day average of about 25 million. The fund is still down 61% YTD. Bond Market Closed The bond market is closed today in observance of Veterans Day. The closure comes after Treasury yields plunged on Thursday. The 2-year yield ended the session down 33 basis points at 4.32% while the 10-year yield dropped 32 basis points to 3.82%. Investors poured back into bonds after the CPI showed inflation pressures may have peaked. That hope also caused traders to lower their expectations for the next Fed meeting. CME Group’s FedWatch Tool shows 85.4% now anticipating a smaller 50bps hike at the December 14 meeting. Mortgage Rates Tumble Below 7% Mortgage rates fell sharply alongside the 10-year Treasury yield Thursday. Mortgage News Daily shows the average 30-year fixed rate plunged 60 basis points and settled at 6.62%. That was the largest one-day drop since the start of the pandemic. Oil Prices Jump As China Eases Covid Restrictions Oil prices are rising today after Chinese authorities eased some Covid restrictions in the country. West Texas Intermediate crude futures are up 3.2% to over $89 bbl while Brent crude futures are up 2.9% to over $96 bbl. The changes include shorter quarantined times for international travelers and those who’ve been in contact with an infected individual. China also narrowed its contact tracing to just close contacts of Covid infections.
Continue Reading -->Coffee With Greta: Inflation Party on Wall Street
DJIA Futures: +832 (+2.6%) SPX Futures: +119 (+3.2%) NASDAQ Futures: +438 (+4.1%) Good morning friends! Futures are surging after the October CPI came in lighter than expected. Let’s get right to it! Inflation Cools More Than Expected U.S. inflation pressures cooled more than expected in October, in a sign the Fed’s rate hikes are starting to impact prices. The Bureau of Labor Statistics consumer price index rose 0.4% monthly last month and 7.7% year over year. That was cooler than economists’ expectations for a 0.6% monthly gain and 7.9% annual jump. That cooldown came despite higher food, gas, and rent prices. Grocery prices rose 0.4% monthly, 12.4% annually. Gas prices were up 4% monthly, 17.5% annually. And rent prices rose 0.8% monthly, 6.9% annually. Utility gas prices tumbled 4.6%, used car prices fell 2.4%, and apparel prices were down 0.7%. The core CPI, which excludes food and energy prices, was also cooler than expected. That index rose 0.3% monthly and 6.3% annually vs 0.5% monthly, 6.5% annually expected. Binance Backs Out of FTX Deal The second-largest crypto exchange in the world is now on the brink of collapse after Binance ditched its plans to acquire FTX. The company reversed course on Wednesday after announcing a nonbinding deal on Tuesday to buy FTX amid a “significant liquidity crunch” at the exchange. In a tweet, Binance said, “In the beginning, our hope was to be able to support FTX’s customers to provide liquidity. But the issues are beyond our control or ability to help. FTX CEO Sam Bankman-Fried has reportedly told investor the company is facing a shortfall of up to $8 billion from withdrawal requests. Rivian Tops Q3 Expectations Rivian (RIVN) shares are rallying 14.8% ahead of the open after reporting a smaller Q3 loss than expected. Here’s how the electric truck maker’s results compared to analysts’ estimates: Adjusted loss per share: $1.57 vs $1.82 expected Revenue: $536 million vs $551.6 million expected Rivian reaffirmed its full-year production target for 25,000 vehicles. But the company said it plans to reduce spending, now expecting full-year capital expenditures to total $1.75 billion vs $2 billion guidance after Q2. Rivian said it has over 114,000 preorders for its R1-series trucks and SUVs, up from 98,000 in August. Unity Software Shakes Off Revenue Miss Unity Software (U) shares are up 10.9% in premarket trade despite reporting less revenue than expected in Q3. Here’s how the software company’s results compared to analysts’ expectations: Adjusted loss per share: $0.14 vs $0.15 expected Revenue: $322.9 million vs $326.1 million expected Unity forecast Q4 revenue between $425 million and $445 million. The company also hiked its full-year outlook, now expecting revenue between $1.37 billion and $1.39 billion vs $1.3 billion to $1.35 billion previously. Beyond Meat Jumps Despite Q3 Miss Beyond Meat (BYND) shares are up 6.6% ahead of the open despite missing Q3 expectations on the top and bottom line. Here’s how the meat substitute company’s results compared to analysts’ estimates: Loss per share: $1.60 vs $1.14 expected Revenue: $82.5 million vs $98.1 million expected Revenue tumbled 22.5% compared to Q3 2021. The miss prompted Beyond Meat to cut its guidance for the second straight quarter. The company now expects full-year revenue between $400 million and $425 million vs $470 million to $520 million previously.
Continue Reading -->Coffee With Greta: Election Question Weighs on Stocks
DJIA Futures: -124 (-0.4%) SPX Futures: -13 (-0.3%) NASDAQ Futures: -46 (-0.4%) Good morning friends! Futures are falling as it remains unclear which party will control Congress after Tuesday’s midterm elections. Let’s get right to it! Disney Slumps On Profit Miss Walt Disney (DIS) shares are dropping 8.1% ahead of the open after missing fiscal Q4 profit expectations. Here’s how the company’s results compared to analysts’ estimates: Adjusted EPS: $0.30 vs $0.55 expected Revenue: $20.15 billion vs $21.24 billion expected The company saw revenue growth of 22% in fiscal 2022 and forecast growth of less than 10% in fiscal 2023. Revenue in Disney’s key media and entertainment division fell 3% year over year to $12.7 billion in fiscal Q4, missing expectations for $13.9 billion. Its streaming platform Disney+ grew more than expected, adding 12.1 million subscribers during the quarter. That put total subscribers at 164.2 million vs 160.45 million expected. But Disney warned that growth is expected to slow in fiscal Q1. Disney reported record revenue of $7.4 billion in its parks, experiences, and products segment. That was up 34% year over year but shy of analysts’ expectations for $7.5 billion. AMC Losses Widen AMC Entertainment (AMC) shares are falling 3.7% in premarket trade after reporting losses in Q3. Here’s how the theater chain’s results compared to analysts’ expectations: Adjusted loss per share: $0.20 vs $0.23 expected Revenue: $968.4 million vs $961 million Although those results were better than expected, it was the 12th consecutive quarterly loss for the company. AMC reported an adjusted EBITDA loss of $12.9 million vs $5.4 million a year ago. CEO Adam Aron said, “Our third-quarter results were impacted by a particularly soft industry-wide box office in the latter two-thirds of the 2022 third quarter.” The losses come as AMC’s spending on food and beverages jumped 30% compared to Q3 2019. Roblox Sinks On Big Q3 Loss Roblox (RBLX) shares are tumbling 15.5% ahead of the open after reporting a wider Q3 loss than analysts anticipated. Here’s how the company’s results compared to analysts’ expectations: Loss per share: $0.50 vs $0.35 expected Revenue/Bookings: $702 million vs $686 million expected Bookings were up 10% year over year with average daily active users rising 24% to 58.8 million. But average bookings per daily active user fell 11% to $11.94. Lucid Reservations Drop Lucid Group (LCID) shares are falling 7.8% in premarket trade after missing Q3 expectations. Here’s how the electric automaker’s results compared to analysts’ estimates: Loss per share: $0.40 vs $0.31 expected Revenue: $195.5 million vs $209 million expected Revenue was down from $232 million in Q3 2021. Lucid said it has more than 34,000 reservations for its Lucid Air EV, down from the 37,000 it reported after Q2. The company said it is on track to meet its 2022 production target of 6,000 to 7,000 vehicles. Lucid also announced it will open reservations for its second vehicle, an SUV, in early 2023. Meta Announces Mass Layoffs Meta Platforms (META) shares are up 4.5% after the company announced mass layoffs this morning. In a letter to employees, CEO Mark Zuckerberg said, “I’ve decided to reduce the size of our team by about 13% and let more than 11,000 of our talented employees go.” Zuckerberg also said Meta is cutting discretionary spending and extending its hiring freeze through Q1 2023. He said the recruiting department will see the largest impact from those moves. Key Earnings After The Close Here are the companies scheduled to report Q3 earnings after the close today: Rivian (RIVN) Unity Software (U)
Continue Reading -->Coffee With Greta: Election Day
DJIA Futures: +107 (+0.3%) SPX Futures: +14 (+0.4%) NASDAQ Futures: +75 (+0.7%) Good morning friends! Futures are rising as the market gears up for today’s midterm election results and traders digest the latest batch of Q3 earnings. Let’s get right to it! Kohl’s CEO to Step Down Kohl’s (KSS) shares are up 7.6% in premarket trade after announcing its CEO will step down. Michelle Gass will leave the company on December 2 to pursue a new opportunity. Levi Strauss (LEVI) separately announced she will serve as president of that company. Kohl’s director Tom Kingsbury will serve as interim CEO. The company has been under pressure from activist investors to remove Gass after terminating takeover talks over the summer. Lyft Sinks On Slowing Growth Lyft (LYFT) shares are plunging 17.8% ahead of the open despite beating Q3 expectations as the report showed growth is slowing. Here’s how the ride share company’s results compared to analysts’ expectations: Adjusted EPS: $0.10 vs $0.07 expected Revenue: $1.054 billion vs $1.056 billion expected Adjusted EBITDA: $66 million vs $62 million expected Lyft had 20.3 million active riders in the quarter, up 2% from Q2 and 7% year over year. That missed analysts’ expectations for 21.3 million. Revenue per active ride rose to a record $51.88, up 14% annually and 4% quarterly. Lyft forecast Q4 revenue between $1.145 billion and $1.165 billion with adjusted EBITDA between $80 million and $100 million. Analysts were estimating revenue of $1.159 billion and adjusted EBITDA of $85 million. TripAdvisor Plummets After Earnings Miss TripAdvisor (TRIP) shares are plummeting 22.4% in premarket trade after missing Q3 expectations. Here’s how the company’s results compared to analysts’ estimates: Adjusted EPS: $0.28 vs $0.39 expected Revenue: $459 million vs $444.3 million TripAdvisor said foreign currency fluctuations impacted revenue by $34 million in Q3. Despite the miss, in its letter to shareholders the company said, “Our results reflect a sustained demand for travel and dining, and another quarter of steady progress to full recovery.” Take-Two Interactive Tanks After Cutting Outlook Take-Two Interactive (TTWO) shares are plunging 17.3% ahead of the open after cutting its full-year outlook. Here’s how the video game company’s fiscal Q2 results compared to analysts’ expectations: GAAP net loss: $1.54 per share Net bookings: $1.5 billion, in line with expectations Bookings were up 53% year over year but Take-Two cut its forecast for full-year bookings. The company now expects fiscal 2023 net bookings to be between $5.4 billion and $5.5 billion. That’s down from $5.8 billion to $5.9 billion previously. Lordstown Rallies On New Foxconn Investment Lordstown Motors (RIDE) shares are rallying 17.3% in premarket trade after announcing a new investment from Taiwanese contract manufacturer Foxconn. The electric truck maker said it still plans to deliver the first models of its Endurance pickup truck before year-end. The company said Foxconn will invest an additional $170 million in Lordstown over three phases. The first $52.7 million is due later this month. Following that investment, Foxconn will own about 18% of Lordstown and be the company’s largest shareholder. Foxconn bought Lordstown’s Ohio factory for $230 million in May, where the company is building its Endurance pickup. Lordstown said it will use part of that investment from Foxconn to develop a new vehicle. The company said it is actively seeking an automaker partner to help it scale up production of the Endurance. Lordstown now expects to build only 30 of the trucks by year-end, down from its previous target for 50. Key Earnings After The Close Here are the companies scheduled to report Q3 earnings after the close today: Walt Disney (DIS) AMC Entertainment (AMC) Lucid Group (LCID) Lordstown Motors (RIDE)
Continue Reading -->Coffee With Greta: New Week Kicks Off Higher
DJIA Futures: +68 (+0.2%) SPX Futures: +7 (+0.2%) NASDAQ Futures: +26 (+0.2%) Good morning friends! Futures are higher as traders kick off a new week. Let’s get right to it! Apple Drops After iPhone 14 Production Warning Apple (AAPL) shares are down 1.3% ahead of the open after the tech giant said Sunday it has temporarily reduced iPhone 14 production. That production cut comes amid Covid-19 restrictions at its main Foxconn plant in China. Apple said the factory is operating at “significantly reduced capacity”. The company said it will ship fewer iPhone 14 units and customers will experience longer wait times. Meta Reportedly Set for Massive Layoffs Meta (META) shares are up 3% in premarket trade following a Wall Street Journal report the company is set to begin large-scale layoffs. Those layoffs are reportedly set to begin as soon as Wednesday and are expected to impact thousands of employees. CEO Mark Zuckerberg hinted toward planned layoffs on Meta’s earnings call last month. He said, “we expect to end 2023 as either roughly the same size, or even a slightly smaller organization than we are today.” BioNTech Profit Slides BioNTech (BNTX) shares are down 2.7% ahead of the open despite beating Q3 expectations as profits and sales tumbled year over year. Here’s how the German pharmaceutical company’s results compared to analysts’ expectations: EPS: €6.98 vs €3.42 expected Revenue: €3.461 billion vs €2.065 billion expected Both profit and revenue dropped more than 40% compared to a year ago as Covid vaccine sales slowed. But BioNTech did raise its full-year Covid vaccine sales forecast to between €16 billion and €17 billion from €13 billion to €17 billion previously. Inflation Week Traders are focused on inflation this week with the October consumer price index set to be released Thursday morning. That report is expected to show both headline and core inflation pressures slowed last month. The headline CPI is expected to show a 7.9% annual gain while the core CPI is expected to rise 6.5% year over year. Although both would be a slight slowdown from September, that’s still near a 40-year high. Following last week’s rate hike the Fed Chair said it is “premature” to start thinking about a pause in rate hikes as inflation remains far above the bank’s 2% target.
Continue Reading -->Coffee With Greta: Hot Jobs Report Vindicates Powell
DJIA Futures: +206 (+0.7%) SPX Futures: +33 (+0.9%) NASDAQ Futures: +107 (+1%) Good morning friends! Futures are higher as a hot October jobs report supports the Fed’s continued hawkish stance. Let’s get right to it! Hot Jobs Report Job growth surged higher in October as hiring remains strong. The Labor Department reported the U.S. economy added 261,000 jobs last month vs 205,000 expected. But the unemployment rate unexpectedly increased to 3.7% from 3.5%. Economists were expecting that rate to be unchanged. The rising unemployment rate alongside strong hiring indicates more people have resumed actively looking for work. Average hourly earnings were up 4.7% year over year and 0.4% on a monthly basis. The labor force participation rate ticked lower to 62.2%, still down sharply from 63.4% pre-pandemic. September’s job growth was also revised higher by 52,000 to +315,000 while August was revised lower by 23,000 to +292,000. PayPal Drops On Q4 Outlook PayPal (PYPL) shares are down 5.8% ahead of the open despite beating Q3 expectations as the market focused on its forecast. Here’s how the company’s results compared to analysts’ expectations: Adjusted EPS: $1.08 vs $0.96 expected Revenue: $6.85 billion vs $6.82 billion expected PayPal expects $7.83 billion in Q4 revenue, less than estimates for $7.74 billion. But the company did hike its full-year EPS guidance as it expects to add between 8 and 10 million net new active users this fiscal year. Block Rallies On Earnings Beat Block (SQ) shares are rallying 11.3% in premarket trade after beating Q3 expectations. Here’s how the payments company’s results compared to analysts’ estimates: Adjusted EPS: $0.42 vs $0.23 expected Revenue: $4.52 billion vs $4.49 billion expected Gross profit jumped 38% year over year to $1.57 billion vs $1.53 billion expected. Gross profit at Block’s Cash App business surged 51% annually to $774 million. The company also said over 18 million people were actively using its Cash debit card in September, up 40% compared to a year ago. Its point-of-sale business, Square, brought in gross profit of $783 million, up 29% year over year. Coinbase User Numbers Beat Coinbase (COIN) shares are up 5.7% ahead of the open after topping Q3 user expectations. Here’s how the crypto platform’s results compared to analysts’ expectations: Adjusted loss per share: $2.43 vs $2.40 expected Revenue: $590 million vs $654 million expected Revenue plummeted more than 50% year over year as traders ditched crypto. In its investor letter the company said, “Transaction revenue was significantly impacted by stronger macroeconomic and crypto market headwinds, as well as trading volume moving offshore.” Coinbase said it had 8.5 million monthly transacting users in Q3. That topped analysts’ expectations for 7.84 million but was down from 9 million in Q2 and 9.2 million in Q1. The company expects its monthly user numbers to be “slightly below” 9 million for the full year Starbucks Rallies On Earnings Beat Starbucks (SBUX) shares are up 6% in premarket trade after beating fiscal Q4 expectations. Here’s how the coffee chain’s results compared to analysts’ expectations: Adjusted EPS: $0.81 vs $0.72 expected Revenue: $8.41 billion vs $8.31 billion expected Global same-store sales jumped 7% as U.S. sales surged. Same-store sales in the U.S. jumped 11% as customers paid higher prices. Prices were up 6% year over year but Starbucks said it does not plan to increase prices anymore for the time being. Active membership in the company’s loyalty program jumped 16% to 28.7 million people. Starbucks forecast fiscal 2023 revenue growth of 10% to 12% and global same-store sales growth on the high end of its previous range of 7% to 9%. Carvana Plunges On Big Q3 Loss Carvana (CVNA) shares are plunging 11.8% ahead of the open after reporting a steep loss in Q3. Here’s how the car reseller’s results compared to analysts’ expectations: Loss per share: $2.67 vs $1.94 expected Revenue: $3.39 billion vs $3.71 billion expected Gross profit dropped 31% year over year while retail units sold fell 8%. Gross profit per unit also tumbled by more than $1,100 to $3,500 as used car prices have cooled compared to a year ago.
Continue Reading -->SPY vs. QQQ for Day Traders: What You Need to Know
SPY and QQQ are the two most discussed ETFs in the world. Every single trader out there has bought or sold them at some point. But what are the differences between SPY and QQQ? And are they more similar or different? SPY vs. QQQ: In ShortSPY and QQQ are very similar, but have some important differences. QQQ is more volatile because it is more concentrated in technology and high-growth stocks. It also has no exposure to energy or financials. Many active day traders like QQQ more than SPY because of its increased volatility. So as you’d expect, SPY outperforms when financial and energy stocks are in favor. SPY also has a lower expense ratio and higher dividend yield, which help it appeal to swing traders and long-term investors. The Basics of SPY and QQQSPY is the symbol of the SPDR S&P 500 ETF Trust.It is managed by State Street Global Advisors, one of the largest asset management companies in the United States.SPY tracks the performance of the benchmark S&P 500 index.QQQ is the symbol for the Invesco QQQ ETF, which is managed by Invesco.QQQ is based on the Nasdaq 100 index, not the Nasdaq Composite as commonly thought.Traders never use the full names of these ETFS.You often hear people SPY called simply SPY, SPYs (pronounced like spies), or “spiders” which is a reference to the SPDR brand name.And when you hear a trader say “the Qs” they are talking about QQQ.What SPY and QQQ Have in CommonSPY and QQQ are similar in many ways.They give you instant exposure to a variety of companies, though in different ways, as you will see below.Both ETFs are extremely liquid.At the time of writing, SPY traded 81 million shares per day, while QQQ’s average volume was 58 million. Plus, both have active options markets.So it’s easy to get in and out of positions.SPY and QQQ are also inexpensive. SPY has an annual expense ratio of 0.09% while QQQ’s is 0.2%.Short-term traders love the liquidity of these instruments. And long-term investors like the low expense ratios.SPY and QQQ are also both based on market cap-weighted indices, meaning that the stocks with the biggest market capitalizations have the biggest weightings in the funds.SPY vs. QQQ: A Holdings ComparisonThis is where things get interesting.SPY and QQQ have many holdings in common. In fact, the top 4 holdings in each are identical. And 6 of the top 10 are the same.Here’s each fund’s top 10 holdings by weight. HoldingSPY QQQ#1 Apple (AAPL): 7.0% of the fund Apple (AAPL): 14% of the fund#2 Microsoft (MSFT): 5.3% Microsoft (MSFT): 9.9%#3 Amazon (AMZN): 2.6% Amazon (AMZN): 5.7%#4 Tesla (TSLA): 1.9% Tesla (TSLA): 4.0%#5 Alphabet Class A (GOOGL): 1.7% Alphabet Class C (GOOG): 3.2%#6 Berkshire Hathaway Class B (BRK.B) Alphabet Class A (GOOGL): 3.1%#7 UnitedHealthy (UNH) Nvidia (NVDA): 2.8%#8 Alphabet Class C (GOOG): 1.5% Pepsico (PEP): 2.5%#9 Exxon Mobil (XOM) Costco (COST): 2.1%#10 Johnson & Johnson (JNJ): 1.4% T-Mobile (TMUS): 1.9%Data Source: MorningstarAnd if you notice, the QQQ is much more top heavy. This is because it is comprised of 103 stocks vs. 503 for the SPY. Note: the Nasdaq 100 has 103 stocks in it and the S&P 500 has 503 stocks. This is because some companies like Alphabet (GOOGL) have more than one share class.The top 10 stocks in the QQQ account for 49.2% of the fund, so just 10 out of 103 holdings account for almost half the fund’s performance. Apple (AAPL) is number-one at 14.0%.SPY’s 10 biggest holdings are 26.0% of the fund, with Apple weighing in at 7.0%.Now let’s talk about sectors.People often equate QQQ with technology because 50% of the fund’s assets are in tech stocks vs. 26.2% for the SPY. And interestingly, QQQ has zero exposure to energy, financials, materials, and real estate.SectorSPY QQQConsumer Discretionary 10.8% 15.4%Consumer Staples 6.9% 7.1%Energy 5.4% 0%Financial 11.6% 0%Healthcare 15.4% 7.6%Industrials 8.3% 3.8%Information Technology 26.2% 50.0%Materials 2.6% 0%Real Estate 2.6% 0%Communication Services 7.3% 14.7% Communication Services 3.0% 1.5%SPY vs. QQQ: VolatilityAs you’d expect, the QQQ is more volatile than SPY.Beta is a common measure of volatility for stocks and ETFs.The SPY has a Beta of 1.0, while QQQ’s is 1.10.So for every 1% SPY moves up or down, the QQQ is expected to move 1.1%.For that reason, many active day traders gravitate towards QQQ. They can get more movement, which is critical for day traders..Of course, on any given day, the performance can vary by a wide margin, particularly if there is big movement in tech stocks like Apple, Microsoft (MSFT), and Amazon (AMZN).During earnings season, you can expect dramatic differences between SPY and QQQ when a big name like Apple reports.SPY vs. QQQ: PerformanceSPY and QQQ’s performance is almost always in the same neighborhood because each has significant exposure to major sectors of the economy.However, performance during a given time period varies based on the risk appetite of the public.When markets are in a state of euphoria, expect QQQ to outperform SPY.In 2020, QQQ rose 48.6% because tech stocks like Apple and Tesla rallied so hard after the pandemic bottom.And when the market is bearish, QQQ will underperform because tech stocks get devalued quickly.When the tech bubble burst in 2000, QQQ fell -36.9% vs. a -9.2% drop for SPY.Sectors also play a role at times.In 2021 and 2022, SPY outperformed because of strength in energy stocks, of which there are none in the QQQ.Yes, 2022 is a down year as of this writing, but SPY is down less because of energy exposure.SPY vs. QQQ: Dividend YieldSPY’s dividend yield is 1.61%, more than double the QQQ’s 0.68%.That’s no surprise given that QQQ has no exposure to the highest-yielding sectors like financials, energy, and utilities. SPY vs. QQQ: Which Is Better?So what’s better? SPY or QQQ?The answer is… it depends on what you need and want.If you want more volatility in your portfolio and can stomach of risky technology stocks, QQQ fits the bill. In fact, many traders prefer QQQ because of the volatility.If you want stability, SPY makes more sense. What do you think? Do you trade SPY,
Continue Reading -->Rick March Talks Fibonaccis, Options, and Old School Trading Pits
Get to know Rick Turner one of our Inner Circle moderators, in this in-depth interview. Interview Transcript* *this transcript has been edited for length and clarity Michael Comeau: Rick, tell us about what it was like when you got started in the market, and how that’s different from today. Rick March: When I was 10 years old, my grandfather, who drew charts by hand, gave me his book of charts. It was 500 pages for the S&P 500 stocks. 90% of them don’t exist anymore. But I looked at the charts. And I said “when this crosses over this, it’s a buying indication.” I asked why, and he explained. When I was 13 years old, while my friends were going to camp and having a good time, I was a runner on the floor of the Chicago Mercantile Exchange. I was taking orders from the desks. That was my first experience on the floor. For my first, trade, I bought five December corn at $162.50. I would stand in a pit and trade one or two months of a commodity, or S&P, or the yen, or cattle, And now I sit at a desk and trade any 1 of 500 stocks and options. MC: So it was like Trading Places with people screaming at each other and making those crazy hand gestures? Is it actually more chaotic today than it was when you were on the floor? RM: Everything’s computerized now. And it’s not as fun as standing in a pit with 50 men and women, watching everybody scream and freak out. That was fun. Not because they were freaking out, but because you could read the emotions on their faces. Behind a computer screen, I can’t tell if somebody’s blown out longs. MC: So it seems like you started on charts from a very early age. How has technical analysis changed from then to today? RM: Back then, there were no algos. There were no computers. We drew trend lines and watch the breakouts. And if cattle broke out to a new high, we would tell our clients. We would do this all by hand and on the phone. There was no immediate drawing of a chart and posting it in Inner Circle. So that’s 100% different. And now, there’s easily 500 methods of of price and time analysis. Stuff like WD Gann Theory and Gartley existed, but you couldn’t calculate them quickly enough for the market. There were guys in the options pits, who had their sheets of what X options should be trading at Y desk and Y price. And they would stand there and look at their sheets. They wouldn’t make a trade until something came up on their sheets. MC: So we should be grateful with all the amazing technology we have today that’s basically free. RM: Absolutely, because it enables me as a trader and an analyst. It’s amazing. MC: Let’s talk a little bit about your trading style. How would you describe it? RM: I follow the market flow and the options. I’m very blessed to have two partners at Inner Circle. I don’t mind buying something at a high price thinking it’s going to trade higher. That’s how I do these SPX lotto call traders that you’ve seen there. Kira Turner is great at seeing a day trade coming, and David Prince plans trades better than anybody I’ve ever met in my life. So to answer your question, I swing trades, I do a lot of options trades, and I day trade. MC: Many technicians are pretty loosey-goosey and doing things by feel. So how mechanical is your buying and selling? RM: It depends on what I’m trading. I set alerts in stock where if they get hit, I can buy or sell the stock or option I want to be in. MC: You have no problem just pulling the trigger when that happens? RM: If I’m setting it up in options, then I don’t. Because I say, at $80, I’ll buy this. All right, at $100, I’ll sell this. And that’s what works for me with the stock. For example, I’ve been short Beyond Meat (BYND) for months from significantly higher prices. I want to cover in the single digits, but I haven’t put the order in because it could go lower. When you get to a level where you think you should buy or sell, you need to take action. If you don’t, you’ll regret it after the trade is done. That’s why we trim and trail. MC: Let’s talk about regret because I don’t think people talk about regret enough. When a trade is done, do you just fully put it behind you? RM: It would be nice to put it behind me. The way my brain works is, I pay attention to that stock or option for a couple of weeks after. I don’t necessarily go back into the same price and do the same trade, but I’m aware of it. Because if I made a mistake, I need to learn from it. So I can build my talent and build my equity going forward. MC: Do you worry about algos or HFTs when you are trading? RM: The only thing I worry about during my trading is when the market goes to a standstill. I don’t know what to do in a quiet market. My biggest frustration is a lack of action. MC: Is there ever a time where you just sit on your hands and do nothing? RM: I’m trying to do more and more of that. MC: It seems like people have an urge to take action, to just do something. RM: They absolutely do. For some people, it’s like being at the casino and seeing the craps table. They have to do something. But trading is not a casino. Trading is not gambling. We figure out the possible risk versus the probable or improbable reward. You have to think through risk before you
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