Business & Investment

Nasdaq: The whipped-up Nasdaq volatility is a new bowel check for bottom feeders.

Is it lion-like courage or a sheep to slaughter?That’s a question for retail dip buyers who continue to throw fresh cash in the increasingly turbulent Nasdaq. stock..

Investor Last year’s all-functioning strategy made it bold, with more than $ 1 billion recently invested in technology and deposits in almost every other sector. JPMorgan Chase & Co. Said domestic traders saw a record high retail flow, adding $ 5.9 billion to stocks in the week leading up to Tuesday.

But now the earnings season has begun and investors are Federal Reserve A tightening cycle in which the market is growing rapidly. The CBOE NDX Volatility Index has been above 25 for the second straight week, with only 12% in the last nine months. At the end of friday, Nasdaq The composite index fell 7% below November’s record highs.

“There is a risk,” said Dave Ellison, portfolio manager for the Hennessy Large Cap Financial Fund. “I’m not afraid of it Economy.. It’s not afraid of work. It’s afraid,’Hey, I bought all these things. It will come down. ‘”

Bloomberg

Expensive tech stocks housed in Nasdaq have lost some of their brilliance since the Fed signaled that it would move fast to fight the fastest inflation in 40 years. The market now expects the central bank to raise rates four times in 2022, with the first rate hike in March. Just last week, investors took part in only three hikes that year.

It doesn’t help that technology loses its advantage in terms of revenue. Revenue growth of megacap tech companies is projected to fall below market growth by the end of the year, which can make them unattractive.

The Nasdaq Composite index fell 0.3% in the five days to Friday, falling for the third straight week. Meanwhile, the S & P 500 closed unchanged because of disappointment in retail sales, consumer sentiment, and factory production. That week’s losses totaled 0.3%, and this year’s index has yet to record a weekly rise.

Barry Gilbert, LPL Financial’s asset allocation strategist, said: “Some purchase points can be a bit lower and can be a little late.”

Investors will test the solution if they decline more often. They invested more than $ 1 billion in exchange-traded funds in the week leading up to Thursday, according to data compiled by Bloomberg. In fact, all industrial sectors except consumer discretion and materials saw an influx within that four-day range.

Meanwhile, nifty dip buyers added another $ 500 million to the ProShares UltraPro QQQ Fund (ticker TQQQ) in the week leading up to Wednesday. The fund uses options to provide three times the performance of the Nasdaq 100.

According to JPMorgan data, a record high retail “order imbalance” was recorded in the week leading up to Tuesday. This means that buy orders outnumber sell orders. Investors added a total of $ 5.9 billion, and Tuesday’s $ 1.7 billion flow was the highest single-session inflow ever.

b2Bloomberg

ETFs account for more than 65% of S & P 500 fund purchases and interests, and are “especially noticeable,” a strategist led by Peng Cheng wrote in a note. Value-focused funds such as the Energy Select Sector SPDR Fund (XLE), the Financial Select Sector SPDR Fund (XLF) and the Vanguard Value ETF (VTV) are ranked among the most purchased funds in the retail industry. Said.

But now that the Fed is planning a more hawkish path, if history is the guide, the strategies that worked during the pandemic may not work in the future.

Throughout the period since the March 2020 pandemic low, buying of the S & P 500 after falling below the average price for the last 50 days reached an average of 2.3% the following week. But that’s not the case in the last 90 years, when short-term returns were low in that scenario, according to the Bespoke Investment Group. Looking at Friday’s actions, historical standards may have returned. Benchmarks were below that threshold and dip buyers weren’t enthusiastic about the three-day weekend.

“Last year it was mostly clockwork. It stabilized every time the market fell by 5%,” said Victoria Greene, founding partner and chief investment officer of GSquared Private Wealth, on the phone. “This year, we’re actually seeing a fix, which can drop by 5-10%, so we don’t necessarily move all our capital whenever there’s a nasty pullback.”

High-value stocks have recently posted some of the most dramatic declines. Cathie Wood’s ARK Innovation ETF (ARKK) is down 15% this year. Bitcoin has also lost its brilliance and has fallen 7% since the beginning of the year.

“I’ve never seen a securities firm say,’Yes, let’s go, let’s buy stock.’ Let’s buy the stock of Cathie Wood, let’s go, now no one is doing it, “said Ellison of Hennessy. “They were all telling me to buy when they were 50% higher, because it’s new. Now, when they fall, everyone retreats.”

Indeed, the correlation between the largest tech stocks tends to be low. This can reduce interest in the cohort as a “one giant theme transaction” and can reduce the risk of a group-wide meltdown if individual outlook deteriorates. According to Bloomberg Intelligence’s Gina Martin Adams, it’s solid.

iCapital Network Inc. Anastasia Amoroso, Chief Investment Officer of, says he likes to approach technology in a selective way, as he has certain options, including stocks that have lost 30% or 40% in the latest downdraft. Opportunistic.

“For example, if you asked a week ago, you would say,’No, I wouldn’t buy Nasdaq widely,'” mainly because it hasn’t reached the level of oversold. “It’s a great time to understand the subtle differences in what should actually be on your shopping list.”

Nasdaq: The whipped-up Nasdaq volatility is a new bowel check for bottom feeders.

https://economictimes.indiatimes.com/markets/stocks/news/whipped-up-nasdaq-volatility-is-new-gut-check-for-bottom-feeders/articleshow/88912468.cms Nasdaq: The whipped-up Nasdaq volatility is a new bowel check for bottom feeders.

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