Big Tech Takes the Reins

·5-min read

Hey everybody, Dave Bartosiak filling in for Jim “The Count of Montequinto” Giaquinto. He should be back with you folks for tomorrow’s debrief.

A tale of two markets today as big tech tried to keep things rolling in positive territory. Despite yesterday’s Fed announcement about moving up the timetable for rate hikes, financials were bogged down. Worse still, Basic Materials and Energy stocks got rocked to the tune of 3% and 2.9% respectively, wreaking havoc on the small caps.

The Russell 2000 gave up 27.23 points or 1.18% at 2,287.45. The Dow Jones Industrial Average fared a bit better, but still lost 210.22 points or 62 bps at 33,823.46. The S&P 500 nearly hung onto positive territory, shedding just 1.86 points or 4 bps at 4,221.85. The NASDAQ Composite bucked the broad negative trend, instead gaining 121.67 points or 87 bps at 14,161.35.

Chart of the Day

NVIDIA (NVDA)

The worldwide microchip shortage has been well documented. Supply chain disruptions and product shortages are all the rave nowadays. This hiccup is hitting huge industries like the auto business. That is not stopping tech stocks like NVIDIA from rocking and rolling. Today’s $33.88 move in the stock was good for 4.76% at $746.29.

I wanted to point this chart out for two main reasons. First, just so all of us can admire the massive 20 million share day for the $746 stock. That’s nearly $15 billion in nominal value trading hands in a single stock today. The second part is the textbook moves off the 200-day moving average, shown here in red on the chart. Early March, the stock had one terrible day where it sold off past the 200-day but quickly rebounded the next day. This key level was support later than month and again in May. Buying stocks with solid earnings history when they come down to the 200-day moving average is always a good idea.

Today’s Portfolio Highlights:

Insider Trader: Tracey took some risk off the table today, cutting one position in half while ousting three others. With oil coming under pressure, threatening to dip back under $70, she trimmed her Matador (MTDR) position. Recognizing what she called a “mini-breakdown” in oil prices, she decided on limiting exposure.

If you are a long-term bull in the sector, there is still plenty of hope.

“If you're a longer term energy investor of 6 months to a year, I still expect the energy stocks to continue to rally in the second half of the year, in spite of the big gains they've already had.

But I wouldn't be surprised to see them take a break here. They've been the hottest industry for the past month.”

The ousted names were UnitedHealth (UNH), Fastenal (FAST) and NuSkin (NUS). Both UNH and FAST were only half positions to begin with today.

Surprise Trader: Things are really winding down in Surprise Trader with earnings season about a month away. For now, there are a few names which trickle in from time-to-time. Most of the holdings in the current portfolio will be done away with over the coming weeks, setting up the portfolio for a fresh, clean slate heading into next quarter’s earnings season.

Today, I dumped both Guess (GES) and H&R Block (HRB) after disappointing moves following earnings. The key here is to let winners run and dump the losers fast, before they go from bad to worse.

Winnebago (WGO) was added. These RVs continue to stay hot as dealers cannot keep inventory on the lot. It is a good problem to have and there does not seem to be a let-up in the demand, according to rival Thor. Seemed like a decent risk/reward.

Tech Innovators: Selling off holdings seemed to be a theme today as Brian took it upon himself to divest in Tech Innovators. Both Canadian Solar (CSIQ) and Progress Software (PRGS) were sold for nearly the same reason, unfavorable Zacks Ranks. CSIQ had come down to a Zacks Rank #5 (Strong Sell) while PRGS is now a Zacks Rank #4 (Sell).

He did replace one of those names with the addition of Xperi (XPER). This Zacks Rank #1 (Strong Buy) is associated with 3D printing, although Brian was quick to point out the connected car and pay TV services that are also offered by the company. He cites a great earnings history among his chief reasons for adding the name.

That is all we have for you today. Jim will be back at the helm tomorrow I believe.

Have a great night,

Dave


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