Nasdaq has moved below 0.5% so far this week, but many well-known technology names have seen far greater price fluctuations.
On the one hand, the proverbial FAANG shares, which have generally underperformed the Nasdaq since September, have moved higher this week.
Facebook (FB) – Get report and Netflix (NFLX) – Get report is up approx. 4% from the end of last Thursday, Apple (AAPL) – Get report is around 3.5% and Amazon.com (AMZN) ̵
Amazon may get a boost from a Monday press release trumpeting the company’s holiday sales. Amazon revealed, among other things, that sales of the holiday season involving sellers of the market increased by over 50% annually.
Apple, which has reached new heights this week, seems to still get a boost from last week’s Reuters report that they are working on an electric car. Continued signs of strong iPhone demand may also help.
But while the tech giants are having a good week, the same cannot be said for many Robinhood favorites such as high-multiple internet, cloud software and electric car games.
Zoom video communication (ZM) – Get report, which sold out last week after a report on plans to launch email and calendar apps raised concerns about competitive pressure, is down another 6% this week. Likewise online TV service provider FuboTV (FUBO) – Get report has fallen 16% this week, after climbing last Thursday thanks to a very bearish LightShed Partners report.
C3Ai (AI) – Get report, which was offered at a nosebleed valuation despite seeing a large COVID-related sales pressure this year, is also down 16%. Snowflake (SNOW) – Get report is down 6%, Palantir Technologies (PLTR) – Get report is down 11% and (thanks to a big Tuesday sale) developer of electric car batteries QuantumScape (QS) – Get report is down 14%.
What causes this technological rotation? Transactions at the turn of the year that have been made for tax and portfolio balancing reasons can play a role. Also Tesla’s (TSLA) – Get report entry into the S&P 500 a week ago is a potential catalyst.
The fact that the S&P 500 index fund had to trim its positions in FAANG shares and Microsoft (MSFT) – Get report to help make room for Tesla was the headwind in recent weeks for the shares of many big-cap tech names, and one that has now disappeared.
Meanwhile, Robinhood’s favorites may be pressured by the growing number of alarm bells that analysts and others are claiming for astronomical valuations, and select technology companies favored by retail investors are now being given.
Over the weekend, The Wall Street Journal ran a bit and noted that for the first time in history, US marginal debt has risen above $ 700 billion. The WSJ also reported (citing data from Options Clearing Corp.) that the volume of daily option contracts has risen 48% this year, and that inflows for leveraged and inverse ETFs have reached their highest level since 2008.
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