Tech Bear Flag
12/17/23 Prospero.Ai Investing (83rd) Edition (Weekend)
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Tech Bear Flag, Outline:
Market/Macro Update
QQQ and SPY Net Options Sentiment
Sector Update / Portfolio Strategy
Now the Sector analysis will be roped into our allocation!
Longs
Adds —> Keeps —> Drops
Shorts
Adds —> No Keeps —> Drops
Portfolio Summary
Market Update
For Tech: QQQ Net Options Sentiment > 40 = Bullish. < 30 = Bearish.
For Non-Tech: SPY Net Options Sentiment > 25 = Bullish. < 15 = Bearish.
QQQ returned 3.36% this week vs 1.98% for SPY; and another week of looking smart on IWM, as it was up 5.48%.
Both QQQ and SPY Net Options Sentiment were in Bull zones for the majority of the week, but we are seeing a concerning tech trend below:
QQQ Net Options Sentiment has only made one dip into the Bear zone in the last month and it did coincide with a price dip. So watch carefully as the market opens on Monday. If QQQ Net Option Sentiment stays above 35, we’d take it as a sign of a better week. But if it stays low, you may want to re-think your long Tech exposure, especially in large caps.
It’s always good to keep up with us during the week for ongoing changes! Doing our regular times: 1st: YouTube livestream is tomorrow 12/11 at 11 AM EST and 2nd: Wednesday 12/13 at 3 PM EST.
We’re lowering the Bull level on QQQ to reflect softening in the index.
For Tech: QQQ Net Options Sentiment > 35 = Bullish < 25 = Bearish.
For Non-Tech: SPY Net Options Sentiment > 25 = Bullish < 15 = Bearish.
Sector Analysis / Portfolio Macro Strategy
While the overall market movement has been very encouraging, the softening of QQQ Net Options Sentiment has us concerned. We are going to pair back our picks until we have more conviction, and then target the best and most opportunistic picks regardless of Sector. We aren’t getting any clear Sector directionality read as of this moment either.
We still like mid caps though, so IWM stays!
Going with 3 Bulls (1 of them IWM) and 1 Bears.
Long / Bull Adds - Link to Below Picture
Nothing too complicated here, just going with our strongest picks on signals and technicals!
Long / Bull Keeps
META is a keep, and returned .65% vs 1.98% for the SPY. No big mysteries here, it is perched on the top of our Bull Screener again.
BKNG is a keep, and returned 6.23% vs 1.98% for the SPY. No big mysteries here either, 3rd in Screener with better technicals than 2.
Long / Bull Drops
LLY was dropped due to its technicals taking a turn for the worse. Covered 12/10-12/15 and it finished -4.35% and a Loss, Losing to the SPY benchmark by 6.33%.
Short / Bear Adds - Link to Below Picture
It was a tough call between EURN and MGEE, especially with Energy doing so well on Friday. But the flip side is the Energy Sector did well while EURN just did ok. We like that EURN has such a low Net Options Sentiment.
Short / Bear Drops
MGEE was dropped as a Bear because we don’t want more than one short; and it was ranked lower in the signals, with a higher Net Options Sentiment. Covered 12/10-12/15 and it finished +1.16% and a Win, Beating the SPY benchmark by 0.83%.
CRMT was dropped as a Bear because it ranked too low in the filters. Covered 12/03-12/15 and it finished -4.29% and a Win, Beating the SPY benchmark by 6.25%.
Portfolio Allocation
3 Longs: IWM, META, BKNG
1 Short: EURN