This is right up my alley, Great read Brent! I'm curious. If I'm fundamentally long the NOK but the currency hasn't been performing as bullish as I hoped. Would you wait for the currency to make a strong bullish move before getting long a Norwegian Equity?
"Higher rates are ultimately more negative for tech than they are for the broad market. Tech stocks are long-duration assets." Coincidentally, I was having the exact conversation last weekend. We did a historical study on the correlation between rates and growth/tech stocks; and the results are relatively mixed (admittedly our sample size is only last 25 years so not too big). The correlation is weak, can be anything and is narrative driven (generally speaking there is a bigger macro factor driving both bonds and equities). Another point to consider is Nasdaq 100 is heavily concentrated in few names: Apple, Microsoft, Amazon and Alphabet. Together, they make up a staggering 37% of the whole index. These names are super cash rich, regularly issue dividends and do buybacks on a large scale. So they are not as “long duration” as the cash poor, no dividend, no buyback average tech stock that people probably have in minds. Anyway long story short, while I agree with your technical analysis that Nasdaq is about to hit some strong resistance (especially after an incredible 15% bounce from March low), I think the narrative side (tech is long duration and higher rates are not good for tech) is probably weaker under close examination.
For anyone unfamiliar with futures don't forget the $20 multiplier on NQ futures... if you short one future you'll get stopped out with a $13.8k loss
Yes smaller trade sizes should be done through QQQ tbh I didn’t walk through the position sizing jn this one. My bad. Thanks
Great read. Thanks Brent
This is right up my alley, Great read Brent! I'm curious. If I'm fundamentally long the NOK but the currency hasn't been performing as bullish as I hoped. Would you wait for the currency to make a strong bullish move before getting long a Norwegian Equity?
"Higher rates are ultimately more negative for tech than they are for the broad market. Tech stocks are long-duration assets." Coincidentally, I was having the exact conversation last weekend. We did a historical study on the correlation between rates and growth/tech stocks; and the results are relatively mixed (admittedly our sample size is only last 25 years so not too big). The correlation is weak, can be anything and is narrative driven (generally speaking there is a bigger macro factor driving both bonds and equities). Another point to consider is Nasdaq 100 is heavily concentrated in few names: Apple, Microsoft, Amazon and Alphabet. Together, they make up a staggering 37% of the whole index. These names are super cash rich, regularly issue dividends and do buybacks on a large scale. So they are not as “long duration” as the cash poor, no dividend, no buyback average tech stock that people probably have in minds. Anyway long story short, while I agree with your technical analysis that Nasdaq is about to hit some strong resistance (especially after an incredible 15% bounce from March low), I think the narrative side (tech is long duration and higher rates are not good for tech) is probably weaker under close examination.
Great points the declining supply of apple shares is probably a huge bullish factor. Thanks super interesting reply