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Techbubble

Correction Coming for AI? AI technology has been recognized as the new future since the end of 2022. The rapid advancements in AI and its stock prices sparked debates regarding the sustainability of its current valuations. Indeed, AI technology has a long runway ahead, but like all journeys, it will eventually encounter a bend. In today's tutorial, we are going to study its fundamental and technical reasons why we may have to prepare for a windy and bumpy ride ahead. E-mini Nasdaq Futures & Options Ticker: NQ Minimum fluctuation: 0.25 index points = $5.00 Micro E-mini Nasdaq Futures & Options Ticker: MNQ Minimum fluctuation: 0.25 index points = $0.50 Disclaimer: • What presented here is not a recommendation, please consult your licensed broker. • Our mission is to create lateral thinking skills for every investor and trader, knowing when to take a calculated risk with market uncertainty and a bolder risk when opportunity arises. CME Real-time Market Data help identify trading set-ups in real-time and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com
NASDAQ:AVGOShort
by konhow
How to Analyse Tech Market? - Index + Big Cap + Mid Cap Today, we will discuss how to apply inter-market analysis effectively. While there are numerous analysis methods available, I find comparing the index, an influential stock, and a smaller yet actively traded stock to be effective in projecting what is coming ahead. Let's make some interesting observations in the tech market, focusing on the Nasdaq Index, the world's largest market-cap stock – Microsoft, and Super Micro Computer Inc., one of the most actively traded stocks recently. Micro E-mini Nasdaq Futures & Options Ticker: MNQ Minimum fluctuation: 0.25 index points = $0.50 Disclaimer: • What presented here is not a recommendation, please consult your licensed broker. • Our mission is to create lateral thinking skills for every investor and trader, knowing when to take a calculated risk with market uncertainty and a bolder risk when opportunity arises. CME Real-time Market Data help identify trading set-ups in real-time and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com
CME_MINI:NQ1!Short
by konhow
5
Tech performance after peak valuation?Tech stocks have been soaring, but can this outperformance be sustained or will this artificial intelligence (AI) driven boom mimic the internet explosion and subsequent bust of the 2000-2002 period? Today, gains in the sector are concentrated in large companies like Nvidia and Meta, with year-to-date (YTD) returns standing at 225% and 148% respectively, subsequently causing the Nasdaq 100 to outperform the S&P 500 by around 25% YTD1, mostly due to its extra weighting in the Tech sector (~60% vs ~27%)2. This rally has been accompanied by a significant expansion in valuation multiples, specifically the price-to-sales (P/S) ratio. Particularly relevant for the Tech sector, the P/S ratio offers a way to evaluate companies that may not yet be profitable but are generating sales—a common scenario among new and innovative firms. For many in the Tech sector today, this ratio has soared to unprecedented levels. At the end of March 2023, Nvidia became the company with the highest P/S ratio in both the S&P 500 and Nasdaq 100 indices. It has only increased since then, reaching a P/S ratio of over 40, which is based on the trailing 12 months of sales. Nvidia’s quarterly earnings report, however, did forecast a large (60%) jump in future sales, so analysts are now pricing in future sales which brings down the multiple to 25 times expected sales over next 12 months3. This leads us to our key question: based on a historical sample of companies that have reached these valuations in the past, what are the chances that Nvidia can continue to outperform? The research in this piece will explore the implications of high P/S valuations, which will be defined as 25 or over (coincident with Nvidia’s price over expected sales), on future company performance. P/S ratios: from rarity to normality From the late 1960s to the early 1990s, it was uncommon to find a company with a P/S ratio over 25. When it did happen, it was one or two firms each year, and the percentage of the total market cap they represented was negligible. Today, high P/S ratios have become routine, especially in the Tech sector: is this the new normal? The tech bubble of 1999-2002 saw a drastic surge in companies with high P/S ratios. In 1999, there were 56 companies with a P/S ratio over 25, representing over 6% of the total market cap. The trend peaked in 2000, with 113 companies and over 10% of the total market cap. For most of the 2000s, several companies each year reported a P/S ratio over 25, making up a small but not insignificant portion of the total market cap. The COVID-19 era of 2019-2023 saw another surge in high P/S ratios. In 2020, there were 32 companies with P/S ratios over 25, making up 1.10% of the total market cap. The trend extended into 2021 when 44 companies contributed to 2.46% of the total market cap. This shift was partly propelled by an influx of high-profile initial public offerings (IPOs), as newly public companies often command high valuations. The momentum shows no signs of waning in 2023, with over a dozen companies already boasting a 25 P/S in Q1 alone—the majority of which are tech stocks. Dynamics of top P/S stocks Within the universe of the top 500 largest US companies by market capitalisation, 99 companies have reached the distinction of having the highest P/S ratio of all companies since the 1960s. Nvidia now holds this title today. The Tech sector takes the lion's share of the highest multiple stocks, representing 27.3% of the companies, followed by the Health and Energy sectors, accounting for 22.2% and 17.2% respectively. To understand the dynamics of the companies with the top P/S ratio, we examined their performance over various periods following the point at which they claimed the top spot. We scrutinised their returns over the subsequent 1, 3, 5-year periods, and until the end of sample or March 2023. An interesting pattern emerged. In the year following the point when a stock takes the top spot for the P/S ratio for the first time, these companies continued outperforming—on average beating the S&P 500 by almost 1.5%. But their momentum falters in the years that follow; within the next three years, their average annual return declines to -4.4%, and the five-year average annual return fell further to -1.5%. Notably, the markets were annualising over 9% over those next 3-5 years, so their under-performance versus the market was more than double digits. When we take the entire history of these stocks, their average return still falls short of the market by over 12% a year. Even when we break it down by sector, it seems as though once a company reaches the position of ‘top P/S’, it struggles to maintain its momentum and keep up with the market. Tech and Health sectors, those with the most companies appearing in this top spot, don’t even outperform in the short term, but have negative returns on average. Declining odds of out-performance Looking at all 2691 companies that have been in the largest 500 at some point, the tables below show how frequently companies reach a specific P/S threshold, and the odds that it will outperform the market in the next 1,3,5,10, and 20 years. For the 231 companies that have reached a P/S over 25, they only outperformed the market in the next year 21% of the time, with a median relative return of -36%. Over longer horizons, this percentage worsens, reaching 9% over the next 3 years, and 4% over the next 20 years. For higher P/S ratios (>40) it’s even less likely to outperform the market on all time frames. The odds become stacked against you having a winning long-term stock at these valuations. The market has seen a shift in recent years, with high price-to-sales (P/S) ratios becoming increasingly common, particularly in the Tech sector. Our analysis suggests that an overemphasis on high P/S stocks may falter in the long run, as it may prove difficult for these companies to sustain the rapid growth required to justify these valuations and continue their performance trajectory. Sources 1 Source: Performance data is referenced from Yahoo Finance, with YTD referring to 2023 through 21 July 2023. 2 Source: Respective S&P 500 Index and Nasdaq 100 Index factsheets, with current data as of 30 June 2023. 3 Source: Investor.nvidia.com/news/press-release-details/2023/NVIDIA-Announces-Financial-Results-for-First-Quarter-Fiscal-2024/default.aspx This material is prepared by WisdomTree and its affiliates and is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed are as of the date of production and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and non-proprietary sources. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by WisdomTree, nor any affiliate, nor any of their officers, employees or agents. Reliance upon information in this material is at the sole discretion of the reader. Past performance is not a reliable indicator of future performance.
NASDAQ:NDX
by aneekaguptaWTE
Nasdaq -> Sell Everything Now!Hello Traders and Investors , my name is Philip and today I will provide a free and educational multi-timeframe technical analysis of the Nasdaq 💪 Looking at the macro view on the monthly timframe you can see that at the moment the Nasdaq is retesting massive resistance of the 10+ years rising channel formation so I do expect a monthly push lower. With the recent weekly rejection of the major previous structure zone, everything is looking like Nas100 will also break the current support level and simply drop further towards the downside. And you can also see that there is the possibility that Nas100 will create a regular head and shoulders in combination with a double top on the daily timeframe which is a massively bearish reversal pattern suggesting that we might see a harsh move lower on Nas100. Keep in mind: Don't get caught up in short term moves and always look at the long term picture; building wealth is a marathon and not a quick sprint📈 Thank you for watching and I will see you tomorrow! My previous analysis of this asset:
FX:NAS100Short
by basictradingtv
41
SPY: FLUSH OR RALLY / MARKET BREADTH / MARKET MAKERS TIMINGDescription: In the chart above I have provided a semi-macro analysis of SPY that compares ongoing market rally and past rallies within the range of 420 & 360 Points. Points: 1. Price Action is fast approaching 420 Resistance that has been indicative of a turn around for past 4 rallies that failed to break the 420 LEVEL. 2. First 2 rallies under the 420 Level showed signs of congruence when it came to market breadth and price action. 3. Last 3 rallies including current one has shown divergence with market breadth along with a distinct pattern of consolidation that is followed by a sudden drop in price action. 4. It is important for price action to have another leg even if current uptrend is continued. First Price Target: 404.64 Bouncing Support Second Price Target: 400 Critical Support Market Breadth: 1. Showing strong signs of divergence with average price action continuing to rise. The Tech Sector is mainly responsible for the upholding of this rally with giants like AAPLE, NVIDIA, AMD, AMAZON, META, & GOOGLE fighting against bearish momentum. 2. For the majority of US INDICES Tech companies like AAPLE, NVIDIA, AMD, AMAZON, META, & GOOGLE represent a large majority of the holdings within many US INDICES. So it is no coincidence for why market breadth may appear weak when only a couple holdings are contributing to rallies meanwhile a large majority of the holdings are in the red. 3. Market Breadth Levels of 4200 have been indicative of volatile declines in price action in the past with an average incoming 10 POINT DECLINE over a day or two. FULL CHART LINK: www.tradingview.com AMEX:SPY
AMEX:SPYShort
by DGSTBROKERACC
NASDAQ Bubble Bust DXY CorrelationThe market peaked in Nov and is in Bubble-Bust-Mode. DXY is breaking out upwards from a multi-year consolidation. Looking back to the DotCom Bubble and comparing NASDAQ to DXY, DXY broke out near the equity peak and reached its peak when NASDAQ was near bottom of the crash. It's not a perfect correlation in shorter time-frames, but close enough that it may be useful on the macro time-frame. If the current Asset/Big-Tech Bubble rhymes with history, look for DXY to continue upward into 110-120 range or higher over the next year or so as NASDAQ plummets back down to reality, e.g. somewhere around the 200 Month Moving Average. Then whenever DXY is crashing back down towards ~100 that may be a good signal that the bottom is in for equities.
TVC:IXIC
by RobBiddle
#NASDAQ - CRASH - 12.000 INCOMING? Nasdaq broke the recent correction lows and closed right at session lows. If we just saw the first wave of a correction, and after that, the relieve rallye to the 50retrace, we now might be poised for the second leg down. Copy the first leg, measure it from the high of the relieve rallye and you end up retesting the old ATH at 12k, what clearly is a major inflection point in the Nasdaq chart. That would probably be an insane buying oportunity, especially in some - at that time probably completly obliterated - high growth stocks. ---- If you wanna protect your portfolio, wait for Nasdaq to retest 13.700 from below and get rejected, that would be your lowest risk/reward short entry. Im not posting full short setups though, cause of reasons :D ---- STAY SAFE out there and good luck on your trading.
UShort
by 10xTrading
How Big is the Tech Bubble?A ratio chart divides the value of the Nasdaq 100 by the value of (S&P 500+Dow 30+Russell 2000). The large spike in the blue line to the left illustrates how the NQ became so overvalued in relation to the S&P, the Dow, and the Russell. If the ratio pulls back, I would say it may find its balance around the lower red line, after retracing the recent parabolic spike like it did in 2000. I think it will keep going higher. I think the high prices of tech stocks are more legitimate this time around. I believe I just made a "this time is different" type of comment lol. Thoughts?
TVC:NDQ
by The_Arena_Trader
4
NVDA Long ideas into earnings Nvidia and AMD have both enjoyed immense popularity by the stimulus packages, the runs in Bitcoin and derivative/competing crypto currencies, as well as a newly found gaming community brought on by the COVID-19 lockdowns. Looking at NVDA's history, and especially since they have talked about releasing the RTX3060, their "consumer" 3000-series card, as well as re-introducing the venerable 1050Ti to help absorb some market demand, I cannot fathom Nvidia missing earnings or not continuing to grow at an asinine pace. I am long Nvidia into earnings, I'll be looking to sell into the IV spike on earnings day. Positions: 5 x NVDA 625 Call, March 21
NASDAQ:NVDALong
by rowingdude