The Great Unwind is Underway

BY ANDREW GIOVINAZZI

December 05, 2023

Yo Pit Crazies,

You have a day to sign up for my webinar on how to turn your trading acct into your own personal hedge fund.

Apple Inc (Ticker: AAPL) has not had growing revenue in 2 years. But it held steady revs over the last two years and it was enough to drive its stock price to all time highs this summer on the AI wave. Monday was almost a selloff but could not muster the umph to get to $185.

AAPL 5 Day Chart with 1 min candles

Mark, Bill, Licia and myself covered Ark Funds Ark Innovations and Tech Fund (Ticker: ARKK) in the Pit Report last week and the Ticker Show Monday; you can get it when you download the Option Pit App. I recall 2020/2021 when ARKK turned in a massive performance going from the $35 low to $150 before a trip back down to $35 this year. With tech, in general what goes up will eventually come down. I think ARKK makes a good sideways Bitcoin bet with its stake in Coinbase Inc (Ticker: COIN) as the last exchange standing.

Will tech continue to soar in 2024 or is it time to shut the door?

The Tech Cycle is boom, bust and then the winner takes the spoils

The internet had many giants at the beginning but only a few are left. Social media, where is that myspace account? AI will be the same although many companies will benefit from it and become more productive. That is my theme for 2024.

Below is the Dow Jones industrial average trust (Ticker: DIA) and Russell 2000 trust (Ticker: IWM) compared to the QQQ. Note the QQQ is a bit toppy lately as DIA and IWM keep moving higher. I think this trend will continue as interest rates peak and companies have gotten used to higher interest rates.

QQQ compared with IWM Green and DIA Blue

There is considerable chop coming ahead as some of the multiples on tech shrink. Mark and I covered this in 2022 only to watch QQQ dip to pre covid prices. 2023 QQQ got its groove back but dollars always flow out of the higher valuation stocks eventually as traders want less risky performing stocks. The long DIA, IWM short QQQ finally makes a nice trade here as the big funds sit on those lofty QQQ valuations.

Or I don’t have to chase direction at all and try my strategy for truly non-correlated returns. In that case, stocks just have to move somewhere.

To Your Trading Success,