This website uses cookies to collect usage information in order to offer a better browsing experience. By browsing this site or by clicking on the "ACCEPT COOKIES" button you accept our Cookie Policy.

Chart Advisor: Tech Lift

Investopedia

Contributor:
Investopedia
Visit: Investopedia

Monday, 30th August, 2021

1/ Nasdaq leads indexes higher 

2/ Remote communication in focus as ZM reports 

3/ Call option buying surges on Apple 

4/ The bottom line

1/ Nasdaq Leads Indexes Higher 

Invesco’s Nasdaq 100 ETF (QQQ) pushed another 1% higher, continuing momentum from the Jackson Hole Symposium last week. Tech stocks have made the biggest moves following Powell’s statements. The lack of a hard timeline on an interest rate hike gave investors a sense of confidence that share prices would rise. Apple and Amazon are both up over 3% today, which is a big contributor to the gains on QQQ. Investors are counting on a weak dollar contributing to accelerated foreign sales. However, not all the news generated optimism. Home sales missed analysts’ forecasts once again, exposing lingering scars from the pandemic. Home sales fell -1.8%, vs 0.5% expected.  

The July report missed its forecast by a larger margin. In addition to missing expectations, this also marks two consecutive months where the data has dropped. Total sales are 8.5% lower nationally year over year. “… at the moment there is not enough supply to match the demand from would-be buyers,” said Lawrence Yun, NAR chief economist. Investors appear to be shrugging off this news for now signaling their bullish bias.  

2/ Remote Communication in Focus as ZM Reports 

Investors bid up the share price of Zoom Video Communications (ZM) ahead of the company’s fiscal second-quarter earnings announcement. Analysts are expecting an adjusted earnings per share of $1.16 and over $990 million in revenue from the video conferencing giant. Earnings are expected to be released after the market closes today. While ZM has risen 1.5% today, the company has largely underperformed year-to-date, losing more than 4%.  

The pandemic has pushed ZM toward astronomical growth over the past year, as distance learning and remote work expanded like never before. While ZM has lagged its sector on the year, it has outperformed Verizon (VZ) in that same time span. The chart below illustrates how ZM has recently kept ahead of VZ, while staying relatively in front of State Street’s Communications Sector ETF (XLC) since Q1 earnings in June. 

While investors may seem optimistic before earnings, they may also be wary that ZM may not be able to maintain the sky-high revenue levels it has enjoyed during the pandemic.  

3/ Call Option Buying Surges on Apple 

Apple (AAPL) exhibited unusual option activity today. AAPL’s iPhone 13 is slated to hit shelves in September, and rumors of the new device supporting low-earth-orbit satellite communications has set space and satellite stocks jumping today. Lost in the headlines is AAPL’s more than 3% gain amid elevated option volumes. AAPL has seen nearly 1.5x the average daily volume of options traded, with an overwhelming amount (78%) of this volume being call options.  

This is notable because even as AAPL’s share price set a new all-time high in the session, the majority of option trades suggest traders and investors believe that the stock still has room to move higher. AAPL has had a year-to-date gain of 18%, adding to its nearly $2.5 trillion market cap. For all the bearish words like “taper” and “bubble” stoking investor fear, it’s interesting that the market seems to be expressing that perhaps this bull has a bit more run left in it.  

4/ The Bottom Line 

Tech stocks rose today while home sales fell. The tech move higher will likely continue as Zoom and Apple expect to report positive earnings results.  

Originally posted on 30th August, 2021

Disclosure: Investopedia

Investopedia.com: The comments, opinions and analyses expressed herein are for informational purposes only and should not be considered individual investment advice or recommendations to invest in any security or to adopt any investment strategy.  While we believe the information provided herein is reliable, we do not warrant its accuracy or completeness. The views and strategies described on our content may not be suitable for all investors. Because market and economic conditions are subject to rapid change, all comments, opinions and analyses contained within our content are rendered as of the date of the posting and may change without notice. The material is not intended as a complete analysis of every material fact regarding any country, region, market, industry, investment or strategy. This information is intended for US residents only.

Disclosure: Interactive Brokers

Information posted on IBKR Traders’ Insight that is provided by third-parties and not by Interactive Brokers does NOT constitute a recommendation by Interactive Brokers that you should contract for the services of that third party. Third-party participants who contribute to IBKR Traders’ Insight are independent of Interactive Brokers and Interactive Brokers does not make any representations or warranties concerning the services offered, their past or future performance, or the accuracy of the information provided by the third party. Past performance is no guarantee of future results.

This material is from Investopedia and is being posted with permission from Investopedia. The views expressed in this material are solely those of the author and/or Investopedia and IBKR is not endorsing or recommending any investment or trading discussed in the material. This material is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.

In accordance with EU regulation: The statements in this document shall not be considered as an objective or independent explanation of the matters. Please note that this document (a) has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and (b) is not subject to any prohibition on dealing ahead of the dissemination or publication of investment research.

Any trading symbols displayed are for illustrative purposes only and are not intended to portray recommendations.

trading top