In the 36th week of the year (ending September 8th), The S&P 500 Top 25 list by momentum outperformed the S&P 500 index (-1.03% vs -1.29%). Meanwhile, the Nasdaq 100 Top 25 list outperformed the Nasdaq 100 index (-0.54% vs -1.36%). Tech stocks led the downturn in the market. In the 35th week, the S&P 500’s Top 25 outperformed the S&P 500 index (+4.49% vs +2.50%) while the Nasdaq 100 Top 25 outperformed the Nasdaq-100 (+5.79% vs +3.67%). The main leaders of the upswing here were also tech stocks.
The behaviour of the Volatility Index VIX (also known as the “fear gauge”) has been quite interesting over the past few weeks:
During the Nasdaq 100’s grand swing up in Week 35, the VIX trended high while it was more volatile on its downswing in Week 36. Going forward, the Put Call Ratio on VIX Options contracts also show some interesting trends:
Overall, the ratio for the month as of the 20th has a classic bullish indicator at 0.52, with successive weeks being even more bullish. However, this doesn’t necessarily imply that the VIX will continue to rise. For contrarians, it is a signal to go against the wind.
If the bullish trend continues, the VIX will possibly plunge. But if the markets show tech rotating in and out of favour on a week-on-week basis, the VIX will possibly rise. This creates an interesting tactical opportunity if one were to use the VIX as a buffer to make a bet on tech stock trajectories.
As an earlier article had indicated, this is made possible by the newly-introduced “Short Volatility Long Tech” ETP (or “SVLT”). The ETP goes long on the Nasdaq-100 while going short on the VIX to potentially buffer any suffering of performance. In terms of performance over the past 3 months, the ETP runs roughly on par with the Nasdaq-100 despite the cost of the protection purchased.
SVLT is an innovation in the crowded ETP space: a strategy run by a fund manager that is made available at a low price, comes with baked-in low fees and easily tradable on exchanges. Professional investors will find this to be an interesting proposition for consideration as tech stocks continue to see-saw (or even rationalize downwards).
Sandeep joined Leverage Shares in September 2020. He leads research on existing and new product lines, asset classes, and strategies, with special emphasis on analysis of recent events and developments.
Sandeep has longstanding experience with financial markets. Starting with a Chicago-based hedge fund as a financial engineer, his career has spanned a variety of domains and organizations over a course of 8 years – from Barclays Capital’s Prime Services Division to (most recently) Nasdaq’s Index Research Team.
Sandeep holds an M.S. in Finance as well as an MBA from Illinois Institute of Technology Chicago.
Julian joined Leverage Shares in 2018 as part of the company’s primary expansion in Eastern Europe. He is responsible for web content and raising brand awareness.
Julian has been academically involved with economics, psychology, sociology, European politics & linguistics. He has experience in business development and marketing through business ventures of his own.
For Julian, Leverage Shares is an innovator in the field of finance & fintech, and he always looks forward with excitement to share the next big news with investors in the UK & Europe.
Violeta joined Leverage Shares in September 2022. She is responsible for conducting technical analysis, macro and equity research, providing valuable insights to help shape investment strategies for clients.
Prior to joining LS, Violeta worked at several high-profile investment firms in Australia, such as Tollhurst and Morgans Financial where she spent the past 12 years of her career.
Violeta is a certified market technician from the Australian Technical Analysts Association and holds a Post Graduate Diploma of Applied Finance and Investment from Kaplan Professional (FINSIA), Australia, where she was a lecturer for a number of years.
Oktay joined Leverage Shares in late 2019. He is responsible for driving business growth by maintaining key relationships and developing sales activity across English-speaking markets.
He joined Leverage Shares from UniCredit, where he was a corporate relationship manager for multinationals. His previous experience is in corporate finance and fund administration at firms like IBM Bulgaria and DeGiro / FundShare.
Oktay holds a BA in Finance & Accounting and a post-graduate certificate in Entrepreneurship from Babson College. He is also a CFA charterholder.
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