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Education Series: Single-Stock ETPs

Tech Giants Drag NASDAQ 100 Lower

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Websim is the retail division of Intermonte, the primary intermediary of the Italian stock exchange for institutional investors. Leverage Shares often features in its speculative analysis based on macros/fundamentals. However, the information is published in Italian. To provide better information for our non-Italian investors, we bring to you a quick translation of the analysis they present to Italian retail investors. To ensure rapid delivery, text in the charts will not be translated. The views expressed here are of Websim. Leverage Shares in no way endorses these views. If you are unsure about the suitability of an investment, please seek financial advice. View the original at

The NASDAQ 100 index has been trading lower over the past week as tech giants such as Alphabet Inc, Amazon.com, Microsoft Corp, Meta Platforms, and Netflix Inc all plummeted, as investors digested a slew of economic data, disappointing earnings results, and weak forward guidance.

NASDAQ 100 underperformed the rest of the U.S. benchmark indices in 2022 and its performance is likely to remain in the shadow of the Dow Jones Industrial Average in the coming months. From their respective all-time highs, the Dow Jones shed 13%, the S&P 500 declined 21% and the NASDAQ 100 slumped 33% as of Friday.

Analysts have lowered their expectations for the third quarter reporting season, which led to many ‘’beats’’, but gloomy earnings and warnings by growth companies’ executives, including Microsoft, Alphabet, Amazon, and Meta, ignited concerns that the aggressively rising interest rates are slowing down economic growth and is impacting corporate earnings.

On Thursday the U.S. Bureau of Economic Analysis released GDP data for Q3 2022, showing that the economy grew 2.6% YoY exceeding forecast of 2.4% and rebounding from a contraction in the previous two quarters. Excluding trade and inventories, real final sales to domestic private purchasers increased at an anaemic 0.1%, according to government data.

On Friday the Federal Reserve’s favourite inflation rate, the PCE price index was released and showed core inflation came slightly weaker than expected. This raised hopes among investors that a smaller interest rate hike could be delivered in December, while at present the market has fully priced in another 75-basis point hike in November. The weak corporate reports, along with data suggesting the economy is softening is also raising hopes that the Fed could take a less aggressive approach at its December meeting.

Shares of large cap tech companies such as Microsoft, Alphabet and Meta Platforms, which reported downbeat earnings earlier this week, have traded deeply in the red. Amazon.com joined the club of Big Tech firms that have disappointed investors also forecasting a slowdown in sales growth. Apple cautioned revenue growth could see some pressure in the December quarter, but the overall result showed some resilience.

Until we see clear signs of inflation is slowing and a Fed pivot, equity markets are likely to remain volatile and under selling pressure. The daily chart shows that the tech heavy NASDAQ 100 index could extend its corrective rebound in the short-term but is facing heavy overhead resistance from its medium-term down trend line crossing at 12,600. Overall, momentum indicators remain weak at this juncture in time, there are no preliminary signs of the down trend reversing course, therefore we favour further downside in the months ahead.

Nimble traders looking to gain exposure to the QQQ ETF may use our 3x US Tech ETP to take advantage of short-term rebound, and our -3x US Tech ETP to capture short-term declines.

Your capital is at risk if you invest. You could lose all your investment. Please see the full risk warning here.

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Sandeep Rao

Research

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.

Violeta Todorova

Senior Research

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.

Julian Manoilov

Senior Analyst

Julian joined Leverage Shares in 2018 as part of the company’s premier 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.

Oktay Kavrak

Director

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 LS 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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