AI doubling down on China Tech, Short Energy

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It feels like we’ve said this for the last three weeks: following strong earnings, tech stocks have proven that the sector’s market valuation hasn’t reached a ceiling yet and continues to eclipse its previous records.

Like most things lately, economic data was mixed this week. Employers added 1.8 million jobs in July, narrowly beating expectations of 1.48 million, but these numbers are down significantly from the 4.8 million jobs added during the month of June.

While Chinese tech stocks have rallied off the March lows, valuations continue to be attractive given the growth prospects for the sector –– the market is huge and a great way to add diversification to your portfolio. Our AI seems to think so too, as it has named Invesco China Technology (CQQQ) a Top Buy for the next 30 days again. Our AI models also appear to be favoring the front-end of the Treasury Curve with ProShares UltraShort 20+ Year Treasury (TBT) and iShares 1-3 Year Treasury Bond (SHY) both recommended as Top Buys.

Enthusiasm toward a speedy coronavirus recovery has dwindled and it shows when you look at our recommended Top Shorts. Royal Caribbean Cruises Ltd (RCL), SPDR S&P Oil & Gas Equipments and Services (XES), and ProShares Ultra Bloomberg Crude Oil (UCO) are among the ETFs rated Top Short by our AI, an outcome that could be very different had this situation approved on a global scale.

This week’s top options trades focus on:

Call Spread Collar in Kroger Co (KR) – leveraged bullish trade that offers exposure to a top-rated consumer staples stock.

Short Call Spread in PNC Financial Services (PNC) –  leveraged bearish trade that serves as a hedge against potential weak bank earnings and a rise in credit risk.

The Latest

Tech ETFs have also been a blessing for investors as they continue to receive inflows over the period, especially when economic indicators present a mixed picture with no clear indication of how the economy will evolve from this pandemic. Using our deep learning and AI technology, we have identified the top tech ETFs for August.

With over 30 million out of work, consumers have been hit hard by the pandemic, which could have a trickling effect on businesses, especially in the consumer discretionary and consumer staple industries. We’ve run our AI models and have determined the top consumer stocks in both categories.