Edition # 16, Buy These Tech Stocks & ETFs As Volatility Returns

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U.S. and global markets are hanging in the balance for a new stimulus to be introduced by congress. It has taken much longer than anticipated and has had compounding effects on consumer sentiment and GDP projections. At this rate, Goldman Sachs has cut its estimations for this year’s GDP growth in half. This is only the tip of the iceberg. Eviction moratorium and enhanced unemployment benefits have expired, leaving 12 million unemployed Americans in a financial limbo as they continue to look for work in a shrinking labor market.

It has also affected investor sentiment. That, coupled with September already being an infamously challenging month, has fast tracked the market’s fourth consecutive week of losses. Although tech has been volatile lately, our AI seems to think that things will turn around soon, as the Invesco QQQ Trust (QQQ) and Vanguard Information Technology (VGT) are now Top Buys for the next 30 days. Conversely, iShares Silver Trust (SLV) has lost some of its heat and is now considered a Top Short, at least for the next 7 days. 

Looking at stocks rated Top Short, we’re noticing the same pattern of industries from previous weeks: retail, auto, and oil & gas. Bed Bath & Beyond Inc (BBBY) and Ovintiv Inc (OVV) are Top Shorts for the next 7 days. Bed Bath & Beyond was assigned Q-factor scores of D in Technical, C in Growth, F in Momentum Volatility and F in Quality Value while Ovintiv received scores of C in Technical and F in Growth, Momentum Volatility and Quality Value. 

A Top Short for the next 30 days, Carvana Co (CVNA) received Q-factor scores of C in Technical, D in Growth, D in Momentum Volatility and F in Quality Value. Navistar International Corp (NAV), another Top Short for the same timeframe, has been assigned scores of D in Technical, F in Growth, D in Momentum Volatility and C in Quality Value.

For the next 30 days, Lennar Corp (LEN) is a Top Buy. It has Q-factor scores of D in Technical, B in Growth, B in Momentum Volatility and C in Quality Value. This makes sense; U.S. home sales are at record levels, and supply is starting to run low. In August alone, the rate of home sales increased by 4.8%, bringing the seasonally adjusted annual rate to just over 1 million units. This is the highest rate we’ve seen since 2006. 

Some of our favorite options trades this week: 

Put Spread Collar in  Invesco QQQ Trust (QQQ) -  Leverage bearish trade that offers portfolio protection for investment portfolios with large tech exposure.

Call Spread Collar in Activision Blizzard Inc (ATVI) - Leveraged bullish trade on one of our favorite video game stocks heading into the major Fall releases.

Performance Update: Our Top Buys are up over 63% since the start of 2017, beating the SPDR S&P 500 ETF Trust (SPY) by more than 5%. In July our Top Buys were up 5.3% and up 1.8% in August.††

The Latest

A way to deal with the current climate is to invest in dividend ETFs. We’ve used our AI and deep learning algorithms to identify the top picks for September. 

Like most of tech, Facebook has experienced a downfall since its August highs. Is now the time to buy the stock? Our AI has evaluated its current performance and its financials to deliver its recommendation.

Using our AI, we’ve identified and evaluated the top Tech ETFs based on the fund flows over the last 90-days, 30-days, and 7-days. These are the ones worth buying – and avoiding.

††As of 8/31/2020. The calculated returns above are based on paper trades and back tests during the relevant measuring period and therefore represent hypothetical performance. The average holding period for each security is 1 month with the return calculation assuming an equally-weighted theoretical portfolio. Returns reflect full reinvestment of dividends. The hypothetical returns do not include advisory fees or transaction costs as Qai does not maintain an investment advisory business and has no assets under management. However, an investor paying a professional advisor would have its return affected by any fees or commissions paid. Past performance is not an indication of future returns. Changes in economic conditions and market factors will affect the returns of investments in different ways. Any investment involves a risk of a loss. All information herein is from sources believed to be reliable but have not been independently verified. No representation or warranty can be given with respect to the accuracy or completeness of the information, and is subject to updating, revision, and amendment. Hypothetical returns are shown against the actual returns for the SPRD S&P 500 ETF Trust (SPY) during comparable periods. The strategy is based on buying an equal amount of all stocks ranked as Top Buys by the Q.ai Factor Models for US Large-Cap Stocks (and an identical back tested strategy employed in the earlier stages of the measuring period January 1, 2017 through August 31, 2020). The Q.ai Factor Models are calibrated to focus on capital appreciation. Q.ai is the trade name of both Quantalytics Research, LLC and Quantalytics Holdings, LLC.