Up or Down? What the market Divergence mean?

MaverickWealthBuilder
2023-01-04

The first trading day of US market implied a lot. Between Up and Down, investors use different strategies.

More signals of recession in 2023, investors could use different trading tools, such as

  • Closing long positions.Esp for companies that are under great pressure during the recession cycle.
  • Be short, to make the overall exposure short, through stocks, or industries and index ETFs.
  • Hedging. those still holding stocks, could hedge by derivatives, such as stock index futures and options. The common method for individual stocks is to buy PUT or Sell Covered CALL.

On the first trading day of 2023, all three major index of US stocks declined, of which$NASDAQ(.IXIC)$ down 0.76%. However, the difference between individual stocks and plates is very big.

From sectors,

Only the energy sector was in total deline. Energy increased the most in 2022. Judging from the current situation of supply and demand, the oil price has dropped, and other commodities have also fallen. The expectation of the energy sector in 2023 is not very optimistic, so the outflow of funds is normal.

The science and technology sector is divided, semiconductor-related decline is large; On the contrary, information services and software applications are rising. Apple plunged 3.7%, while Microsoft fell slightly by 0.1%.

The medical sector is also divided, with the medical security industry declining greatly, followed by biotechnology, but the medical service and diagnosis industries rising. Pharmaceutical companies generally rose slightly and fell slightly.

In addition to the insurance and credit intermediary industries, the financial sector is rising as a whole; The industrial sector is similar.

The overall increase of communication services is slightly higher, and there are good companies in content services and entertainment. META rose 3.7%.

Optional consumption is polarized, with Internet retail, resorts and other industries increasing by more than 2%, but Tesla plunged by 12% again.

Obviously, the differentiation of big tech enterprises is high. $Apple(AAPL)$-3.7%, $Microsoft(MSFT)$-0.1%, $Amazon.com(AMZN)$+2.2%, $Tesla Motors(TSLA)$-12.2%, $Alphabet(GOOG)$+1.0%, $Meta Platforms, Inc.(META)$+3.7%, $Netflix(NFLX)$+0.02%.

The differentiation of big techs also means that investors' emotions are very different. At least for now, the long-short game will be fierce.

In addition, from the perspective of the capital flow of ETFs in different industries, the industrial sector$Industrial Select Sector SPDR Fund(XLI)$The inflow is the most obvious, followed by real estate$Vanguard Real Estate ETF(VNQ)$,Mainly because the pressure to raise interest rates has weakened. Medical sector$Health Care Select Sector SPDR Fund(XLV)$Financial sector$Financial Select Sector SPDR Fund(XLF)$The recent outflow pressure is relatively high.

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Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

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