To The Moon

Big-Tech’s Performance

This week, tech companies led the index to new highs, but also caused concern among some investors. The amount of money pooled in Nvidia in the short term is very large, amid important events such as index shifts, while Apple should pull back for a potential $10 billion outflow.

Through the close of trading on June 21, the best performers over the past week were $NVIDIA Corp(NVDA)$ +4.46%, $Tesla Motors(TSLA)$ +2.41%, $Microsoft(MSFT)$ +1.05%, $Amazon.com(AMZN)$ -0.42%, $Alphabet(GOOG)$ $Alphabet(GOOGL)$ -0.84%, $Meta Platforms, Inc.(META)$ -1.4%, and $Apple(AAPL)$ -1.59%.

Big-Tech’s Key Strategy

Is the market looking for a replacement for NVIDIA?

With the S&P's quarterly repositioning, NVIDIA managed to make it into the top two S&P tech sectors by market capitalization with its post-earnings ride, overtaking Apple at the last minute after the WWDC conference and swapping weights between XLK and AAPL, with NVDA receiving tens of billions in inflows and AAPL tens of billions in outflows.

But what goes around comes around, and when the market-wide attention gathered by Nvidia peaks, it is often a point of change. the June 21st encounter was bound to be very intense, and the need for rebalancing has become stronger with NVDA's position high enough in most investors' portfolios.

Investors worried about the market correction, may be the "technology sector" position, slightly decentralized, then it is bound to look for Nvidia's replacement, in this week's relatively strong performance of the company, but also naturally the funds to adjust the position of the preferred target.

Among the large technology companies:

1. MSFT - while also one of the largest weights in the index, its low IV and low beta are more popular with institutional investors, especially those seeking beta neutrality and lower overall portfolio IV;

2. AMZN - which not only stands at the tip of the consumer industry pyramid, but also provides in indispensable infrastructure - has just released 3.5 Sonnet under its Anthropic banner, backed by Google and others, and is also seen as one of the strongest competitors to OpenAI;

3. GOOGL/META - A number of investors have been arguing that AI monetization on a large scale at the application level is the only true commercial success, and that if software companies fail to improve qualitatively, then the growth in demand from hardware companies will also be falsified;

4. $Advanced Micro Devices(AMD)$ - both in terms of improving its own product capabilities and absorbing the demand for NVDA overflow - represents an opportunity for AMD, which has retreated more than it has increased since the beginning of the year;

5. $Taiwan Semiconductor Manufacturing(TSM)$ - The Shovel Seller's Shovel Seller, with reduced geopolitical risk, more money is willing to flow into this money-printing company, pushing valuations higher.

Judging from this week's fund flows, some investors have started to take profits early due to the short-term convergence of too many funds, including speculative funds, on NVDA. Even if they sell before the passive funds adjust their positions, they have to "Sell the Fact".

Big-Tech Weekly Options Watcher

Quadruple Witching Day & End of Season Rebalancing

With a sea of options and futures contracts expiring on June 21, and the end-of-quarter S&P and Dow Jones index tuning as a market-wide guide, the volume of contracts traded on the two $3 trillion brothers, NVDA and AAPL, will also be more important, and derivatives are supposed to serve as a guide to the underlying assets' underlying.

Thanks to NVDA's record highs, NVIDIA CALL has become an increasingly popular trade over the past year, with open interest well above that of the S&P 500, while roughly one-third of NVIDIA-related open options are expected to expire this Friday.

As a result, the momentum driving Nvidia's shares higher could wane after the options expire this Friday, and the "Gamma Squeeze" phenomenon that has been fueling the stock higher could slow down.

Big-Tech Portfolio

The Magnificent Seven form a portfolio (the "TANMAMG" portfolio) that is equally weighted and reweighted quarterly. The backtest results are far outperforming the S&P 500 since 2015, with a total return of 1,963%, while the $SPDR S&P 500 ETF Trust(SPY)$ returned 214% over the same period, before pulling back after a record high.

The broader market hit a new high this week and the portfolio's year-to-date return hit a new high of 30.4%, outpacing the SPY's 15.4%.

The portfolio's Sharpe ratio for the past year was 2.7, while the SPY was 2.2 and the portfolio's information ratio was 1.9