To The Moon

Big-Tech’s Performance

As the market waits for THE rate cut, appetite for risky assets declined, investors boosted safe-haven assets in response to increased market volatility, and defensive sectors of the stock market received inflows.

Reflected in the broader market, is the $DJIA(.DJI)$ and the $NASDAQ(.IXIC)$ divergence.The tech stocks are also trading lower due to the post-earnings window and the wait for jobs data and the Fed resolution.Corporate hotspots such as Tesla's FSD expectations, Apple's launch, and NVIDIA's Blackwell progress will determine investor sentiment in the coming months.

Currently, the market implies that the Fed has a 43% probability of cutting rates by 50 basis points in September, a 40.7% probability of cutting rates by 100 basis points during the year, and 175 basis points by March next year, so the magnitude and tempo of the rate cuts will be the market's biggest concern.

To the close of trading on September 5, the past week's performance of big tech companies was mixed. $Tesla Motors(TSLA)$ rallied more +11.87%, $Amazon.com(AMZN)$ +4.15%, $Meta Platforms, Inc.(META)$ +0.02%, while the rest closed lower, $Microsoft(MSFT)$ -0.54%, $Apple(AAPL)$ -1.81%, $Alphabet(GOOG)$ $Alphabet(GOOGL)$ -3.44%, $NVIDIA Corp(NVDA)$ -14.65%.

Big-Tech’s Key Strategy

Tesla's "Paradigm Shift"?

Tesla had a strong week and broke out of its consolidation since August.There were two main reasons for this:

1. Announced August sales surge in China to undo the sales decline

2. Official X account announces new FSD developments and expects to land in Europe and China in Q1'25

These two pieces of news are enough to invigorate a hotspotless market as opposed to the mediocrity of the latter month of earnings.While Tesla previously expected FSD to hit the ground running during the year, that too seems to have been delayed at this point.Recent news is that Tesla has been authorized to test its advanced driver assistance system on some streets in Shanghai, and has passed the authoritative national vehicle data security standards and requirements.

However, TSLA has always been a ticket of anticipation, and now due to the overall industry-wide decline of new energy, Tesla has been forced to transform more in other directions, and this shift is the same as Apple's shift from a hardware company selling stand-alone computers to the current shift centered on software and services, which is a kind of "Paradigm Shift.It is a "Paradigm Shift", which refers to a fundamental change in the underlying theoretical framework or standard way of practicing in a particular field.

Tesla, for one, has gone from electric car maker to integrated energy and AI company.

1. First, energy revenues have increased dramatically, reaching $3 billion in the Q2 earnings report, with a goal of 1,500 GWh of energy storage deployment by 2030.

2. Once FSD is in place, Tesla will become a serious "SaaS" company, not only in terms of technological advancement, but also in terms of potentially capturing a larger share of the market.

   

Of course, the valuation of TSLA, different investors are very different, and because of the overall decline in the new energy industry, sales and profits are down, resulting in the company's overall debt ratio increased, free cash flow decline (but relative to the industry is still the leading level), it is difficult to accurately value through the expected, to determine the share price is the investor's "expectationsIt is difficult to accurately value the company through expectations, and it is investors' "expectations" that determine the stock price.

Big-Tech Weekly Options Watcher

Options on Tesla are also active again after earnings season is essentially over, and options trading provides more insight into investor expectations and the divergences therein.

Looking at open orders for September 20 month options, for Call, there is a large buildup at both 230 and 250, and in fact, at current prices, TSLA longs are starting to increase their bets on Call as well, while Covered longs may instead be lifting positions.It's very big resistance for the PUT, which has relatively very little volume and is a bit more bearish on a relative basis.Monthly options are also centered 210-210, which is also relatively a bit higher than previous expirations, suggesting that the overall picture is still bearish.

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 1,948.9%, while the $SPDR S&P 500 ETF Trust(SPY)$ has returned 216.5% over the same period, once again pulling ahead.

With the broader market pullback this week, the portfolio returned 29.5% year-to-date, outperforming the SPY by 16.3%.

The portfolio's Sharpe Ratio for the past year has fallen back to 1.6, equal to the SPY's 1.6, and the portfolio's Information Ratio is 1.0.