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MSFT Microsoft Options Ahead of Earnings ! Growth Thesis !If you haven`t bought MSFT when they Bought 49% Stake in OpenAI, creator of ChatGPT: Or sold on their warning to investors: Then analyzing the options chain and chart patterns of MSFT Microsoft prior to the earnings report this week, I would consider purchasing the 345usd strike price Calls with an expiration date of 2024-1-19, for a premium of approximately $28.95. If these options prove to be profitable prior to the earnings release, I would sell at least half of them. The investment by Microsoft in OpenAI signifies a significant boost to their artificial intelligence capabilities. OpenAI's advanced technologies and expertise in AI research and development could potentially enhance the capabilities of Microsoft's Bing search engine. With access to powerful AI algorithms and resources, Bing may be able to offer more personalized and accurate search results, thereby attracting users who seek a more refined search experience. Microsoft has been making strategic moves to expand its presence in various sectors, including cloud computing and enterprise services. By integrating Bing into its ecosystem of products and services, Microsoft can leverage its existing user base and partnerships to promote Bing as a viable alternative to Google. In recent years, Google has faced scrutiny over data privacy concerns and antitrust issues, which could create an opportunity for Bing to gain traction among users seeking more privacy-focused alternatives. Additionally, Microsoft has been actively investing in marketing and advertising efforts to raise awareness about Bing and improve its market positioning. While Google currently holds a dominant position in the search engine market, the landscape is dynamic and subject to change. If Microsoft successfully leverages its partnership with OpenAI to enhance Bing's capabilities, coupled with strategic marketing initiatives, it could potentially chip away at Google's market share over time. The implementation, by Microsoft, of a chatbot like ChatGPT, powered by OpenAI's advanced natural language processing capabilities, could indeed provide an opportunity for consumers to find the cheapest price online for the same product. In an era where price comparison and cost-saving measures are highly valued by customers, this feature could be a valuable asset for Bing. Amazon's reputation for having expensive and overvalued prices has been a topic of discussion among consumers. While Amazon provides a wide range of products and convenient shopping experiences, some users have expressed concerns about the pricing competitiveness on the platform. This presents an opening for Bing to attract cost-conscious consumers who are actively seeking better deals. The concern over the origin of products, particularly those manufactured in China, has gained attention in recent years. Some consumers prefer to avoid purchasing Chinese-made products due to quality, safety, or political reasons. If Bing can provide a search experience that allows users to filter or identify the origin of products more effectively, it could cater to a segment of consumers who prioritize alternative sourcing. I think MSFT will be one of the winners of the AI race. Looking forward to read your opinion about it.
NASDAQ:MSFTLong
by TopgOptions
2
MSFT suppressed by the 3.000 level of the golden sectionMSFT suppressed by the 3.000 level of the golden section This chart shows the weekly candle chart of Microsoft stock in the past two years. The graph overlays the low point at the end of October 2022 against the golden section. As shown in the figure, Microsoft's stock has reached another new high this week, breaking through the highest point at the end of 2021! But the weekly pattern of Microsoft stock this week is a long shadow line, with the highest point precisely suppressed by the 3.000 level of the golden section in the figure! Based on last week's weekly pattern, Microsoft's stock market is likely to enter a contraction triangle consolidation state in the future!
NASDAQ:MSFT
by Think_More
SPX/ES - An Analysis Of The 'JPM Collar'Over the last two quarters, financial social media has cared a lot about the "JPM Collar," a series of very large options trades that JP Morgan uses in one of the funds it offers its clients. The theory for speculators is that the JPM collar will be used to constrict the market within a certain range. But as for how that plays out, it's hard for a trader to anticipate, especially amid the daily chop. The levels are on the chart and you can reference them yourself. Below is a print of monthly bars, which is easier to see since I have to compress the TradingView chart to make the bars work: If you're not familiar options, the general idea is this: These options blocks expire September 29 JPM will lose a lot of money if price is over 4,665 or starts to approach 4,665, especially if it happens right away JPM will lose a lot of money if price goes under 3,550, especially if it happens right away JPM will lose a lot of money if price goes under 4,215, especially if it happens right away But a nuance of being long 4,215 calls is that if price is significantly over 4,215 by September, they will make a lot of money on their calls. Geopolitical Risks Before we begin, I'll warn you, as I do in every post, that the geopolitical situation is tense. NATO is at war with the Russian Federation inside of Ukraine and the International Rules Based Order is always talking about "de-risking, but not decoupling" from Mainland China under President Xi Jinping. The risk for markets is, short of a situation where a tectonic/geothermal event surprises everyone and causes the crash of crashes, is that Xi gets up one night and throws away the Chinese Communist Party. Since Beijing business hours are New York night, you'll wake up to quite the gap down that will be hard to recover from, for the Chinese Communist Party and former Chairman Jiang Zemin and its cronies are guilty of the 24-year-long persecution and genocide against Falun Dafa's 100 million practitioners. The Call The most most notable thing about price action is as June closed, range equilibrium between the June high and the October low is exactly 4,000.00 points. Something else I stumbled upon when preparing for this post is that when comparing the Dow, Nasdaq, and SPX futures monthly bars, the three have completely converged. This is the first time since the **2022 top** that this has happened. You can see it on the weekly as well There used to be quite the delta, which allowed for stock picking and trading. If you ask me, what three memelines coming together all at once means is that the markets reached peak overbought, and genuine "overbought" isn't something you can see with an indicator. The daily shows this really only manifested in June. There are some problems with more uppy, as I explain in my calls below on the VIX, which needs to go up so that whales can go back to collecting free money selling volatility: VIX - The 72-Handle Prelude (But note that under the current conditions being summer and we're not that bearish right now, we may only see VIX 50) And the fact that the Nasdaq is just so far away from its trendline that going more parabolic is hard to believe. Nasdaq NQ - A Fundamental and Technical Warning Signal I don't normally call exact areas, but I put a white box with a dolphin because I think price is going there, and will do so fast, like, mid-August fast. That box means 3,778~. This means JPM will be green on out of the money calls, red on its own calls, and red on the 3,550 puts. But JPM doesn't lose money to begin with because they're hedged and will be compensating for the drawdown in other ways, like the alpha they'll generate from going big block long in the dumps under 4,000. The other advantage is it will trap bears who think it's finally the apocalypse they've long been awaiting for the ponzi to go to zero, and they'll buy puts and buy puts even though the iVol is insane from VIX being over 50. Once the craziness is done, the markets will recover, and whoever sold will probably by trapped. So, be careful out there. Wall Street's best laid plans can be blown to pieces in an hour by Heaven, for men are no better than mice in this boundless Cosmos.
CME_MINI:ES1!
by LordWrymouth
6
Nasdaq - The Great Bear TrapIn recent analysis on the state of the markets, I note that the notion that we're "in a bull market" is actually really dangerous, and how, if you really want to see healthy markets into the future, you don't want to see a new all time high print yet, because we're just too far over the trend: Nasdaq NQ - A Fundamental and Technical Warning Signal Moreover, Q2 just finished strong, and with a new quarter, comes a new deployment of the algorithms. The infamous "JPM Collar" is something I discussed in a recent post: SPX/ES - An Analysis Of The 'JPM Collar' Namely that I believe it forecasts a serious correction in the markets. But at the same time, it has until September to even start, really. And it's dangerous to be long right now because the VIX is so low and we've been in a bullish impulse inside of bearish market conditions for so long, which I note below VIX - The 72-Handle Prelude You can see the first manifestation of this principle has begun in both the VIX, and the UVIX 2x leveraged bull ETF: You might look at that and think "lol it gave all its gains back" but this is actually what you want to see if it's going to run a bit. I also have open calls for Tesla, which are short term, albeit significantly, bearish. Tesla - What To Expect Until September? And an open call on Netflix where I actually believe it will retrace to the $170s during the next major correction. Netflix - I Hope You Like Catching Knives So where we're at with Nasdaq futures is that it made lower highs while the SPX made higher highs: The divergence is noise for the short term, but if you ask me, it means that in the long term, if we see a dump, and then a bounce, that Nasdaq will actually take out the high while SPX will be a laggard. What Friday's price action showed is that both SPX and Nasdaq have begun to dump. If you ask me, this is because before we can go higher, we must go lower. Sells have to be matched with buys and buys have to be matched with sells, after all. And at this point, we haven't seen any downside in the markets since March. It's too extreme. Two important areas of note is we have the daily pivot around 14,800 and the gap around 14,500. Both of these are places that I expect to see attempts at bounces that will not come to fruition. Because you need to give people a chance to buy the dip and then for them to get stopped out. I believe that the reason things will dump, and they may dump violently, and fast, is to crank the VIX and have all the permabears finally see their "opportunity" emerge to get short for "the crash." Only for markets to bounce through the end of August while everyone with money is at the sea side and VIX dies a slow death back to a 9-handle while volatility gets sold off for free money again. By then, nobody will want to be short anymore. Everyone will have capitulated. Then the fireworks can start, and early bears will miss the move, much to their consternation. So, I believe that Nasdaq and tech stocks give the opportunity to short through the next few weeks. On Wednesday, we have CPI, which has not mattered in months, but may matter a lot now while the markets pretend to care about whether the Fed hikes rates again. Then we have FOMC on July 25 and a Nasdaq 100 "rebalance" on the 24th. A recovery through the end of July and all the way through the end of August is a very likely scenario. Until then, I believe we will see violent and significant downside, and it finally gives an opportunity trade puts and bear ETFs until you see really significant bullish movement in price at key levels, and then look for longs. But the next time it's time to go long, it's only a scalp. After Q3, the remainder of 2023 and the early part of 2024 is likely to be quite dangerous. There are more important things in life than making money. Make sure you take good care of yourselves and your family and friends. Make sure you make up for your regrets as soon as possible, lest you find yourself with no further chances to set right what was set wrong.
CME_MINI:NQ1!
by LordWrymouth
1
FTC Appeals to Block Microsoft Activision MergerI am providing a crucial update regarding the recent news of the Federal Trade Commission's (FTC) decision to appeal against the proposed merger between Microsoft and Activision. This development has significant implications for the tech industry, particularly for those who have invested or are considering investing in Microsoft stock. The FTC's decision to appeal the merger indicates that regulatory authorities are scrutinizing the potential consequences of this consolidation. While mergers and acquisitions can often lead to positive outcomes, such as improved products and services, it is essential to approach this situation cautiously, considering the potential risks and uncertainties ahead. As tech traders, it is crucial to carefully evaluate the potential impact of this appeal on Microsoft's stock performance. The uncertainty surrounding the outcome of the appeal, coupled with potential delays or even the possibility of the merger being blocked, could significantly influence the company's stock value in the short to medium term. Therefore, I strongly advise you to exercise prudence and consider holding off on buying Microsoft stock until further clarity emerges regarding the outcome of the FTC's appeal. By doing so, you can better protect your investment and mitigate potential risks associated with this merger. It is important to understand this is not financial advice but rather an alert to the potential implications of the FTC's appeal on Microsoft's stock performance. As always, I encourage you to consult your financial advisor or conduct thorough research before making investment decisions. In conclusion, the FTC's decision to appeal the Microsoft-Activision merger has introduced an element of uncertainty into the market. By adopting a cautious approach and refraining from immediate stock purchases, you can better position yourself to make informed investment choices once more clarity on the situation emerges.
NASDAQ:MSFT
by bryandowningqln
MICROSOFT Remains a buy as long as the 1day MA50 holds.Microsoft / MSFT turned sideways inside the 4 month Channel Up after it hit the 350 Resistance (and All Time High) and got rejected. The price is now approaching the bottom of the Channel Up and the 1day MA50. The 1day MA50 has been supporting since January 26th. As long as it holds, buy and target 360. If the price closes a 1day candle under it, sell and target 315. A closing under the 1day MA100, can initiate a bearish reversal. Notice: the 1day RSI is holding its Rising Support, keeping the momentum bullish. Follow us, like the idea and leave a comment below!!
NASDAQ:MSFTLong
by TheCryptagon
6
MICROSOFT remains bullish as long as the MA50 (1d) holdsMicrosoft is having a technical pull back inside the Channel Up that started at the beginning of the year. It is testing the first Support level, the Rising Support line inside the Channel, with the second level being the MA50 (1d). As long as it holds, the trend remains bullish. Trading Plan: 1. Buy above the MA50 (1d). 2. Sell if a (1d) candle closes under the MA50. Targets: 1. 360.00. 2. 305.00 (expected contact with the MA100 1d).
NASDAQ:MSFTLong
by TradingBrokersView
MSFT Microsoft's ChatGPT VS AMZN Amazon and GOOGL GoogleIf you haven`t bought MSFT here: Then you should know that in a rapidly evolving digital landscape, Microsoft's strategic acquisition of a 49% stake in OpenAI, the developer of the powerful language model ChatGPT, has positioned the tech giant to potentially challenge market leaders Google (GOOGL) and Amazon (AMZN). With ChatGPT's advanced natural language processing capabilities, Microsoft is poised to capitalize on the growing demand for intelligent conversational interfaces and revolutionize the way users interact with search engines and online shopping platforms. Revolutionizing Search and E-Commerce: One significant advantage of ChatGPT is its potential to transform the search landscape. Users seeking specific information or products can engage in natural language conversations with the chatbot, refining their search queries and receiving highly relevant results. This conversational search experience, powered by ChatGPT's contextual understanding, could entice users to migrate from traditional search engines to Bing, fostering market share growth for Microsoft. In the realm of e-commerce, the integration of ChatGPT holds tremendous potential. Users could leverage the chatbot to interactively explore product options, compare prices, and access personalized recommendations. By providing a seamless and intelligent shopping experience, Microsoft can challenge Amazon's dominance, especially if concerns over pricing and product origin come into play. Microsoft's commitment to transparency and user control over data privacy may also resonate with consumers who prioritize these factors in their online shopping decisions. If I had to buy some options, that would be the following Calls: 2024-1-19 expiration date $350 strike price $21.85 premium Looking forward to read your opinion about it!
NASDAQ:MSFTLong
by TopgOptions
Peeking into Super SevensIn our previous paper , we outlined how investors can use CME's Micro S&P 500 Futures to hedge beta exposure and extract pure alpha. The paper referenced that the Super Sevens stocks (Amazon, Apple, Google, Meta, Microsoft, Nvidia, and Tesla) will continue to outperform the broader S&P 500 index. Not only do these stocks benefit from passive investing and ESG investing, these firms also have solid fundamentals to back up their gargantuan valuations. Each of the firms in the Super Sevens offer unique value drivers. Each firm is a market leader in its space and has demonstrated resilient earnings capacity and solid growth potential. Still, each also has its own set of risks. Notably, with the Super Sevens the value drivers outweigh the potential risks. AMAZON VALUE DRIVERS • Blistering profits from AWS offering with dominant market share of 33%. • Market dominance in e-commerce and solid supply chain network. • Successful new categories: Kindle (publishing), Alexa (voice assistant), and Prime (video streaming). POTENTIAL RISKS • Heavy reliance on AWS for profits. Slowing growth in AWS due to slowdown in corporate IT spending. • Low profit margins in e-commerce business. Slowing growth due to lower consumer spending. • Rising competition in cloud services and e-commerce. ANALYST PRICE TARGETS • Across 54 analysts providing a 12-month price target, 42 (77%) having a strong buy rating, 7 (13%) of them have a buy rating, 4 (7%) suggest a hold, while just 1 (2%) has a strong sell rating. • Average 12-month price target stands at 137, with a maximum of 220 and a minimum of 85. TECHNICAL SIGNALS • Technical signals point to momentum deeply in favour of Amazon shares. Oscillators point to buy and Moving averages point to a strong buy. • In aggregate, technical signals point to a buy. APPLE VALUE DRIVERS • Product category definers. Dominant and still growing iPhone demand. • Solid eco-system which is extremely hard to displace. • Control over both software and hardware enables specialized tailored improvements. • Sticky services such as App store, Apple Pay, and potentially Apple BNPL. POTENTIAL RISKS • Apple is heavily reliant on external fabricators exposing it to supply-chain bottlenecks. • Heavily dependent on iPhone sales. • Rising dependence on future growth in unexplored new categories. ANALYST PRICE TARGETS • Across 42 analysts providing a 12-month price target, 22 (52%) having a strong buy rating, 6 (14%) of them have a buy rating, 13 (31%) suggest a hold, while just 1 (2%) has a strong sell rating. • Average 12-month price target stands at 187, with a maximum of 220 and a minimum of 140. TECHNICAL SIGNALS • Technical signals point to solid momentum favouring long position in Apple shares. Oscillators point to buy and Moving averages point to a strong buy. • In aggregate, technical signals point to a strong buy despite Apple trading at near its all-time-high. GOOGLE VALUE DRIVERS • Google is the dominant search engine (86% market share). • Phenomenally successful and effective ad-targeting capabilities. • Heavy investments in future innovation enabling leapfrog into new verticals such as Android, Waymo (FSD & Maps). • Successful early acquisitions such as YouTube, Android, Applied Semantics & DoubleClick (AdSense), Nest (Home Automation). POTENTIAL RISKS • Massive reliance on ad revenues via search for profits. Slowing ad spend as firms cut back on spending. • Non-trivial dependence on cloud revenue for growth exposes them. Slowing cloud revenue growth due to lower corporate IT spending. • Failure to expand into new domains such as social media, wearable tech, and gaming. ANALYST PRICE TARGETS • Across 52 analysts providing a 12-month price target, 40 (77%) having a strong buy rating, 7 (13%) of them have a buy rating, while 5 (10%) suggest a hold. None of the analysts have a sell rating. • Average 12-month price target stands at 131, with a maximum of 190 and a minimum of 100. TECHNICAL SIGNALS • Technical signals point to decent momentum favouring Google shares but prices are at tiny risk of oscillating downwards. Oscillators point to neutral while Moving averages point to a strong buy. • In aggregate, technical signals point to a buy. META VALUE DRIVERS • Market monopoly on social media with high penetration across global markets on multiple platforms. • Flagship Facebook platform continues to see growth with 2.9 billion monthly active users (MAU). • Successful acquisitions have provided them with a wide suite of social media platforms – WhatsApp (2 billion MAU) and Instagram (2 billion MAU). • Successful developer tools (Graph, Hydra, React) have allowed them to build useful SDK (Software Development Kit). Potential sources of enterprise revenue from these. POTENTIAL RISKS • Increasing competition from TikTok. • Privacy concerns have a direct revenue impact e.g., Apple’s new privacy policies. • Falling market share for flagship Facebook in advanced economies. • High reliance on ad-sales. Slowing ad sales as firms cut back on spending. • Shaky bet on the Metaverse which is starting to fade. ANALYST PRICE TARGETS • Across 60 analysts providing a 12-month price target, 39 (65%) having a strong buy rating, 7 (12%) of them have a buy rating, 10 (17%) suggest a hold, 1 (2%) sell rating, and 3 (5%) has a strong sell rating. • Average 12-month price target stands at 281, with a maximum of 350 and a minimum of 100. TECHNICAL SIGNALS • Technical signals point to decent momentum favouring Meta shares. Oscillators signal neutral indicating a tiny risk of shares shedding gains while Moving averages point to a strong buy. • In aggregate, technical signals point to a buy. MICROSOFT VALUE DRIVERS • Sheer dominance of Windows (74% market share) & MS Office. • Deep roots in MS Office enables the firm to straddle across consumers & enterprise. • Diversified software offerings - cloud (Azure), gaming (Xbox), enterprise (Windows Server and SQL), search (Bing), productivity (Office), collaboration (Teams), and AI (through Open AI's ChatGPT). • Active M&A activity to acquire assets - LinkedIn, OpenAI, GitHub, Skype, Mojang, Nokia, Activision-Blizzard (Pending). • Besides Windows, Microsoft controls dev frameworks such as .Net further strengthening their grasp on SW dev. POTENTIAL RISKS • Limited success in hardware offerings unlike Apple. • Multiple major acquisitions have fizzled – Skype and Nokia. • Limited adoption in enterprise software. ANALYST PRICE TARGETS • Across 51 analysts providing a 12-month price target, 37 (73%) having a strong buy rating, 6 (12%) of them have a buy rating, 7 (14%) suggest a hold, while just 1 (2%) has a strong sell rating. • Average 12-month price target stands at 345, with a maximum of 450 and a minimum of 232. TECHNICAL SIGNALS • Technical signals point to decent momentum favouring Microsoft shares. Oscillators are at neutral while Moving averages signal a strong buy. • In aggregate, technical signals point to a strong buy. NVIDIA VALUE DRIVERS • Market dominance in discrete GPU’s (80%). • Early mover in AI hardware which gives them a lead over the competition. • Raytracing, DLSS, Neural Network cores. • Nvidia’s CUDA is the primary choice for training ML models. • Market dominance in high-growth data centre graphics hardware (95%) and super-computing hardware. • Successful enterprise partnerships – car manufacturers using Nvidia software. • Emerging tech such as AI and VR require more graphics intensive processing driving demand for Nvidia’s products. POTENTIAL RISKS • Hardware-focused business model exposes it to supply-chain risks and bottlenecks. • Extremely high P/E of 225 dependent upon expectations of future growth in AI. • Losing market share in discrete GPUs and enterprise GPUs to AMD and Intel. ANALYST PRICE TARGETS • Across 50 analysts providing a 12-month price target, 36 (72%) having a strong buy rating, 6 (12%) of them have a buy rating, 7 (14%) suggest a hold, while just 1 (2%) has a sell rating. • Average 12-month price target stands at 444, with a maximum of 600 and a minimum of 175. TECHNICAL SIGNALS • Technical signals point to solid momentum favouring long position Nvidia shares. Oscillators point to buy and Moving averages point to a strong buy. • In aggregate, technical signals point to a strong buy despite Nvidia relentless and unrivalled price ascent. TESLA VALUE DRIVERS • Early mover in EV’s with dominant market share in US (62%). • Dedicated and loyal customer base. • Vertical integration of EV value chain allows it to reduce reliance on external suppliers. • Early investment in large factories that will allow them to scale output more efficiently. • Huge and monetizable supercharger network by opening it up to other EV makers. • Subscription model for software enables revenue generation after product sale. • Long term vision has allowed Tesla to create entirely new products such as supercharger network, battery banks, home power backup and solar roofs. • Tesla’s planned Robotaxi and entry into car insurance can be hugely disruptive. POTENTIAL RISKS • Increasing competition from automobile majors as well as Chinese EV firms. • Tesla’s brand is deeply entangled with Musk’s reputation. • Dependence on government incentives to make Tesla affordable. • Continued access to battery metal minerals. • Ongoing and unresolved production scaling challenges. ANALYST PRICE TARGETS • Across 46 analysts providing a 12-month price target, 18 (39%) having a strong buy rating, 5 (11%) of them have a buy rating, 17 (37%) suggest a hold, 1 (2%) has a sell rating, and a 5 (11%) hold a strong sell rating. • Average 12-month price target stands at 201, with a maximum of 335 and a minimum of 71. TECHNICAL SIGNALS • Technical signals point to solid momentum favouring Tesla. Oscillators point to buy and Moving averages point to a strong buy. • In aggregate, technical signals point to a strong buy. SUMMARY The Super Sevens are well positioned to continue outperforming the wider market. As mentioned in our previous paper , investors can use a beta hedge to nullify the effects of the broader market (S&P 500) and extract pure alpha from the growth of the Super Sevens. MARKET DATA CME Real-time Market Data helps identify trading set-ups and express market views better. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com DISCLAIMER This case study is for educational purposes only and does not constitute investment recommendations or advice. Nor are they used to promote any specific products, or services. Trading or investment ideas cited here are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management or trading under the market scenarios being discussed. Please read the FULL DISCLAIMER the link to which is provided in our profile description.
Editors' picks
NASDAQ:AAPLLong
by mintdotfinance
35
Harvesting Alpha with Beta HedgingImagine this. Dark skies, earth tremors and thunder roars. Shelter is top priority. Size matters in a crisis. When the tsunami strikes and lightning splits the sky, investors shudder in fear; But the super seven stand tall, shielding investors from the fury. Dramatic metaphors aside, we truly live in unprecedented times. Risk lurks everywhere. List is endless. Unstable geopolitics. Sticky inflation. Recession expectations. Unprecedented deepening of yield curve inversion. Unfinished regional banking crisis. Weak manufacturing. Tightening financial conditions. Extremely divisive global politics, to just name a few. Despite severe headwinds, US equity markets are roaring. YTD, S&P is up +15% and Nasdaq is up +32%. At the start of 2023, the consensus was for US equities to be in doldrums dragged down by recession. Halfway through the year, markets are at the cusp of one of the best first half for US equity markets in twenty years. This is among the narrowest and top-heavy rally ever. Only a sliver of stocks - precisely seven of them - defines this optimism. This paper will refer to these as the Super Sevens. These are the biggest members of the S&P 500 index. Super Sevens are Amazon, Apple, Google, Meta, Microsoft, Nvidia, and Tesla. This paper argues that the Super Sevens will deliver above market returns in the short term as investors seek safe haven from a vast array of macro risks. The paper articulates a case study to demonstrate the use of beta hedging to extract alpha from holding long positions in Super Sevens and hedging them against sharp reversals using CME Micro E-Mini S&P 500 index futures ("CME Micro S&P 500 Futures"). THE RISE AND RISE OF SUPER SEVENS Super Sevens have an outsized impact as S&P 500 is a market weighted index. Merely five of these seven form 25% of the S&P 500 market capitalisation. At $2.9 trillion in market capitalisation, Apple is greater than all of UK’s top 100 listed companies put together. If that were not enough, Apple's market capitalisation alone is greater than the aggregate market capitalisation of all the firms in the Russell 2000 index. Nvidia has been soaring on hopes of AI driven productivity gains. On blow out revenue guidance, it has rallied $640 billion in market cap YTD. That increment alone is larger than the combined market cap of JP Morgan & Bank of America the two largest banks in the US. The heatmap summarises analyst targets & technical signals on pathway for prices ahead: In part 2 of this paper, Mint will cover the detailed analyst price forecasts, technical signals and summary narratives covering value drives and intrinsic risk factors. WHAT DRIVES INVESTOR CONCENTRATION INTO THE SUPER SEVENS? As reported in the Financial Times last week, two broad market trends appear to have fed into this investor concentration. First, Passive investing. When funds merely deliver the performance of an index by replicating its composition, the higher the index weights, the more these passive funds buy into these names. Second, ESG investing. Rising push towards ESG has forced investment into tech and away from carbon-heavy sectors such as energy. Collectively, this has resulted in all types of investors – active, passive, momentum, ESG- all going after the same names. Question is, what happens now? Will the broader market catch up with the Super Sevens? Or will the Super Sevens suffer a sharp pullback? That depends on the broader US economy. Will it have a hard landing, soft landing, or no landing at all? Given market expectations of (a) resilient earnings capacity, and (b) solid growth potential among Super Sevens, we expect that in the near to mid-term the Super Sevens will continue to outperform the broader market. In ordinary times, investors could have simply established long positions in Super Sevens and wait to reap their harvests. However, we live in unprecedented times. WE LIVE IN TRULY UNPRECEDENTED TIMES Risks abound but no signs of it in equity markets. Historically, geopolitical instability, tightening financial conditions, and a deeply inverted curve could have led to crushing returns in the US equity markets. Not this time though. Peak concentration As mentioned earlier, bullishness in equity markets can be vastly attributed to just the Super Sevens. These seven have delivered crushing returns rising between 40% and 192% YTD. The S&P 500 index is market cap weighted. Super Sevens represent the largest companies in the index by market cap and their stellar performance has an outsized impact on the index. Is this a bull run or a bear market clouded by over optimism among Super Sevens? Deeply inverted yield curve In simple words, it costs far more to borrow for the near term (2 year) relative to the borrowing for long term (10-year). The US Treasury yield curves have been inverted for more than a year now. The difference between the 2-Year and 10-Year treasuries is at its widest level since the early 1980s. Inversion in yield curve has historically been a credible signal of recession ahead. When bonds with near term duration yield higher rates than those with longer-dated expiries, this precedes trouble in the economy. Recession. What recession? This period might go into the record books for the most long-awaited recession that is yet to come. For the last 12 months, experts have been calling for recession to show up in 3 months. While manufacturing sector seems feeble, labour market remains solid. Corporate balance sheets are robust. Consumer finances and consumer confidence are in good health. The VIX remains sanguine while the only fear indicator that appears unsettled is the MOVE index which indicates volatility in the bond markets. After having spiked earlier in the year, the MOVE is starting to soften as well. BETA HEDGING FOR PURE ALPHA In times of turbulence, risk management is not an afterthought but a necessity. Hedge delivers the edge. When there are ample arguments to be made for bullish and bearish markets, taking a directional position can be precarious. This paper posits Super Sevens holdings be hedged with CME Micro S&P 500 Futures. Hedging single stocks is nuanced. The stocks and the index do not always move in tandem. A given stock may be more volatile or less volatile relative to the benchmark. Beta is the sensitivity of the stock price relative to a benchmark. Beta is computed from daily returns over a defined historical period. Stocks with high Beta move a lot more than the underlying index. Stocks that move narrowly relative to its underlying benchmark exhibits low Beta. Beta hedging involves adjusting the notional value of a stock price based on its beta. Using beta-adjusted notional, hedging then involves taking an offsetting position in an index derivative contract to match the notional value. TradingView publishes beta values computed based on daily returns over the last 12 months. The following table illustrates the beta-adjusted notional for the Super Sevens based on the last traded prices as of close of market on June 16th. Beta hedging using CME Micro S&P 500 Futures enables investors to precisely scale their portfolio exposures to the index. A small contract size enables investors to manage risks with finer granularity. CME allows conversion of micro futures into a classic E-mini futures position, and vice versa. Round the clock liquidity combined with tight spreads and sizeable open interest across the two front contract months, investors can enter and exit the market at ease. BETA-HEDGED TRADE SET UP In unprecedented times like today, markets may continue to rally or come crashing. To harness pure alpha, this paper posits a spread with long positions in Super Sevens hedged by a short position in CME Micro S&P 500 Futures expiring in September 2023. This trade set-up gains when (a) Super Sevens rise faster than the S&P 500, or (b) Super Sevens suffers drop in value but falls lesser relative to S&P 500, or (c) Super Sevens gain while S&P 500 falls. This trade setup loses when (a) Super Seven falls faster than S&P 500, or (b) S&P 500 rises faster than Super Seven, or (c) S&P 500 rises while Super Sevens pullback Each CME Micro S&P 500 Futures has a multiplier of USD 5. The September contract settled on June 16th at 4453.75 implying a notional value of USD 22,269 (4453.75 * USD 5). Effective beta hedge requires that notional of the hedging trade is equivalent to the beta-adjusted notional value of single stock. Given the beta-adjusted notional value of USD 2,561 for single shares in Super Sevens and the notional value for each lot of CME Micro S&P 500 Futures at USD 22,269, the spread trade requires: a. A long position in 26 shares each across all the Super Sevens translating to a beta-adjusted notional of USD 66,576. b. Hedged by a short position with 3 lots of CME Micro S&P 500 Futures which provides a notional exposure of USD 66,807. The following table illustrates the hypothetical P&L of this spread trade under various scenarios: MARKET DATA CME Real-time Market Data helps identify trading set-ups and express market views better. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com DISCLAIMER This case study is for educational purposes only and does not constitute investment recommendations or advice. Nor are they used to promote any specific products, or services. Trading or investment ideas cited here are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management or trading under the market scenarios being discussed. Please read the FULL DISCLAIMER the link to which is provided in our profile description.
NASDAQ:AAPLLong
by mintdotfinance
3
Harnessing the AI Revolution: A Powerful Surge with NVIDIA, GoogThe future is now, and it's coded in the language of Artificial Intelligence. As investors, we have a unique opportunity to be part of this game-changing journey. My personal story began with NVIDIA, an industry leader in AI and graphics processing. Acquiring NVIDIA shares two months ago was akin to boarding a spacecraft destined for new frontiers. The ride has been exceptional, with returns exceeding my expectations. But, the vast landscape of AI is not limited to one planet. There's a whole universe to explore, and I decided to broaden my horizons. Hence, I ventured further, incorporating three other stellar entities into my portfolio - Google, Microsoft, and IBM. These industry titans are carving their paths, harnessing AI to innovate, and influencing global trends. My portfolio is not just an investment; it's a belief in a future shaped by AI, a testament to a revolution unfolding right before our eyes. Join me in this journey, as I share my insights, strategies, and perspectives on navigating these high-tech tides. Together, we can capitalize on the industry that is relentlessly and rapidly shaping our tomorrow. Remember, the revolution might be digitized, but the rewards are very real.
NASDAQ:NVDALong
by Titans_Trading
4 takeaways from EmTech Digital's AI conferenceMIT Technology Review recently put on its EmTech Digital conference. It will come as no surprise that this year’s focus was generative artificial intelligence (AI). There is a sense that generative AI, in its many different forms, is important and that it will have an economic impact, but it’s not yet clear exactly how this will manifest itself in the coming years. Below we discuss the four key takeaways from the conference. 1. Changing how we interact with Microsoft Office Software It is well known that Microsoft has made significant investments in OpenAI and that there is a close relationship between the two firms—GPT-4 is accessible on certain Microsoft Azure service platforms, as an example. Microsoft had only just mentioned the import and expected impact of AI to its future business results as it reported on the period ended 31 March 2023, so we were curious what more they could add in a short presentation. However, Microsoft mentioned one of the most exciting things across the entire conference. We are all searching for ‘use cases’ and we are also all trying to figure out what it will look like to communicate with Office 365 software in ‘natural language’. Microsoft’s representative noted that he had seen an example case where there was a Word document, and that the technology was able to seamlessly interface with PowerPoint and to go from having a Word document to having a version expressed in slides. In WisdomTree’s research team, taking a source file in text form and converting it to a potential presentation is an important function; some situations require slides, some situations require emails, some situations require Word documents. It takes a really long time to laboriously change a Word document into relevant, impactful slides. If there was a way for the file in Word to communicate with PowerPoint to create at least a rough draft with slides, over the course of the year within WisdomTree’s research team alone this would save a rather large amount of team hours. Since it probably could also work in reverse (PowerPoint back to Word), maybe we are not far away from drafts of blog posts being created off of PowerPoint slides. 2. Did you realise that AI cannot hold a patent? Part of what is sparking the current generative AI revolution has to do with creation. People are excited for the capability to create images, molecules, text, to name just a few things. However, the world is seeking to get a better handle on the legal ramifications. One such example regards Stability AI’s image generation capability. Getty Images, a major holder of rights to photographic content, has alleged that the use of their images in this way runs afoul of its licensing provisions, and that their images are quite valuable for training purposes due to diversity of subject matter and detailed metadata1. The value of access to training data, therefore, is coming to light. Another thing we did not realise was that, if AI is involved in the creation of something novel, AI cannot hold a patent, which could have interesting intellectual property implications in the US. An article in the National Law Review, published on 2 May 2023, affirmed that “Federal Circuit Holds That AI Cannot Be an “Inventor” Under the Patent Act - Only Humans Can Get Patents2.” 3. The magic of defect detection One of the most exciting presentations, in our opinion, regarded ‘defect detection’ from the firm Landing AI. In recent years, we have spent a lot of time thinking about electric vehicles, and WisdomTree as a global business has many funds that focus on different metals, different types of companies—basically all sorts of ways that investors can align an investment with trends they are seeing. The world needs more batteries, that much is clear, but batteries need to be assembled in a way that limits defects. When people mention ‘computer vision’ by itself, without an application, it doesn’t always sound exciting or capture the imagination. Seeing the presentation immediately helped us to picture all of the new factories being built to assemble more battery cells, taking advantage of certain funding provisions in the Inflation Reduction Act in the United States. Picturing a computer vision system, deployed at scale, able to catch defective battery cells in close to real-time, could be immensely valuable. All manufacturing companies could benefit from better defect detection. It was interesting to hear in the presentation how there is so much money in things like ‘Targeted Advertising’ and ‘Internet Search’ that this is where a lot of AI applications are developed, but if a company can serve the totality of need across different manufacturing concerns, it could be a big market as well and immensely valuable if these systems can really catch defective products before they are shipped. It was also particularly powerful to watch a demonstration of how a company might have a series of pictures in a database and use AI to ‘learn’ to recognise a particular attribute, like a crack. This could deploy better defect detection at scale as well as putting model training in the hands of people without PhD’s in data science, both very impactful things. 4. The maths of drug development is prohibitive A few presentations during the event concerned drug discovery, and for good reason. It was mentioned that the development of a given molecule into a drug takes roughly $2 billion, 10 years and has a 96% failure rate along the way. While we need drug therapies, the statistical specification of that journey does not sound compelling, and it makes those drugs that get through extremely expensive. Whether it is Nvidia or Exscientia presenting, so far the critical element is not to say that ‘AI is creating drugs’ but rather ‘AI is improving our chances’. Chemistry and physics are much like languages and there are certain rules that govern how they work. Generative AI does not always craft finished prose, but it is able to put many options to the page quite quickly. Generative AI for drug development is most likely to help researchers make better, higher probability attempts at further study. One thing that was very notable to hear was that we might be at a transition point in how research is done. Human researchers seeking the cure or a new therapy for a particular disease converge quite closely around a lot of similar ideas. For approaches run by humans, this makes sense. But for approaches with machine learning closer to the forefront, there may not be enough diversity across the data from the attempts such that the machine learning algorithm can find notable relationships across the data that human researchers would have been less likely to see. If machine learning algorithms are closer to the forefront, it can change the way certain types of research, like drug discovery, are done such that the systems are getting the appropriate breadth of data from which to draw out patterns and relationships. Conclusion: 2023 as a turning point History is replete with turning points. eCommerce, internet search, smart phones, the app economy, social media—all of these things had a ‘beginning’ where success was far from assured and we could not have predicted exactly where the technologies would go. Even if AI has been developing for many years, maybe 2023 will be seen as somewhat of a beginning, in that it marked the point after which non-technical people were using AI just like it was any other application. Sources 1 Source: Brittain, Blake. “Getty Images lawsuit says Stability AI misused photos to train AI.” Reuters. February 6, 2023. 2 Source: “Federal Circuit Holds that AI Cannot Be an ‘Inventor’ Under the Patent Act—Only Humans Can Get Patents.” The National Law Review. May 6, 2023. Volume XIII, Number 126.
SPARKS:AIX
by aneekaguptaWTE
Microsoft - Fundamental Analysis: Everything you need to know.Microsoft's Stock Rises on the Back of AI Expansion, Gaming Dominance, and Positive Analyst Outlook Over the past few months, Microsoft's stock has experienced a remarkable surge of almost 30%, driven by the company's ambitious venture into the field of artificial intelligence (AI). This cutting-edge technology has the potential to revolutionize numerous industries in the years ahead, and Wall Street has taken notice, leading to a bullish outlook on Microsoft's stock. While Microsoft already boasts established brands like Office, Windows, Azure, and Xbox, the growing influence of AI has further enhanced its potential, making it an opportune time to explore the opportunities presented by this tech giant. Here are three crucial factors that knowledgeable investors should consider. AI Potential: In 2019, Microsoft made a strategic investment of $1 billion in OpenAI, a move that has proven to be a significant win for the company. OpenAI's advanced chatbot, ChatGPT, has triggered an AI race among tech giants and prompted Microsoft to invest an additional $10 billion in the company. This partnership has positioned Microsoft as a frontrunner in the market, allowing the integration of OpenAI's technology into its own services such as Office, Azure, and Bing. As a result, Microsoft has solidified its position as the leading provider of AI services for both consumers and businesses. Furthermore, Microsoft's cloud computing platform, Azure, has the potential to become a market leader with the help of AI. Richard Bernstein, an investment manager, predicts that Microsoft's cloud revenue could more than double as the company expands its AI offerings. As of the first quarter of 2023, Azure currently holds the second-largest market share in the cloud industry at 23%, with Amazon Web Services leading at 32%. However, Microsoft's leadership in artificial intelligence gives it the potential to surpass its competitors in the coming years. Growing Dominance in Gaming: In addition to making strides in AI and cloud computing, Microsoft has made significant progress in the gaming industry. The Xbox brand has propelled the company to become the fourth-largest games company globally, trailing only Tencent, Sony, and Apple. However, Microsoft is actively taking steps to increase its market share in this sector. One of Microsoft's notable achievements in gaming is the introduction of the Xbox Game Pass, a game subscription service that has transformed how millions of gamers consume games since its launch in 2017. By offering users access to an extensive collection of games for a low monthly fee, Game Pass eliminates the need to purchase games individually. Moreover, Microsoft adds its own game titles to the platform on their launch day, which is a significant selling point. With the acquisition of more game studios, Game Pass has become increasingly attractive to gamers, offering hit titles and value-added features that make the Xbox console more appealing than competitors like Sony's PlayStation 5. Despite facing macroeconomic challenges, Microsoft's games business has continued to grow, thanks to the success of Xbox Game Pass. In the third quarter of 2023 (ending March 2023), revenue from the service increased by 3% year-on-year, and the number of Game Pass members grew by an impressive 150% from 2020 to 2022. Analysts' Optimism: Investors have been drawn to Microsoft this year due to the company's expansion into AI, resulting in the stock price rising nearly 30% since the beginning of 2023. Microsoft's strong brands, such as Office, Windows, Azure, and Xbox, have already made it an appealing investment. However, the company's foray into AI has further boosted its outlook. Savvy investors recognize that Microsoft possesses significant potential in AI and is leveraging its partnership with OpenAI to integrate the startup's technology across various services, including Office, Azure, and Bing. Additionally, Microsoft has made notable progress in gaming, with the rapid growth of its subscription service, Xbox Game Pass, which adds value to the Xbox console. Analysts have expressed optimism about Microsoft's prospects, giving the company a buy/strong buy rating. They recognize the significant potential of Microsoft's expanding role in AI, the cloud market, and gaming. The average 12-month price target reflects a projected 7% growth in the stock. With its strong foothold in established industries and its investments in emerging technologies, Microsoft is seen as a long-term buy with substantial growth potential. In summary, Microsoft's stock has experienced a substantial rise driven by its expanding ventures into AI, its dominance in the gaming industry through Xbox Game Pass, and the positive outlook from analysts. The company's strategic partnership with OpenAI and its integration of AI technology into various services position it as a leading provider in the AI market. Furthermore, Microsoft's cloud computing platform, Azure, has the potential to become a market leader. As Microsoft continues to innovate and expand its offerings, investors recognize the long-term growth opportunities it presents.
NASDAQ:MSFT
by FOREXN1
18
MSFT Swing Short updateWe have hit our entry perfectly and have started to move down. Since we have already moved 2% Its good enough for moving stop loss slightly lower, but I would keep it above the recent high atleast couple of point higher. Once we breach the while horizontal line and stay under it for a day or two I will move the Stop loss to breakeven after taking small tp and let the rest ride. If you like my content then please boost and share this post. I have over 6 years of trading and investing experience and have learned a lot in this time. I like to share what I have learned. If you would like to learn from my experience then follow me on trading view to get notified on my trade, market projections and several upcoming technical analysis and in-depth tutorials on technical Indicators. You can also leave a comment and let me know if you want me to look at any specific asset or want to learn about any specific topic in the world of Technical Analysis. I Will do my best to create a post for it. Keep learning and Happy trading All.
NASDAQ:MSFTShort
by zakoraio
2