Trade Alert

Trade Update: Pair Trading Mega Cap Tech

_{Posted by Club Member Bonds 8.9.23}

Posted about my pair trade last week. Here's the update. The pair trade is performing in line with expectations: Gains from shorting US T-Bonds is offsetting the pain from a few of my mega cap tech positions.

The news cycle for Apple seems to have taken a sharp negative turn. The stock is down 6% over the past 2 days following headlines that China is banning government officials from using IPhones for work purposes.

“Valuation don’t matter until they do!” Apple currently trades at 29x forward earnings, which is a relatively expensive premium for a company whose sales and earnings are down 5% and 1% respectively. But none of these are new information, just a few days ago, investors were happy to justify Apple’s premium valuation!

I’m considering swapping out Apple for Amazon. The price action has been much better for Amazon and I also like the retail margin expansion story there.

That said, taking a step back, Apple’s stock is more or less trading where it was just a month ago, so maybe there’s no need for an immediate reaction. The news cycle will soon move on to something else, and investors will return to Apple as they always have. Still deciding on the Amazon/Apple swap, will keep the group posted.

#Trade update #Mega Cap Tech #Apple #Amazon

View Comments - Join the discussion for this trade!  

For more trade ideas visit the Daily Market Exchange. Recent posts:

1. Disney - a Falling Knife ?

   Disney is now trading close to its COVID lows in 2020! There’s a lot of negative headlines surrounding the company, but at this price level a lot of the bad news should be already priced in, anyone stepping in to trade Disney here?

   Click here to continue reading and/or to join the discussion on Disney

Subscribe to receive more Trade Alerts.

About Us

The Daily Market Exchange is a global investment network.

It is a forum for elite market participants to exchange investment ideas and market views.

It is a platform for investors to collaborate and a hub for traders to share strategies.

Stock selection is hard, market timing harder so. Why do it alone?

Our members benefit from the network’s collective market insight and experience.

Have a stock idea, but not confident with your research to pull the trigger? Join our network and discuss your investment thesis with other members. Benefit from their sector experience and perspectives!

Struggling to find new investment ideas for your portfolio? Join our network and tap into our members’ latest ideas and research!