As risk-off sentiment overwhelmed the market last month, the tech-heavy Nasdaq index posted its worst monthly performance since October, 2008, slumping 13.3%. Meanwhile, the Dow Jones and S&P 500 both recorded their worst month since the start of the pandemic, with the indexes shedding 4.9% and 8.8% respectively.
A number of headwinds have been contributing to the shift in sentiment, including surging inflation, monetary policy tightening by the Federal Reserve, the war in Ukraine, concerns about a global economic slowdown, ongoing supply chain issues, and a disappointing outlook from a number of mega-tech names that represent a huge portion of the market.
With last month’s action prompting a rethink among many, Selfwealth members stepped up their engagement with mega-tech stocks.
US share trading activity
With a number of high-profile tech names being sold off quite sharply throughout April, especially towards the end of the month when they delivered their quarterly reports, there were record funds flowing through these stocks across the Selfwealth community.
The fourth most-traded stock by value was Meta (NASDAQ: FB), which at one stage hit a new 52-week low before paring losses late in the month after exceeding earnings forecasts. Throughout April, the value of all trades in ‘FB’ shares increased by over 460% compared with the month prior, although the ratio of buy-to-sell activity decreased from 76.9% to 53.7%. This was a consistent theme among the mega-tech stocks that reported late in the month.
Alphabet (NASDAQ: GOOGL) climbed to fifth position among the most-traded US stocks as the value of ‘GOOGL’ shares traded increased by 138%, but buying activity represented 59.5% of money flow compared with 80.3% in March. Amazon (NASDAQ: AMZN) leapt from 14th place into sixth position courtesy of a 368% increase in the value of ‘AMZN’ shares traded, while its buy-to-sell ratio fell from 87.2% to 56.2%.
Microsoft (NASDAQ: MSFT) encountered a similar phenomenon, with trade values in ‘MSFT’ shares doubling, but on the back of a more even mix of buying and selling activity. Sell orders were responsible for 44.1% of the value of shares traded, compared with just 14.8% in March.
Even perennial favourite Apple (NASDAQ: AAPL) was exposed to a higher level of selling activity. The buy-to-sell ratio for the iPhone manufacturer decreased from 82.4% in March to 62.8% last month, while the increase in funds flowing through the stock was more modest than its tech peers.
These numbers indicate a split of sorts in terms of the outlook for tech. Yes, buying action remains the predominant force across these names, and it certainly ramped up on price weakness across the tech sector. However, the market downturn also prompted a disproportionate number of Selfwealth members to sell these stocks, likely out of caution in response to concerns about the aggressive path for the US rate hike cycle.
What’s also interesting is that trade numbers in these high-profile stocks didn’t necessarily increase from the month prior, indicating it was shareholders with larger positions driving the action last month. The average trade value across these five stocks was 138% higher month-on-month, despite the fact the underlying price of all these shares dropped sharply.
Elsewhere, the inclusion of Nio (NYSE: NIO), Netflix (NASDAQ: NFLX) and Block (NYSE: SQ) on the list of the most-traded US stocks adds further weight to the trend that sees Selfwealth members engaging highest with tech names while volatility is elevated at this time.
|Top 20 stocks traded by value|
|1||TQQQ||ProShares UltraPro QQQ||51.0%|
|2||SQQQ||ProShares UltraPro Short QQQ ETF||48.4%|
|13||YINN||Direxion Daily FTSE China Bull 3x Shares||50.3%|
|16||UVXY||ProShares Ultra VIX Short Term Futures ETF||48.8%|
|17||YANG||Direxion Daily FTSE China Bear 3x Shares||44.0%|
|18||AMD||Advanced Micro Devices||60.9%|
|20||SOXL||Direxion Daily Semiconductor Bull 3X Shares||67.9%|
Which US shares are the most held?
At the end of April, the list of the most-held US stocks across the Selfwealth community was largely consistent with those from the month prior, however, the major headwinds confronting tech stocks crushed the collective value of the most-popular holdings.
For example, take Tesla (NASDAQ: TSLA), which remains the clear frontrunner as the most-loved stock on the Selfwealth platform, boasting a value more than three times the holdings of the next best-placed stock in Apple (NASDAQ: AAPL). Nonetheless, the value of all ‘TSLA’ shares held across the platform decreased by 10.4% during April.
That drop pales in comparison with some of the other reductions witnessed across the board, including GameStop (NYSE: GME), the fifth most-held US stock among Selfwealth members, which recorded a 28.6% decline in value across all holdings. Meanwhile, the drop for Nvidia (NASDAQ: NVDA), ARK Innovation ETF (NYSE: ARKK) and Palantir (NYSE: PLTR) was 19.9%, 28% and 24% respectively, while Advanced Micro Devices (NASDAQ: AMD) encountered a similar fate.
Of the top 20 most-held names, only one stock managed to avoid a negative decline in funds throughout April, and that stock was Berkshire Hathaway (NYSE: BRK.B), despite the underlying stock price sinking 8.5%. On that front, long-term buying support accounted for the relative outperformance, and this could be due to a perception the stock is less exposed to volatility given it is a more ‘defensive’ holding.
|3||RY||Royal Bank of Canada|
|12||VOO||Vanguard 500 Index Fund ETF|
|15||ARKK||ARK Innovation ETF|
|17||BNS||Bank of Nova Scotia|
|18||AMD||Advanced Micro Devices|
|19||TD||Bank of Montreal|
That’s all for this Trade Trends report, stay tuned for the next edition this time next month!
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