The Zacks Analyst Blog Highlights: Microsoft, Nvidia, Tesla and Adobe

For Immediate Release

Chicago, IL – July 8, 2020 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Microsoft MSFT, Nvidia NVDA, Tesla TSLA and Adobe ADBE.

Here are highlights from Tuesday’s Analyst Blog:

Don't Forget: Buy Low, Sell High

The US's "V-shape" recovery appears to have come to a pause as daily COVID-19 cases surge, and states begin to roll back reopening. The bulls and the bears are duking it out between S&P 500's 3,000 and 3,200.

Overzealous investors and analysts are driving the equity market rally. Analysts are continually upgrading their price targets as the best-positioned tech stocks hit higher highs seemingly daily. Is their backing to these upgrades, or is it just because these stocks keep blowing past these analysts' old targets?

Buying low and selling high is the idiom of every investor, but what are we defining as high? For short-term investors, we have unquestionably hit this "high" with many stocks trading in the 99th percentile of their last decade of valuations. I'm looking at these analysts' price target upgrades with a grain of salt in the short-term (though they may hold weight over a longer time horizon).

Someone Needs to Start Pulling Profits

The markets are frothy, at the very least, and I think we could be in for a rocky summer. The stretched stock market is due for a reality check.

When will the market start pulling profits?

Timing is challenging in any market condition, and the unprecedented economic uncertainty we are facing today adds to the complexity. I am most concerned about investors and traders selling off Q2 earnings. Investors are prone to pulling profits once they see what they wanted in a quarter, especially when they have accumulated some of the gains we have seen in the tech sector this past quarter.

I am not pulling profits in the traditional sense but instead buying puts to hedge my gains. My most prominent winners of 2020 are likely similar to yours: Microsoft, Nvidia, Tesla, Adobe etc. The tech stocks that are expected to drive the next decade's equity market.

I don't want to sell out of my positions because I still believe in these company's long-term potential, but I also don't want to lose the gains that I have accumulated over the past 3.5 months. Considering how heavily weighted my portfolio is in tech, I want to choose a hedge that covers that segment.

Invesco's Nasdaq 100 ETF (QQQ) is the perfect way to hedge my entire portfolio with just a few contracts. I am looking at puts with an August 21st expiration, which should provide me with the Q2 earnings season hedge that I need.

My sell level on QQQ puts is when the ETF hits $240 or the S&P 500 hits 3,000, whichever comes first. Of course, you need to be flexible if the options turn against you and cut losses if the economic narrative shifts (significantly) in a bullish way.

Keep in mind that options are a very complex asset class and can present a lot of risk when used incorrectly.

The Takeaway

I'm not overly bearish or bullish in this market, but I think a correction is imminent. The tech euphoria will fade this summer, and another buying opportunity will present itself. I am not advocating that you sell everything but be cautious and consider taking profits on some of your more exuberant gains.

Zacks’ Single Best Pick to Double

From thousands of stocks, 5 Zacks experts each picked their favorite to gain +100% or more in months to come. From those 5, Zacks Director of Research, Sheraz Mian hand-picks one to have the most explosive upside of all.

This young company’s gigantic growth was hidden by low-volume trading, then cut short by the coronavirus. But its digital products stand out in a region where the internet economy has tripled since 2015 and looks to triple again by 2025.

Its stock price is already starting to resume its upward arc. The sky’s the limit! And the earlier you get in, the greater your potential gain.

Click Here, See It Free >>

Media Contact

Zacks Investment Research

800-767-3771 ext. 9339

support@zacks.com                    

https://www.zacks.com

Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Microsoft Corporation (MSFT) : Free Stock Analysis Report
 
NVIDIA Corporation (NVDA) : Free Stock Analysis Report
 
Adobe Systems Incorporated (ADBE) : Free Stock Analysis Report
 
Tesla, Inc. (TSLA) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research