Here’s an understatement: The first 3 months of this year have been wild! 

Completely coo-coo.

Listen to this. Since January 1, we’ve borne witness to the Sam Bankman-Fried debacle… a slew of tech layoffs… the Silverbank saga… the collapse of Silicon Valley Bank, and the ensuring financial sector shakeup and shakeout (still ongoing, mind you)… the incessant pounding of the inflation drum… outrage at the Fed holding the line, despite all the other craziness going on… the demise of Credit Suisse. 

To add to that, our national attention has focused a fair bit on explosive egg prices… the devastating Turkey earthquake… the threat of a TikTok ban… and the conspiracy of a spy balloon.

I would be about ready for a break from the chaos if it didn’t serve us so well as traders.

So I’m glad to report that, while Q1 is now behind us, Q2 looks to have some doozies in store for us. 

Earnings season starts next Friday, April 14. Banks report first. Naturally, everyone is watching for those releases with bated breath.

Problem for everybody is, they’re looking in the wrong place.

Not us here at Profit TakeOver though because I’ve got ya covered.

So listen up. The next tremor that will rattle the markets will come from…

The All-FAANG Economy

The reality is, Big Tech is everywhere and they’re a domineering force in markets.

The top five weighted companies in the S&P 500 are Apple, Microsoft, Amazon, Nvidia, and Alphabet/Google’s class A stock. Together, they comprise almost 20% of the entire index’s asset value. 

Not only that, but the disparity even within this elite collection is huge. Apple and Microsoft are both weighted over 6%. The next highest weight, Amazon, is less than 3%. The rest of the top 15 companies are all less than 2%, and beyond that, less than 1%. 

Mind you, the rest of that top 15 also contains household tech names like Tesla, Meta/Facebook, and Google/Alphabet’s class C stock. 

All of that is to say: Where tech goes, so goes the market. 

And I see trouble in the tech space. Watch this sector more closely than the banking and financials this earnings season. The trading opportunities to the short side in tech will be fast and furious.

You might be wondering how I know this, though.

Well, I’ve discovered a quiet addendum to that mantra. That is: When tech starts shining, it’s because investors are whining.

In other words, these behemoth tech stocks have become the new safe haven for investors who no longer flock to gold and other traditional stores of value. They are the new risk-off trade. 

So, when the stock prices of Amazon, or Apple, or Google are all going up… but the rest of the market doesn’t follow suit, it’s the most reliable sign yet that investors are fearful. 

How do you apply this information to your trading and investing?

For starters, pay close attention to the tech sector… especially this earnings season. 

If fears of recession resurface, you’ll find the Big-Tech stocks appreciating in their role as a safe haven. This will give you trading opportunities on the long side.

And watch out for sharp Big-Tech stock sell-offs on any weak earnings reports. In this case, you’ll play the short side of the game.

As far as investing goes, now is not the time to add Big-Tech to your investment portfolio for the long term. There will be opportunity for that later. It’s also not the time to sell this sector out of your portfolio if you hold any of the big names. There’s no sense is turning a paper loss into a real one.

The best idea right now is to use this Big-Tech see-saw to trade options. This way, you can build up your investing account with quick wins while this big reset unfolds. 

I get it though. Options trading can be scary. Especially if you’ve never done it before. I promise you though, they’re much easier to trade than you think… and they’re much safer than you believe. You can see this for yourself if you join me for live trading with my Profit Revolution family. Nothing like seeing this for yourself to believe it. 

Come watch me trade live. Here’s how to do that.

You can also join me on Money Morning Live tomorrow morning. Almost every day, we give viewers free trades. Paper trade them to get comfortable. Then you’ll be ready for the Big-Tech show (showdown?) starting in 7 days.

Until tomorrow.

Mark Sebastian


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