The Time Is Ripe to Short Growth Names

in LeoFinance2 months ago (edited)

Technology continues to lead the way in the stock market with growth companies far-outperforming value companies across the board.

The trend is most notable when looking specifically within the S&P 500. Taking a look at two ETFs, SPYG (growth) and SPYV (value), we can see a clear bifurcation that has developed over the past few months as the crisis has unfolded.

Despite a highly-correlated trade looking a few years back, the most recent months have left us with a clear divergence. Technology in particular has taken on the attribute of resilience in the mind of the public and the results are being clearly seen in the stock performance.

Apple (AAPL) continues to lead the pack, putting in a recent 13.2% two-day gain. As the market's largest company, such outsized gain in such a limited amount of time suggests that a near-term pullback may be in order in technology, and these moves might be symbolic of something greater to come.

For myself, I'm personally going to start accumulating a hedging position to mitigate any excess optimism currently underway.

Today, I've gone ahead and bought the following:

With the larger value and room to move found in SPYG, this pair trade should follow it's lead. The addition of a SPYV call is to help offset the SPYG put trade should I be absolutely wrong in my assertion that technology is ready to move lower and instead the market continues to march higher. In the very least, this pair should collectively be a speculative bet on a closing of the bifurcation gap in the market which has left some parts feeling overvalued and yet another part undervalued at the same time.

Posted Using LeoFinance