By Barbara Kollmeyer
A small struggle, led by technology, is shaping up for Tuesday, as a big earnings week is upon us and COVID-19 worries hover. One distraction right now — the war between short sellers and a group of stock enthusiasts behind GameStop /zigman2/quotes/203755179/composite GME +18.56% .
Maybe one day it will be easier, when the robots can do the thinking for us. That brings us to our call of the day , which comes from the DataTrek Research blog, who wonders whether a fund that relies on artificial intelligence for investing ideas and is heavy on tech stocks right now knows something we don’t.
DataTrek notes the AI Powered Equity /zigman2/quotes/204224847/composite AIEQ -4.65% exchange-traded fund is up 12% year to date, versus a 2.6% gain for the S&P 500 /zigman2/quotes/210599714/realtime SPX -2.45% , and for 2020 was up 25%, versus an 18% gain, respectively. It has gained 101% from the March COVID-19 pandemic lows, versus a 72% gain for the S&P.
Electric-car maker Tesla /zigman2/quotes/203558040/composite TSLA -8.06% , solar solutions group SunPower /zigman2/quotes/200243424/composite SPWR -8.37% , chip group Advanced Micro Devices /zigman2/quotes/208144392/composite AMD -5.20% , energy technology group Enphase Energy /zigman2/quotes/207948472/composite ENPH -7.46% , and tech giant Alphabet /zigman2/quotes/202490156/composite GOOGL -3.26% are the top five holdings.
What DataTrek found was the fund’s top picks are more tech heavy than last October, when more cyclical flavored stocks such as health care group Pfizer /zigman2/quotes/202877789/composite PFE +0.21% and automobile maker Ford /zigman2/quotes/208911460/composite F -4.16% made it into the top 10.
“AIEQ seems to have been picking up a good bit of market ‘signal’ in the last 12 months, so the fact that it is lightening up on cyclicals at the top of the sheet and maintaining/increasing its exposure to disruptive tech names (TSLA, SPWR, ENPH) is interesting,” says DataTrek.
What it could mean? A human manager backing away from cyclicals at the moment could be a sign of cold feet over the progress of the COVID-19 vaccine rollout.
As the DataTrek folks say, this AI ETF’s plays mirror those of a successful hedge-fund manager of the 1990s — “well-known stocks that play well-understood themes. Perhaps the real power of artificial intelligence-powered investing is simply not overthinking things too much.”
Stocks /zigman2/quotes/210598065/realtime DJIA -1.75% /zigman2/quotes/210599714/realtime SPX -2.45% /zigman2/quotes/210598365/realtime COMP -3.52% are flat, while European equities /zigman2/quotes/210599654/delayed XX:SXXP -0.39% are higher. China’s CSI 300 /zigman2/quotes/210598128/delayed XX:000300 -2.43% and Hong Kong’s Hang Seng Index /zigman2/quotes/210598030/delayed HK:HSI -3.64% lost more than 2% each. That is after the People’s Bank of China, in a surprise move, pulled funds from the financial system and reportedly warned of asset bubble risks.
From Alexis Ohanian, husband of tennis star Serena Williams and co-founder of Reddit:
Reporting ahead of the market open, shares of conglomerate General Electric /zigman2/quotes/208495069/composite GE -2.74% are rising as revenue beat forecasts , and health care group Johnson & Johnson /zigman2/quotes/201724570/composite JNJ +0.10% posted a profit and growth in pharma sales. Financial services group American Express /zigman2/quotes/203805826/composite AXP -2.01% said revenue fell . After the close, tech giant Microsoft /zigman2/quotes/207732364/composite MSFT -2.37% , coffee group Starbucks /zigman2/quotes/207508890/composite SBUX -0.87% , and chip companies Advanced Micro Devices /zigman2/quotes/208144392/composite AMD -5.20% and Texas Instruments /zigman2/quotes/202237907/composite TXN -4.94% report.
Shares of e-commerce website Etsy /zigman2/quotes/202790087/composite ETSY -5.51% are up 9% in premarket. That move seems to have coincided with a comment on Twitter /zigman2/quotes/203180645/composite TWTR +3.71% by Tesla Chief Executive Elon Musk, who said “ I kinda love Etsy. “
The Federal Housing Finance Agency house price index, the S&P Case-Shiller home price index, and consumer confidence data are all ahead.