Add some fuel to your Mag7 Trade with $FNGU – December 3, 2024
This is Scott at Scott Trades on Twitter with StockMarketMentor.com and your Chart of the Day.
I want to show you a couple of charts here today, but ultimately give you an idea that we have on Dan Fitzpatrick’s Active Trade List. It’s been working well for members and I just want to share it with you. It has to do with the big tech trade. The big tech trade, whether you call them the FANG stocks, or the Magnificat 7, are the true market leaders. And they have been one of the ways to get some massive outperformance in this market rally since 2023.
I’ll start things off here with the QQQs ( NASDAQ: QQQ ). We can see that the QQQs ( NASDAQ: QQQ ) are in a regression channel. I can see some pretty clearly defined highs and some pretty clearly defined lows. For the most part, the QQQs ( NASDAQ: QQQ ) have been living in the middle of this regression channel. Every now and again they get a bit high and a bit above. And every now and again they test the lows. But for the most part, this channel is pretty valid.
Now, when it comes to stock picking, and we’re in a big tech lead rally, not everyone has the time or the patience to go through, okay, should I buy Google ( NASDAQ: GOOG )? Should I buy Amazon ( NASDAQ: AMZN )? Should I buy Apple ( NASDAQ: AAPL )? Should I buy Meta ( NASDAQ: META )? Or should I split my money up between all of them and then hope that most of them work out?
What you can do is, throw your money in an index fund like this, like the QQQs ( NASDAQ: QQQ ), and get most of that move. But if you do that you’re still going to underperform just individual stock picking or buying a basket of those stocks. Here on the QQQs ( NASDAQ: QQQ ) we can see for March of 2023 the QQQs ( NASDAQ: QQQ ) are rocking, they’re up 78 percent. That’s not a bad move.
If we go over to something like QLD ( NYSEARCA: QLD ), which is a leverage basket from the same time period, you can see that you’ve actually done even better. You’ve done 161 percent from the March 2023 low.
Now, if you want to do even better than that, Dan Fitzpatrick has FNGU ( NYSEARCA: FNGU ) on our Open Idea List right now. And you can see from that same time period, this basket of big tech leaders is up 652 percent. This is a trade that we have still open. We still think that this is actionable on this trend, as long as the trend can remain intact. And it gives you 3X leverage of some of the big tech leaders.
Now, because it is a leverage vehicle you do have to manage your size. But even if you have a smaller amount here and you get that outperformance you can turn a little bit of money into a good chunk of money in a short period of time. You still have to respect the trend. You still have to be able to manage this trade using some of these key moving averages. But I would definitely consider watching or taking a position here in FNGU ( NYSEARCA: FNGU ) if it can get above and stay above that 544.00 level and do it on good volume.
You would want to define the risk on this trade right around this 480.00 level. That is a bit of a widespread, again, that is why you would want to have a smaller size. And then when the trade starts working in your favor, ideally you’re moving up your stop-loss and taking as much risk off the table as possible.
If the big tech leaders like Meta ( NASDAQ: META ), Apple ( NASDAQ: AAPL ), Amazon ( NASDAQ: AMZN ), and Google ( NASDAQ: GOOG ) continue to run, then I wouldn’t buy those, I’d buy a basket of those. And that could really give your portfolio the rocket fuel it needs, especially if you are late to this rally.
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