Internet stocks’ time to shine?

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Internet stocks have not been easy lately. They took it on the chin in December, sympathizing with other tech stocks. But in recent weeks, shares of these companies have recovered. Of course, no one asks for Internet funds As late as 1999 but could a decent short-term rally be available at this level?

Source: StockCharts.com, January 10, 2023.

Candlestick charts show the high and low (stick) and open and closing prices (body) of a security for a specific time period. If the body is full, it means the close is lower than the open. If the body is empty, it means that the cover is higher than the open.

Performance data quoted represents past performance. Past performance is no guarantee of future results. Investment returns and the principal cost of the investment will vary. An investor’s shares may be worth more or less than their original value at redemption; actual performance may be lower or higher than stated performance. For the most recent month-end performance, visit Direxion.com/etfs. For standardized performance Click here.

Internet Funds: All are large

For some traders, Internet stocks may bring to mind the glitzy IPOs (initial public offerings)* of the dot.com bubble, but the constituents of today’s Dow Jones Composite Internet Index* are actually more than household names. For example, Amazon.com, Inc. (NASDAQ: AMZN ) [9.22%]Meta Platforms, Inc. (NASDAQ: META ) [6.17%]A Class Alphabet Inc. (NASDAQ:GOOGL) [5.03]and Salesforce, Inc. (NYSE:CRM) [4.88%] are the five main components of this index (as of 12/31/22). Other large companies in the index include PayPal Holdings, Inc. (NASDAQ: PYPL) is included. [4.11%] and AirBnB, Inc. (NASDAQ: ABNB) [2.95%] so we’re not talking about small caps here.

The pursuit of success: potential future trading catalysts

Traders who play the bullish or bearish side of Internet stocks may want to keep an eye on upcoming earnings releases that could cause large intraday swings in these volatile stocks. These reports not only move the stocks of the companies in question, but they can also set the tone for the industry as a whole.

Here are a few things to look out for:

Amazon.com, Inc.: Looks like the Jeff Bezos-led juggernaut is ready to report The results of the fourth quarter of 2022 are on February 2. The consensus earnings per share estimate is $0.17 for the quarter and $0.69 for the year. Having recently laid off thousands of employees, the drop in earnings could give the market hope that the company’s outlook is better than the proposed cost cuts.

Cisco Systems, Inc. (NASDAQ: CSCO ): Will be a digital communications conglomerate Announce your success on February 15th. The market expects earnings of $0.76 per share for the quarter. Notably, Cisco easily beat analysts’ expectations last quarter, so the “repeat beat” should be music to the bulls’ ears.

Meta Platforms, Inc.: Unlike Cisco, Meta disappointed investors last quarter. The slumping company missed market earnings estimates and investors punished the stock with a one-day drop of more than 20% in late November 2022. The consensus price is currently $2.25 per share. and is scheduled for release on February 1. Whether a company wins or misses here will say a lot about its efforts to cut costs, as well as the state of advertising on Facebook and Instagram.

Source: StockCharts.com, January 11, 2023.

Candlestick charts show the high and low (stick) and open and closing prices (body) of a security for a specific time period. If the body is full, it means the close is lower than the open. If the body is empty, it means that the cover is higher than the open.

Performance data quoted represents past performance. Past performance is no guarantee of future results. Investment returns and the principal cost of the investment will vary. An investor’s shares may be worth more or less than their original value at redemption; actual performance may be lower or higher than stated performance. For the most recent month-end performance, visit Direxion.com/etfs. For standardized performance Click here.

Back to the middle or more pain to come?

2022 has not been kind to investors in Internet stocks or growth funds in general. The Dow Jones Composite Internet Index fell sharply in the first half and stalled in the third and fourth quarters.

If you’re a semi-conscious bull, a mean reversion may be a priority, especially given the dominance of growth and tech stocks for many years to 2022. potential for those on the long side. Technical traders are watching the index’s 625 level, which has been a difficult ceiling to break since October.

How to play the long side

Adventurous traders looking for risk can take advantage of the high potential of Internet stocks Direxion Daily Dow Jones Internet Bull 3X Stocks (WEBL)it focuses on daily investment results before fees and expenses of 300% of the performance of the Dow Jones Internet Composite Index.

For the bears, a break of the November low around 525 could open the door for further selling if the bulls throw in the towel at this logical level. Remember: While 2022 will be a tough year for Internet stocks, there’s no law that says there has to be a pullback.

How to play the short side

Traders who want to take advantage of the potential decline in Internet stocks can play Direxion Daily Dow Jones Internet Bear 3X Stocks (WEBS)it focuses on daily investment results up to 300% fees and expenses, the inverse (or opposite) of the Dow Jones Internet Composite Index.

Initially was published January 24, 2023.

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* References

– An initial public offering (IPO) or stock offering is a public offering in which a company’s shares are sold to institutional investors and usually to retail investors. IPOs are usually underwritten by one or more investment banks, which also arrange for the shares to be listed on one or more stock exchanges.

– The Dow Jones Internet Composite Index (DJINETT) is powered by the S&P Dow Jones Indices and includes companies that generate at least 50% of their annual sales/revenue from the Internet, as determined by the index provider. In addition, each stock must have at least three months of trading history and a three-month average market capitalization of at least $100 million. The index consists of 40 stocks in two different sectors, Internet commerce and Internet services.

You cannot invest directly in an index.

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Direxion shares the risks – Investment in each Sub-Fund involves risks, including loss of principal. Each Sub-Fund is not diversified and involves risks associated with the concentration of the Sub-Fund’s investments in a particular industry, sector or geographic area, which may increase volatility. The use of derivatives such as futures and swaps is subject to market risks that may cause their prices to change over time. Each Fund’s risks include market capitalization and volatility risk, leverage risk, market risk, counterparty risk, rebalancing risk, risks related to other investment companies (including ETFs) and risks specific to the information technology sector. Internet. Entrepreneurship. Market prices of Internet securities are subject to a higher degree of market risk and greater price volatility than other types of securities, as these securities may quickly fall out of favor with investors and sell out suddenly. and a sharp drop in market prices. Additional risks include Direxion Daily Dow Jones Internet Bull 3X Stocks, Daily Index Correlation Risk and Direxion Daily Dow Jones Internet Bear 3X Stocks, short and cash risk, and inverse correlation risk with the daily index. For a full description of these and other risks of each Sub-Fund, please see the summary and full prospectus.

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