Wall Street, which staged a strong show post midterm election, was hit by Apple (NASDAQ:AAPL) and Goldman Sachs (NYSE:GS) -induced rout on Nov 12. Apple’s slump of more than 5% on the day, the lowest in more than three months, triggered an upheaval in the tech space.
The company’s main supplier for its Face ID technology, Lumentum Holdings Inc. (NASDAQ:LITE) , cut its revenue and profit forecasts due to lower orders from a major customer. Another supplier, Japan Display, also slashed its full-year guidance on “volatile customer demand” on Nov 12. Sensing this customer could only be Apple, apprehensions about declining demand for iPhones gripped the market.
Meanwhile, Goldman’s shares lost the maximum in seven years, at about 7.5% as Malaysia’s finance minister sought a full refund of fees with regard to a doomed investment fund. Goldman has been placed under scrutiny for its role in helping form the Malaysian state investment fund, known as 1MDB, from where the bank received about $600 million in fees, per CNBC.
Plus, the Fed policy tightening is in place. San Francisco Fed President Mary Daly believes that stock “valuations were higher than could be supported.” Hence, the latest selloff is justified. The Fed is now expected to enact its fourth-rate hike next month. So, rising rate concerns will continue to play in the background (read: Fed Meet Signals December Rate Hike: ETFs That Gained).
SPDR S&P 500 ETF (NYSE:SPY) (AX:SPY) , SPDR Dow Jones Industrial Average (NYSE:DIA) ETF (V:DIA) and Invesco QQQ Trust QQQ lost about 1.9%, 2.3% and 3%, on Nov 12.
How to Profit
Given the upheaval, investors could easily tap the opportunity by going short on global equities, at least in the near term. Below we highlight a few of them.
Dow Jones
Investors intending to play against the tumbling Dow Jones, may tap ProShares Short Dow 30 DOG (up 2.3% on Nov 12), ProShares UltraShort Dow30 (V:DXD) (up 4.5% on Nov 12) and ProShares UltraPro Short Dow30 SDOW (up 7.1% on Nov 12).
Investors can go against the S&P 500 with ProShares Short S&P500 ETF SH (up 2% on Nov 12) and Direxion Daily S&P 500 Bear 1X Shares SPDN (up 2.0% on Nov 12) (read: Trump's Presidential 2 Years: Must-See ETF Areas).
Technology
Technology stocks were hit hard on Nov 12 as Apple shares slumped on downbeat guidance from two of its suppliers. ProShares UltraShort Technology ( (V:REW) ) jumped about 7% on Nov 12.
Nasdaq
ProShares Short QQQ (AX:PSQ) (up 3.0% on Nov 12), ProShares UltraShort QQQ (BK:Q) (up 5.9% on Nov 12) and ProShares UltraPro Short QQQ SQQQ (up 9% on Nov 12) are good to play against the Nasdaq.
Small-Cap
One can short small-cap U.S. equities with ProShares Short Russell2000 RWM (up 2% on Nov 12).
EAFE
ProShares Short MSCI EAFE EFZ (up 1.8% on Nov 12) could be a good way to short stocks from the EAFE region and avoid the spillover effect of the U.S.-induced rout.
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Apple Inc. (AAPL): Free Stock Analysis Report
The Goldman Sachs Group, Inc. (GS): Free Stock Analysis Report
SPDR-DJ IND AVG (DIA): ETF Research Reports
DIR-D SP5 BR (SPDN): ETF Research Reports
PRO-SHRT DOW30 (DOG): ETF Research Reports
PRO-SHRT QQQ (PSQ): ETF Research Reports
PRO-SH MSCI EAF (EFZ): ETF Research Reports
PRO-ULS DOW30 (SDOW): ETF Research Reports
SPECIALTY - HEA (SH): ETF Research Reports
PRO-ULS QQQ (SQQQ): ETF Research Reports
SPDR-SP 500 TR (SPY): ETF Research Reports
NASDAQ-100 SHRS (QQQ): ETF Research Reports
Lumentum Holdings Inc. (LITE): Free Stock Analysis Report
PRO-ULSH DOW30 (DXD): ETF Research Reports
PRO-ULS TECH (REW): ETF Research Reports
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Zacks Investment Research