From Charlie Aitken this morning:
Not such a good morning for investors in high flying momentum stocks with the NASDAQ (-3.1%) suffering its biggest one day drop in 2.5years. There is genuine carnage across momentum stocks and sectors on Wall St, where 65% of NASDAQ 100 stocks are in correction territory and 20% have already entered bear markets (source JP Morgan).
My very clear advice remains this is coming to Australia where people remain nonchalant about the downside risks in many of our highest flying momentum (MO) names.
You can see when momentum changes there simply is no marginal buyer of the given stock. Hedge funds are not short momentum globally, they have been caught long it. When the “MO” goes, you need to go.
Anyhow, you know where I stand on this at the strategy level. Some of the names in my Australian “MO” list are contrary to our analysts bottom up positive recommendation because I am writing top down macro strategy about a global event that is arriving in Australia. My job is to identify vulnerable Australian stocks and sectors to a global top down event.
Personally, I think there’s some urgency required to get these names below out of portfolios and for tactical traders to short them.
- REA Group (REA)
- Seek ltd (SEK)
- Domino Pizza Enterprises (DMP)
- CarSales.Com (CRZ)
- Xero Ltd (XRO)
- Vocus Comms ltd (VOC)
- TPG Telecom Ltd (TPM)
- iiNet ltd (IIN)
- CSL ltd (CSL)
- ResMed Inc (RMD)
- Ramsay Healthcare (RHC)
- Sirtex Medical (SRX)
- 21ST Century Fox (FOX)
- Navitas (NVT)
- G8 Education (GEM)
- OzFoxex (OFX)
- Vocation (VET)
- Donaco (DNA)
- James Hardie (JHX)
- Magellan Financial Group (MFG)
- BT Investment Management (BTT)
- Platinum Asset Management (PTM)
- Henderson Group (HGG)
- Credit Corp Group (CCP)
- Veda Group (VED)
- ASX Ltd (ASX)
- Macquarie Group (MQG)
It would be more accurate to describe this as “high-beta” short list. I’m on board with a sizeable NASDAQ bust here, but there are some dollar-exposed gems in there that I’d be happy to pick up on the slide.
