Mag 7 Stocks Deflated & New Trades

The LongVol Report - Weekly Article of The Week & Podcast

This is episode 58 of The LongVol Article of The Week & Podcast.

We’ve been publishing the article of the week/podcast for nearly two years now each and every Thursday. You can access the premium version as a Basic premium member here. 

If you’re a new reader/listener of the show you can access the webinar link in the members area of this post.

• BROAD MARKET: Stock market sell-off led by Mag 7 names lower, slowing earnings growth, $META ( ▼ 0.17% ) trading notes, BOJ carry trade unwind and trading this environment with levels.

• TARIFFS & GDP WORRIES : You have to crack a few eggs to make an omelette and we all knew what we were getting with Trump 2.0.

  

  PREMIUM MEMBERS ACCESS

• MARA RALLIES ON TRUMP CRYPTO RESERVE: Sunday night Trump announced the strategic crypto reserve. I took a new position on $MARA ( ▲ 2.76% ) and I’ll break down my hesitation but also expectations with this name.

• D.I.T.C. - Dive Into The Charts: $SPY ( ▲ 0.14% ), $QQQ ( ▼ 0.02% ), $COIN ( ▲ 1.64% ), $TSLA ( ▼ 0.08% ), $VIX ( ▼ 9.16% ), $ELF ( ▲ 5.41% ) and other member requested charts.

• LONG TERM IDEA REVIEW: $BA ( ▲ 3.47% ), $HSY ( ▲ 1.44% ), $GXO ( ▲ 1.53% ), $INTC ( ▼ 1.56% ) 

• PREMIUM MEMBERS OPEN Q&A SESSION: Open Q&A for Members

Let’s dive into this week’s article of the week.

Broad Market

Mag 7 Deflated

Quick Commentary: Shown below, the Magnificent Seven (Mag7)—Apple, Microsoft, Nvidia, Meta, Alphabet (Google), Amazon, and Tesla—have all been sold off to end February and to start March as investors look for a market bottom. Earnings growth for 2025 is expected (and has been for months as we talked about here) to come in to nearly 18% from 25% last year…hence the repricing.

• $META ( ▼ 0.17% ) : has been one of the hardest hit Mag 7 names after starting the year up +26% to see it down nearly 15% in just a few weeks but still up +10% on the year. This for me is a good example of a tactical trade and NOT an investment — a sharp rally in 2 trading days so far can yield decent gains.

• But all of Mag 7 is well off the highs given earnings growth. Compare that to non-mag 7 and maybe the stock pickers market is back.

• Surprised?: Not really. It’s justified given forward earnings growth as it’s eased and we’ve talked about it here on this show.

• BOJ Carry Trade: The free money from the BOJ carry trade and parking it into Mag 7 names is likely over, you saw this last August and this is likely an additional cause for this selling.

Below was a note from my my @thelongvol account on X talking about these same things.

• Useless aphorisms: The below doesn’t apply to the day traders who are after 20-second moves. It means price is what you pay and value is what you get — if you’re buying good companies where you understand the financials, the management and the tailwinds you get them on clearance.

  

  Useless aphorism of the week.

Key Insight: When everyone crowds into the same trades, on margin, the rush for exits is always the same. It causes panic and that panic increases the selling. Does that mean you sell or you buy? That depends on your personal situation and whether or not you believe earnings growth will have an affect on valuations in the coming quarters. When it comes to broad market stocks like Mag 7 I believe the valuations and balance sheet analysis is a waste of time: I’d rather trade the momentum of these names using price levels and order flow. I don’t allow the idea of recession, “animal spirits”, “sahm indicator” or whatever the flavor of the week is deter me — week in and week out we trade these names long and short, level to level using the Momentum Monitor.

When it comes to names like $HSY ( ▲ 1.44% ) $GXO ( ▲ 1.53% ) and others I am going to cover this week it’s less about the price chart and more about the valuation.

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