How are investors buying September’s dip?

Equities
Investments

In recent weeks, stock markets around the world dropped to new monthly lows. As ever, eagle-eyed investors were keen to buy the dip. Here are some stocks they were keen to snap up.

The September stock market dip: what caught investors’ eye

Market turmoil has been rocking the bourses in the wake of the Evergrande wobble and a general risky asset sell-off.

Although things have since stabilised, with the S&P 500, Nasdaq, and Dow Jones all up 1% this morning and the FTSE making gains, investors were still keen to take advantage of the dip.

In particular, many stocks on the S&P 500 have been subject of retail investor attention. The index experienced its largest drop since May at the start of the week.

A new report from Vanda Research suggests a $3bn spending spree occurred on Monday and Tuesday as stock buyers looked for some perceived bargains.

According to Vanda Senior Strategist Ben Onatibia, retail investor activity contradicts earlier statements that their appetite for stocks may have been waning. With indices down, this gave them a great opportunity to add to their portfolios.

The stocks investors were buying

Vanda Research shows the below individual stocks were retail customers’ favourites during the recent market downturn.

Stock Ticker Retail purchase volume (last 5 days from September 22nd)
Apple AAPL $362,100,000
Advanced Micro Devices AMD $154,5300,000
AMC Entertainment AMC $90,570,000
Microsoft MSFT $89,700,000
Alibaba BABA $83,420,000
Verizon Communications VZ $79,660,000
Wynn Resorts WYNN $73,700,000
Las Vegas Sands LVS $55,350,000
Nvidia NVDA $54,490,000
Intel INTC $53,900,000

 

Let’s start with Apple. The California tech giant is coming hot off announcing a fresh wave of iPad, iPhone and Apple Watch models at last week’s California Streaming event. The company continues to dominate in the smartphone field. As of June, sales of the latest iPhone 12 had already exceeded 100 million units, and Apple’s laptops and tablets continue to post similarly strong sales numbers.

No new AirPod headphones were released, despite markets thinking Apple would launch its next-gen EarPods at its most recent big conference. However, with such strong sales from the iPhone, it probably doesn’t need to launch them just yet. Consumer confidence in the brand is already exceptionally high.

We can see from the list a heavy leaning towards tech stocks. Excluding Apple, investors spent a combined $378.38m on companies within the tech sphere, including Microsoft, Verizon, and chip manufacturers AMD and Nvidia.

Computer chipsets are hot property globally right now. A general shortage means prices are up. Chipsets are used in practically all the modern conveniences of modern life. Everything from the aforementioned iPhone to cars and graphics cards needs these tiny pieces of electrical microengineering to work – hence their sky-high demand, and why investors are eyeing up companies like AMD.

Graphics cards in particular are coveted by cryptocurrency miners. Each powerful mining rig requires stuffing computers to the brim with components to solve the complex equations that result in fresh digital tokens like Bitcoin.

Speaking of Bitcoin, AMC Entertainment, the memestock and cinema chain, recently gave itself a boost. CEO Adam Aron has announced the company will soon start accepting Bitcoin and other cryptos as payment.

Aron also mentioned AMC is flirting with the idea of entering the burgeoning non-fungible token (NFT) market – possibly through offering commemorative digital cinema tickets.

AMC was already a popular stock for the younger breed of traders trying to shake up the traditional system. Its embracing of digital currencies may make it a more attractive prospect amongst new, Millennial investors.

But let’s not get too carried away with the tech-related stocks. Retail buyers also snapped up over $100m in travel-related stocks too. As you can see from the table above, the big winners here were Las Vegas Sands and Wynn Resorts.

The holiday firms will no doubt be bracing for a renewed wave in vacations as we approach the US holiday season. Thanksgiving and Christmas are just around the corner. Also, the US has given the green light to inbound travel for vaccinated EU and UK travellers, which could point towards an uptick in bookings for both firms.

As mentioned above, stocks have started to recover with major European and US bourses making ground in trading today. But retail investor activity goes to show that vigilance is required to spot opportunities in periods of volatility.

Cryptocurrency update: Bitcoin wobbles on China concerns

Bitcoin starts the week in the red thanks to stock market woes and a potential tightening of regulatory oversight.

Cryptocurrency update

China and regulation fears rock Bitcoin

As Bitcoin becomes ever more prevalent, the influence of non-crypto markets on futures contracts is becoming larger.

As of Monday 20th September, Bitcoin had dropped roughly 5% on the day, thanks to a fall in S&P 500 futures triggered by the China Evergrande Group situation.

Property giant Evergrande fell 10% in Hong Kong during Asian trading this morning, causing globe-spanning stock market ripples. As the S&P 500 fell 1%, Germany’s Dax had also fallen 2%.

The fallout from this is investors looking to mitigate risks across their portfolios. As cryptocurrencies exhibit high volatility, Bitcoin and other tokens may be on the chopping block.

Anticipation of an October or November stimulus taper from this week’s Fed meetings has also strengthened the greenback, making the BTC/USD pairing a little weaker, hence the price drop.

Additionally, further scrutiny is being paid to stablecoins. Stablecoins are crypto tokens backed by the USD. The most prominent of these is Tether. This is meant to cut out much of the volatility we see in the most popular coins, but regulators aren’t so sure.

There are rumblings that further regulation is going to hit stablecoins, which promises big changes for the crypto market as a whole. Some observers believe they may be a threat to the US’ entire crypto situation. A formal review into stablecoins by the Financial Stability Oversight Council could be on the way.

The total market capitalization of all stablecoins has reached $115 billion, growing over ten times over the past 12 months.

Essentially, it will be a rocky week for cryptocurrencies. Right now, all of the major tokens are in the red.

AMC to accept crypto payments

Every so often, you get an overlap of two great internet sensations. Now, the worlds of crypto and memestocks are colliding as AMC Entertainment Holdings announces its plans to accept Bitcoin and crypto tokens as payment.

AMC is the meme stock de jour; one of the stocks exceptionally popular with a new breed of traders. The likes of GameStop have already seen their prices somewhat artificially pumped by a younger generation of traders and investors in an attempt to rattle the old guard.

We know cryptocurrencies are also a favourite of new, younger investors. It seems only right that these two paths should cross.

AMC CEO Adam Aron has been fairly clever here. By aligning AMC with the crypto market, he’s continuing to appeal to the types of investors and traders already interested in the meme stock.

Additionally, the crypto sector may help create further revenue streams for the cinema chain. One idea that Aron allegedly loves is tapping into the non-fungible tokens (NFT) sector. This burgeoning digital asset market has picked up steam massively across 2021, and AMC’s entry point could be to offer its own NFTs in the form of commemorative movie tickets users can buy and keep.

It’s a shrewd move from AMC no doubt – but is banking on NFTs help alleviate the company’s potential future woes around declining cinema attendance?

Litecoin activity outstrips Dogecoin and Bitcoin Cash

Move over Doge: crypto users have a new best friend.

According to Litecoin Foundation Director Jay Milla, the number of active addresses on the Litecoin network has overtaken the number using Dogecoin and Bitcoin Cash.

The growth of wallet activity has overtaken many other large-cap tokens, as Milla recently tweeted:

At 450,000, active Litecoin addresses is over double that of Cardano’s 214,000. Bitcoin Cash’s network user numbers clock in at 101,000. Surprisingly, Dogecoin’s only totals 60,890.

Active addresses are used to monitor and rate on-chain network activity across the crypto market. Analysts use it to sport patterns across the wider sector. It is not necessarily an indicator of the number of traders or investors buying a particular cryptocurrency.

Litecoin recently took a hit thanks to some fake news. It was reported that Walmart had agreed to partner with Litecoin to accept the token as payment. This is false. No such partnership exists.

According to Litecoin, the confusion was caused by an employee tweeting the partnership announcement without authorisation. Walmart has subsequently confirmed it has not partnered with the Litecoin foundation.

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