Happy Sunday, as we prepare for the holiday season. Friday set up as an odd trading session as two major events – Quadruple Witching and Tesla’s (TSLA) inclusion into the S&P 500- disrupted the normal flow of activity. TSLA has been a major focus of retail investors over the course of the year and, given the enormous impact it will have to passive fund managers portfolios, we thought it would be appropriate to center on this name to prepare you for the week of trade.
- Trivia Question- At an approximate 1.5% weighting, TSLA is poised to become the largest addition ever to the S&P 500. Can you name the current record holder?
On Monday, TSLA will be added to the S&P 500. The final weighting for TSLA is expected to be approximately 1.5% following Friday’s 6% rally to $695. TSLA will rank in the Top 10 in the S&P in terms of weighting. For comparisons, Apple’s (AAPL) weighting is 6.5%, auto makers General Motors (GM) stands at 0.17%, Ford (F) 0.12% and the average median weighting is 0.08%.
TrackStarIQ Data
Here are some highlights from Retail searches this week –
| Rank | TOP STOCKS – BY Retail (Total Traffic) This Past Week | Ticker | TOP STOCKS- BY RETAIL (Surge Traffic) This Past Week | Ticker | TOP ETFs By RETAIL (Total Traffic) This Past Week |
|---|---|---|---|---|---|
| 1 | Tesla Inc | TSLA | Wright Investors’ Service Holdings , Inc. | WISH | SPDR S&P 500 ETF |
| 2 | Nio Inc | NIO | New Providence Acquisition Corp Cl A | NPA | Invesco QQQ |
| 3 | Apple Inc | AAPL | Takung Art Co Ltd | TKAT | ARK Innovation ETF |
| 4 | Pfizer Inc | PFE | Aethlon Medical | AEMD | ProShares Ultra VIX Short-Term Futures |
| 5 | Moderna Inc | MRNA | Galapagos NV | GLPG | ARK Genomic Revolution ETF |
| 6 | Veru Inc | VERU | Nxt-Id Inc | NXTD | SPDR Gold Trust |
| 7 | Amazon.com Inc | AMZN | Eloxx Pharmaceuticals Inc | ELOX | Consumer Discretionary Select Sector SPDR Fund |
| 8 | Eversource Energy | ES | Painreform Ltd | PRFX | Technology Select Sector SPDR Fund |
| 9 | Virgin Galactic Holdings Inc | SPCE | Golden Bull Ltd | BTBT | VanEck Vectors Semiconductor ETF |
| 10 | Microvision | MVIS | Coin Citadel | CCTL | Energy Select Sector SPDR Fund |
| 11 | Sundial Growers Inc | SNDL | Wisekey International Holding Ltd ADR | WKEY | ProShares UltraPro QQQ |
| 12 | Alibaba Group Holding | BABA | Davidstea Inc | DTEA | iShares Russell 2000 ETF |
| 13 | Visa Inc | V | Macrogenics | MGNX | iShares Silver Trust |
| 14 | Biocardia Inc | BCDA | Seneca Biopharm Inc | SNCA | VanEck Vectors Gold Miners ETF |
| 15 | Genius Brands International Inc | GNUS | Cns Pharmaceuticals Inc | CNSP | ProShares UltraPro Short QQQ |
| 16 | Marathon Patent Grou | MARA | Avenue Therapeutics Inc | ATXI | ARK Web x.0 ETF |
| 17 | Tesoro Enterprises, Inc. | TSNP | Mediaco Holding Inc Cl A | MDIA | Invesco Solar ETF |
| 18 | AT&T Inc | T | Greenpro Capital Corp | GRNQ | iPath Series B S&P 500 VIX Short-Term Futures ETN |
| 19 | Nxt-Id Inc | NXTD | Radius Health | RDUS | SPDR Dow Jones Industrial Average ETF |
| 20 | Adv Micro Devices | AMD | Eco-Tek Group, Inc. | ETEK | Direxion Daily S&P Oil & Gas Exploration & Production Bull 2x Shares |
Financial Advisors need to be aware of the impact on passive investors. Index funds designed to mirror the holdings of the S&P 500 are expected to buy approximately $80 bln worth of TSLA before it starts trading on Monday, about 3% of the approximate $4.7 trl in assets that passively track the S&P. That means there is the potential for over $100 bln in rebalancing activity, well above the $20 bln that we saw in the September rebalancing. These managers will be selling other stocks in order to fund their purchase. This impact will ripple into non-S&P indexes which will need to adjust to losing TSLA.
Monday we will see the aftermath of the late Friday activity. TSLA rallied 40 points above their last trade in the moments before the market-closing auction in the Nasdaq. 1.7 bln shares worth more than $150 bln traded in the Nasdaq auction, a record dollar market. Investors should be aware of a potential sell off post-inclusion as growth stocks have had a weak track record following rallies. Amgen (AMGN) shares rallied 7.5% before joining the S&P and are down 10% since its addition. Yahoo! saw its shares peak a month after its inclusion while Qwest Communications actually peaked the day it was added. Facebook (FB) rallied 17% into its inclusion before selling off 6% after it was added to the index.
Other names of interest:
- Virgin Galactic (SPCE) – #9 on Top Stocks by Retail (Total Traffic). Shares sold off this week after a test flight failed to reach space due to an ignition sequence not completing. The weakness was compounded by a director selling $97 mln in shares as well as a secondary offering. Shares of SPCE fell approximately 30% last week and are testing the 50-sma ($23.40) for support.
- Microvision (MVIS) – #10 on Top Stocks by Retail (Total Traffic). Electric Vehicles will continue to be a key theme as we head into 2021. MVIS develops scanning technology that creates high-resolution miniature projections, 3D sensing and image capture which are used in 3D perceptive light detection and ranging (LiDAR), an important component for autonomous driving. Shares have doubled in the month of December.
- Marathon Patent Group (MARA) – #16 on Top Stocks by Retail (Total Traffic). A digital asset technology that mines cryptocurrencies. Bitcoin has hit all-time highs and cryptocurrencies stocks are showing signs of volatility similar to December of 2017. Shares of MARA rallied from $5 to $9.30 last week. MARA has a 44 mln float and a 19% short interest.
Trivia Answer- Berkshire Hathaway (BRK.B) currently holds the title with a 1.4% weighting when it was added in 2010.