Long and Short Tech and Energy Stocks Other (not Listed Above)

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Equities and Energy Options

The trades executed are for long MSFT, short AAPL in tech; long XOM and short CHK in energy. These trades are based on both sector sentiment and fundamentals. MSFT appears to be in an outperform trend while AAPL is poised to underperformed following poor sales data in China, slowing down of growth.

In energy, the price of oil is a big factor in any stock's performance and with crude hitting a ceiling at $50, it will not be good for companies like CHK which are overwhelmed by debt and need oil prices to be higher in order to maintain any kind of leverage. XOM on the other hand is in an outperform trend which looks to continue as it nears a deal with Russia to deliver gas to China and as the company continues to invest along these lines, giving it an outlet should oil prices drop again. However, will the global economy looking so sluggish right now and no sector appearing to be safe (and should the UK vote to leave the EU, equities across the board may plunge) a cautious position should be taken first and built up in the coming weeks should the Brexit referendum not pass.

Thus a cautious stake in equities (both long and short positions) and a cautious stake in energy (both long and short positions) will be wisest, with 60% of funds remaining in cash, should positions turn against us and require quick action to effect a swing trade. Even buying and holding with equities at these prices (expensive) or shorting with equities at these prices (makes more sense but with markets manipulated by central banks -- whether in China, Europe or the U.S., being a bear can be a good way to get crushed), caution right now is the word.

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Equities Hypothesis

In the computer tech sector, there are Apple (AAPL) and Microsoft (MSFT). Apple has outperformed since its stock split last year and has recently made all time highs prior to a down trend setting in. This down trend is the result of the market pricing in a number of negatives that appear to be impacting Apple's future growth. China sales have begun to shrink just as they have globally and the company itself seems to have hit peak tech development, with no new creative outlets being probed. The sense is that following the death of Steve Jobs, inertia may have continued to propel the company forward, but now the company has peaked.

Not to mention that Apple has taken on new debt to finance dividend increases in order to make the stock more attractive to investors (Cherney). However, any portfolio that has been holding AAPL since 2015 has surely been adversely affected by the stock's significant pullback. I believe this trend is going to continue as AAPL continues to suffer from a slowdown in growth with no significant development in the pipeline to keep it foremost of the computer tech sector.

Against Microsoft, which has recently acquired LinkedIn and gotten into the marijuana seed-to-sale software business, AAPL looks ready to underperform. MSFT on the other hand….....

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