Weekly Rundown: Is This New ETF Worth All the BUZZ?

 
FUTURE OF WEALTH
WEEKLY RUNDOWN


Hey traders, Lance Ippolito here! Welcome to our Weekly Rundown, where we'll share some of our top trading ideas — and our biggest winners!

Have you ever wanted to measure the success — or buzz — surrounding the stocks you see mentioned in your social media feed?

Well… there's an ETF for that now.

The VanEck Vectors Social Sentiment ETF (NYSE: BUZZ) — which launched Thursday — tracks investor chatter across social media platforms like Twitter, StockTwits, Yahoo Finance, Benzinga and Reddit.

The ETF holds 75 stocks with the best shareholder sentiment that also have at least a crisp $5 billion in market cap. The research behind finding the top 75 stocks is done by an AI-driven program that searches the web for mentions on the stocks.  

While investors everywhere want to know if the BUZZ ETF is a good investment… for some reason I think this might backfire.

Barstool Sports founder Dave Portnoy partnered with the makers of the ETF and said he wouldn't take his cut of commission unless it beats the S&P 500…

That sounds honorable, but does it make the BUZZ ETF a good investment?

Not really...

So I respect what Portnoy is doing… although there are a lot of other people with their hands in the same pot who are going to take their commission regardless. But the real problem I have with BUZZ is something most investors haven't considered: The ETF is going to do exactly what it was designed to do.

It's going to track all these hot social media stocks — meme stocks — people are talking about on Reddit and Twitter… but you have to think about the other side of the trade. There are algorithms that are specifically wired to run stop-orders.

For example, let's say you put in an order to buy a stock for $10. The stock falls to $9 and you get stopped-out. And then maybe the stock bounces back to $9.50.

This ultimately means these programs can cause share prices to fall more drastically than need be when the stock begins to sell.

So certain stocks will have their day in the sun when the BUZZ ETF puts them in the top 75 holdings... BUT I think after the initial pop, the stock will quickly fizzle out.

Once everyone hops on a bandwagon, the wagon tends to slow. Eventually it will break down on people.

While I don't have a definitive answer on whether this is a good ETF to invest in since it's still too early to tell, I do know this...

I won't be one of the investors left stranded if things begin to crash and burn.

Now, on to some...

BIG Wins!

It was another choppy week of trading with some major selling, particularly on the Nasdaq. But we still had a few more big winners from our Weekly Blitz Alerts and Free Riders Club services. All three were in option positions in Ford Motor Co. (NYSE: F), Infosys Ltd. ADR (NYSE: INFY) and BioCryst Pharmaceuticals Inc. (Nasdaq: BCRX.

The theme of the day Tuesday was momentum flow, with Ford seeing 26,800-plus contracts sold. Ford is forming a bull flag on the daily chart as funds rotated out of the big tech names.

Soon after entering this position, we saw a big pop and sold half of our contracts for a nearly 50% gain with rotation out of EV names and into American autos like Ford and GM. Making money on days the market is in the toilet — BOOM, love it!

  • +48.39% on the first half of F contracts (March 12 $12.50 CALL).
    • Entered on March 2 at $0.31 a contract.
    • Exited first half of contracts on March 2 at $0.46 a contract.

We also saw monster bullish bets on INFY on Wednesday, with more than 23,000 contracts sold as traders looked for a quick pop in this India-based IT stock. And we got it! News broke that Infosys inked a $500 million deal with Google, and we cashed out for nearly a 90% win in a matter of hours.

  • +87.5% on INFY (March 19 $19 CALL).
    • Entered on March 3 at $0.40 a contract.
    • Exited on March 3 at $0.75 a contract.

Back in December, the FDA approved a treatment drug known as Orladeyo in the U.S. and Europe. The European Medicines Agency validated its marketing authorization application submission, and formal review of the MAA under the centralized procedure is underway.

BioCryst expects an approval decision in Europe during the second quarter, and the company presented the drug at the 2021 American Academy of Allergy, Asthma and Immunology annual meeting that ended March 1.

We saw a big pop so we trimmed a portion of our position to bag those profits.

  • +54.55% on half of our contracts in BCRX (June 18 $8 CALL).
    • Entered on Feb. 12 at $3.30 a contract.
    • Exited on the first half of the trade March 1 at $5.10 a contract.

My Weekly Blitz Alert and Free Riders services are both focused on trading options, but they're are some huge differences between them.

My Blitz Alerts are issued based on institutional order flow in the options market tracking and trading the largest, single-stock options orders throughout the day. In addition to trade alerts, I also offer up daily market commentary that you can use to come up with your own ideas based on order flow coming into my scanner.

Free Riders is specific to healthcare and biotech — which are of course super hot and profitable! This service is focused on specific sector catalyst plays like FDA announcements, Prescription Drug User Fee Act dates, mergers and acquisitions, big news and more.

So while they're both options trading services, they are different in terms of what kinds of trades we're making.

If you have a big score you'd like to share with your fellow New Money Crew readers, email us your screenshots of the trade and/or any details you want to share at wptestimonial@gmail.com, and we'll celebrate them here!

Signing Off

If you're looking for more compelling trade ideas and stock market musings to read and help you prepare for what lies ahead, here's what other experts at WealthPress are saying:


Lance Ippolito
Future of Wealth
 
A WealthPress Publication
 

Disclaimer & Disclosures: The information in this email is intended for informational purposes only and does not guarantee specific results as there is a high degree of risk involved with trading. Also, our traders are real traders and may have financial interests in the companies discussed. Please see our Terms and Conditions for more information.

Past performance is no guarantee of future results. There is a high degree of risk involved in trading. For our full disclaimer, visit here.

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