Gain exposure to the US technology sector at zero commission on Phillip MetaTrader 5

09 Jun 2021

By Stephen Ong, Senior Account Executive, Phillip Futures

Did you know that CFDs in shares allows you to trade in both bull and bear markets, and is a good tool to use in times of market volatility? Share CFDs also have a minimum tradable size of only one share on Phillip MetaTrader 5, making them highly accessible.

This week, let’s take a look at the technology sector for some share CFDs that might be worth considering – Facebook (FB), and Tesla (TSLA):

Facebook (FB) at record highs ahead of holiday Monday

Facebook’s shares have rebounded recently together with most tech stocks while the Nasdaq catches up to the broader equities market. The Fed’s reiteration that inflation is ephemeral has benefited technology and high growth stocks as they recover from a previous pullback in mid-May. Facebook’s stock price has now risen firmly from the $300 support zone and broken previous record highs of $331.68 (29th April) to form a new all-time high at $333.71 on the 27^th of May. Facebook finished Friday at $328.84.

Facebook (FB) stock technical analysis

FB shares opened higher initially after a strong earnings release on April 28. Earnings per share reported a 40% gain at $3.30 versus a market consensus estimate at $2.35. As a result, Facebook shares spiked 7% post earnings release and a nice gap was formed on the FB stock chart. However by May 10th, FB had effectively given up its prior gains due to profit taking, closing the gap.

Moreover, the Relative Strength Index (RSI) and the Stochastic has also signaled a sell-off with both the momentum oscillator entering overbought territory on 29th April. Facebook eventually found strong support around the 300-day exponential moving average (EMA) zone at the $300 price level. The key level traders are looking at now is whether FB can remain above the 50-day EMA at $324.51.

A price break of 50-day EMA at $324.51 could possibly result in a pullback to support at $315.57, and then the 300-day exponential moving average support at $308.60. Further price action at this level may once again test the support zone at around $300.

The RSI and the Stochastic have been greatly influenced by the recent price rally, and remain firm in the overbought zone. Similarly, the Moving Average Convergence Divergence (MACD) indicates strong upside momentum as it remains above the signal line.

Tesla (TSLA) technical bounce stalls between 50- and 300-day exponential moving average hourly chart.

Last Friday, TSLA shares pullback as it closed at $625.32 due to profit taking. Since mid-May, Tesla shares have been steadily climbing after bottoming out around the strong $544.00 support region. Overall, the technology sector had rallied as concerns about US inflation abated. In a span of about two weeks, Tesla had advanced from $544.82 to $635.10 on last Friday.

Tesla (TSLA) stock technical analysis

Tesla is now in the consolidation phase as it ponders it next move. The stock has gradually craw back some of it losses in April as it seemed to be heading straight from $544 support zone given the down trend from the first half of May. It is now at a crossroad, TSLA needs to break above $683.45 for the chart to continue its bullish run and put an end to its bearish downtrend in April.

The Stochastic (Stoch), Relative Strength Index (RSI) revealed that Tesla has fell into oversold territories in mid-May had flagged a minor turnaround in stock price. As a result, the momentum oscillators showed that Tesla shares broke out of the downward trending 20- and 50-day exponential moving average (EMA) in mid-May and tested 635.10 last Friday.

However, the major downtrend is still in continuation unless $683.45 is breached. A break below 50-day EMA at 610 may reaffirmed that the major downtrend is intact and may target the strong support zone around $544 near term.

Stephen Ong is a Senior Account Executive with Phillip Futures. With over 20 years of experience in the CFD, Forex, and Futures markets, he offers actionable financial insights on multiple asset classes and how best to implement a successful trading plan on market view.

Click here for a free coaching session with Stephen

An Exchange Traded Fund (ETF) is a marketable security that is formed to track nearly anything, ranging from a specific index, sector, commodity, or increasingly, theme. They are most commonly used to track a basket of stocks, and can typically be accessed through the same channels as regular stocks. ETFs are typically separated into passively-managed ETFs that simply mirror the security they are tracking (e.g. the STI), and actively managed ones that attempt to deliver higher returns or specific investment objectives, often with a pre-specified theme in mind (e.g. ARK Invest’s Innovation ETF).

Why should I trade in ETF CFDs?

ETFs have been growing in popularity over the years. 2020 was the best year for ETFs yet, with global equity ETFs seeing more than $1T in inflows within a 12-month period. Using CFDs to gain exposure to ETFs allows for greater capital efficiency because only a portion of the contract value is required as margin to establish a position.
ETFs are particularly popular with investors seeking a relatively hassle-free investing experience, while desiring exposure to a range of specific and relatively understandable securities. Trading ETF CFDs brings greater convenience by eliminating the need for traders to hold multiple currencies in order to access global ETFs.
An investor wanting exposure to the post-pandemic economic recovery could open a position in the well-known SPDR S&P 500 ETF (SPY), which tracks the performance of the S&P 500. Another investor that may be convinced of the future importance of Environmental, Social and Governance concerns (ESG) may find the increasing selection of ESG-themed ETFs that track a basket of high ESG-rating companies to be a good investment, rather than cherry-picking individual equities by hand. ETF CFDs can act as a powerful tool for traders can profit from both directions of the market by taking on long or short positions.

A look at two ETF CFDs we offer:

1) Has the ARKK been sunk?

ARK Innovation ETF (ARKK) ARKK is an actively managed ETF by ARK Invest that invests in a range of companies based on their innovative and industry-disrupting potential. ARKK’s largest holdings are in companies such as Tesla, Square, and Zoom. ARKK is down around -33% from peaking on 12^th Feb and is currently in the red for the year to date as the market experiences a risk-off outflow of funds. Superstar fund manager Cathie Wood has however been consistently doubling down on her bets, buying even more shares in growth stocks that are going through their own tumultuous periods such as DraftKings, Peloton, Teladoc, and Tesla. In her view, ARKK is playing the long game, and remains steadfastly convinced in the long-term prospects of these growth stocks beyond this current bout of volatility. Similarly on outflows, investors are still betting big on ARKK as ARK Invest has only lost about $1.2B in assets this year across all its six funds, compared to seeing an inflow of $15.1B during the same period. Recently, investors have been nervously eyeing ARKK’s basket of tech stocks as their future earnings potential remain vulnerable to erosion through high inflation – the dominant concern of the market in recent weeks. As commodities – the major contributor to the recent heightened inflation fears – drops sharply from record highs, are investor concerns over hyperinflation overblown?

2) Searching for exposure to Asian equities?

iShares MSCI Asia ex Japan ETF (AAXJ) The AAXJ is currently trading -10.6% adrift of all-time highs seen in February, giving up gains in tandem with an Asia-wide equity sell-off at the time. Given that slightly over 40% of the ETF’s holdings are based in China, the ongoing tumult seen in Chinese equities currently have carried over nearly perfectly in the AAXJ, as Chinese investors take a breather after the stellar gains made over the past year. Looking ahead, Asia – and particularly China, is steaming ahead with its economic recovery. China is widely expected to be one of the best-performing major economies this year, providing a major boost to the outlook for corporate earnings. As the rest of Asia and the world gradually opens up their own economies, AAXJ is likely to again benefit from strong Asian outperformance amidst a strengthening trade outlook.

CFD is available for trading on Phillip MetaTrader 5 (MT5).

Features of trading CFD:

Trade in both the bull and the bear markets
The ability to enter a long and/or short position allow traders to take advantage of both rising and falling markets.
Smaller barrier to entry
Flexible and smaller contract sizes. This means that traders will be able to enter into a contract with a modest amount of capital.
No expiration date or risk of delivery
Unlike futures which commonly have a fixed expiration date, CFD allows traders to perpetually hold the position(s). CFD is cash settled, no need to worry about the delivery of the underlying asset.

Benefits of using Phillip MT5:

Trade at zero commission on a dynamic platform that offers low spreads. Integrated with Autochartist and Trading Central Indicators, and available on mobile, web and desktop app, you will never miss a trading opportunity with Phillip MT5.

Register for a FREE 30-day Phillip MetaTrader 5 Demo Account

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