Hedge funds caught wrong-footed as Magnificent 7 reported earnings

[blueprint of hedge fund]
pichet_w

Hedge funds were forced to cover short positions as five of the Magnificent 7 reported earnings last week, according to the Goldman Sachs Prime Services desk.

For the first time in three weeks, Info Tech (XLK [https://seekingalpha.com/symbol/XLK]) (VGT [https://seekingalpha.com/symbol/VGT]) (IYW [https://seekingalpha.com/symbol/IYW]) (IGM [https://seekingalpha.com/symbol/IGM]) emerged as the most net bought U.S. sector, driven by an uptick in short coverings complemented by long buys, creating a buy-sell ratio of 3.4 to 1.

The notional short covering in Info Tech was the largest in four months.

Last week, Apple (AAPL [https://seekingalpha.com/symbol/AAPL]), Amazon (AMZN [https://seekingalpha.com/symbol/AMZN]), Alphabet (GOOG [https://seekingalpha.com/symbol/GOOG]) (GOOGL [https://seekingalpha.com/symbol/GOOGL]), Meta (META [https://seekingalpha.com/symbol/META]) and Microsoft (MSFT [https://seekingalpha.com/symbol/MSFT]) all issued results. XLK rose 2.4% for the week, with the tech-heavy Nasdaq 100 (QQQ [https://seekingalpha.com/symbol/QQQ]) gained 1.9%.

Within the tech sector, the subsectors of Semiconductors & Semiconductor Equipment, Electronic Equipment, and IT Services were the most actively purchased. In contrast, Tech Hardware and Software were notably the only subsectors to be net sold during this period.

In broader terms, October has positioned Info Tech as the most notionally net bought U.S. sector on the Prime book. This buying trend reflects a long/short ratio of 1.96, placing the sector in the 91st percentile when compared to the past year, and in the 41st percentile over the past five years.

MORE ON THE TECHNOLOGY SELECT SECTOR SPDR® FUND ETF

* U.S. Stocks Sector Divergence Raises Red Flags [https://seekingalpha.com/article/4828924-us-stocks-sector-divergence-raises-red-flags]
* Hold XLK, Buy VGT: How To Stay In Tech Without Being Dependent On 3 Ticker Symbols [https://seekingalpha.com/article/4825213-hold-xlk-buy-vgt-how-to-stay-in-tech-without-being-dependent-on-3-ticker-symbols]
* XLK: No Reason To Sell A Stake In Tech, More Gains Are Ahead [https://seekingalpha.com/article/4820550-xlk-no-reason-to-sell-a-stake-in-tech-more-gains-are-ahead]
* 19 out of 20 Information Technology stocks deliver EPS wins this week: Earnings Scorecard [https://seekingalpha.com/news/4512301-19-out-of-20-information-technology-stocks-deliver-eps-wins-this-week-earnings-scorecard]
* Overbought, oversold, and everything in between as October comes to a close [https://seekingalpha.com/news/4511627-overbought-oversold-and-everything-in-between-as-october-comes-to-a-close]