This week we got the answer that theS&P 500is in bear market territory. Now it’s up to the bulls to stave more short-term damage. Meanwhile, the bulls now risk falling for traps chasing mini rallies. Every pop will seem like the end of the correction, so caution is necessary. As such, investors should spend more time looking for stocks to buy after the correction.
Trying to time the bottom perfectly is not realistic. Besides it may open up investors to undue risk from overconfidence. If they assume a bottom, they are more likely to go all in. It’s important that we only take small bites for the next month at least. As for the likely zones for support, they are still below current levels.
I am more optimistic that most, but I also know that the target is likely 3,600 for the S&P. Once we lost the February lows, we triggered bearish patterns for it. But I also have seen patterns fall short of their targets. So the bulls could stave off the sellers long enough to negate it. For now, I am assuming no bottom is in. Therefore, my trades are tactical in nature.
But I will share a list of quality stocks to buy under more certain conditions. There are many more that won’t make my list, and that doesn’t mean they aren’t deserving. My parameters for this list are a bit different than my usual.
I am seeking quality in some, but only if they have hit a pre-pandemic support zone. For example,Apple(NASDAQ:AAPL), even though it is an awesome company, is still 40% above its pre-pan breakout level. I would also consider momentum stocks that have suffered too much in sympathy. I will even includeBitcoin(BTC-USD) related stocks, because crypto is also correcting. Another important parameter to always consider is relative value. Some of these stocks would also be on my bargain stocks to buy.
Since we are going into a very binary week, I caution against pouncing too eagerly into any of these stocks. Also I would spread the risk engagement over time, not all at once.
Disney (DIS)
The happiest place on earth wasn’t so during the pandemic. In fact the parks were empty for months and on a global scale. All crowd business came to a screeching halt, yet somehowDisney(NYSE:DIS) survived the crisis. In fact, it may have picked up a few good habits out of necessity. After all, the company’s financial metrics are back to a healthy state.
Disney still generates a ton of cash, and it is profitable with a reasonable price-to-sales ratio. Other sectors within the crowd businesses are not this lucky, and still struggling. There recently have been a few political skirmishes, but the attention has ebbed a bit. The launch of the streaming platform came at a good time. Now the company can leverage its reach well, since it has a ton of content. Disney even managed to grow sales above the pre-pandemic days. As long as we don’t suffer a similar blow to that inflicted by the onset of Covid-19, DIS stock is ready for its next test.
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