Yesterday tech tumbled but utilities, commodities like copper and even gold, and many “vaccine recovery” plays gained.
Today almost everything is down.
Which to me is a sign that this now 6-day downturn is getting closer to an end. Right now, as of 1:30 a.m. in New York the NASDAQ is off another 2.32%. The brings the drop from the mid-february high to 6%. A little more than half way to a 10% correction.
I don’t think we’re at the bottom yet. But I am looking for growth stories–which is not the same as “growth stocks”–where the selling has created an opportunity.
What I’m looking for is strong, very strong growth stories that really haven’t changed in the last 6 sessions but that are now selling for attractively lower prices.
So, for example, I bought some Applied Materials (AMAT) this morning. On February 19 the stock hit $119.46 after blowout earnings and guidance that added up to a long-running increase in equipment sales as chip makers upped capital spending to meet soaring demand. This morning the stock was down to $114.75. What’s changed with the Applied Materials growth story? Nothing that I can see. I had a $140 target price on the shares and I don’t see a reason to lower that.
Commodity stocks, which have been screaming higher on there combination of prospects for higher global growth and fears of rising inflation (which nobody can find), are also down today. Go figure. So I added to my positions in lithium miner Albemarle (ALB), down 1.27% this morning. Suddenly we’re going to sell fewer electric cars? And copper miner Southern Copper (SCCO), down 2.23%. If the U.S. and global economies are recovering, I want to be long copper.
I’m not rushing to buy most technology shares. Prices, even of stocks that I liked, were at nose bleed levels and I think money is flowing out of many of these stocks in the short term and into “recovery” plays. (MGM Resorts International (MGM), for example, is up another 4.21% as of 11 a.m. today even in this down market and that cash is coming out of somewhere.) So even though I like Twilio (TWLO) and Nvidia (NVDA) for the long term, I’m waiting for some more selling before I add to my positions in growth momentum technology shares. But I am adding to my positions in some chip stocks, especially in companies with big exposure to car makers and the rising silicon content of cars. So I added share of Infineon (IFNNY) on this morning’s loss of 2.24% and NXP Semiconductors (NXPI) on the drop of 3.12%.
I’m trying not to overlook today’s drop in “vaccine recovery” stocks either. I added to my position in Natura & Co. (NTCO) today, down 1.34% this morning, for example.
Full disclosure: I own shares of Applied Materials, Albemarle, Southern Copper, Twilio, Nvidia, Infineon, NXP Semiconductors, and Natura & Co. and Call Options on MGM Resorts International in my personal portfolios.
