So You Didn’t Buy Low. Now What?
For several weeks recently, I received barely any emails from investors. That’s highly unusual. As the days passed, I became more and more worried. It dawned on me that perhaps many investors have been paralyzed by world events, and mostly not taking advantage of historically low stock prices. As you can imagine, that was a depressing thought, and I certainly hoped it wasn’t true.
Then yesterday, I sent out some stock trading ideas, and the dam burst. I heard from at least a dozen investors who are clamoring for specific trading ideas. Great!
I normally take my time in the mornings, assessing current-day stock activity, before deciding what to buy and sell. In that light, I can’t send you trading ideas in the early morning, because the market needs to open and get its legs before I can begin doing this analysis. There are even some days when I do the entire buy-and-sell assessment during the market’s last hour. Nevertheless, here are some ideas for you:
Stocks that appear ready to continue rising:
Alexion Pharmaceuticals (ALXN)
Stocks that appear ready to rise soon from a tight trading range or a handle formation. These are also your best choices for call options.
Alphabet (GOOGL)
Applied Materials (AMAT)
L3Harris Technologies (LHX)
MKS Instruments (MKSI)
Stocks that are quickly approaching price resistance, where they’ll likely get stuck for a while. You could sell some shares, and use the capital to buy low on other stocks, thereby potentially keeping your capital growing.
Advanced Micro Devices (AMD) peaked at 59 in February
NVIDIA (NVDA) peaked at 314 in February
If you don’t have cash with which to buy low, raise cash by selling a portion of any stock that recently rose a large amount (or any stagnant portfolio stock). After all, over the short-term, Netflix (NFLX) and Amazon (AMZN) will not likely rise another 10%-40%, but many other stocks will. As soon as NFLX and AMZN have pullbacks, I’ll ring the bell and encourage people to add to their positions.
These are all companies that offered attractive earnings growth and valuations up until the COVID-19 pandemic began harming the economy. I’m not going to recommend companies that are losing money or are carrying the burden of other existential threats. I am essentially trading the same stocks that I would be otherwise holding onto during more normal stock market periods.
Each day, as I assess these potential trading opportunities, I aim to increase my cash position a little bit more. That’s because the occasional market pullback will rear its ugly head. Buying low is the best revenge!