In a market stricken ill from the ever-growing coronavirus, it might be tempting to quarantine your cash from a swift, take no prisoners correction. But with history as our guide, its time to buy three otherwise healthy, but extremely oversold coronavirus stocks. These stocks will survive today’s diseased market as well as thrive in your trading account.
As of Thursday’s close, the past four sessions have resulted in the broader market’s most punishing decline since the financial crisis. It has been more than a decade since investors have witnessed fearful selling pressure and bearish sentiment of this magnitude.
Sure, 2018’s correction is still larger and that market bottom remains well beneath today’s prices in the likes of the S&P 500 or NASDAQ. Without question, though, this week’s combination of spiraling losses of nearly 11%, along with VIX spiking to close at its most fearful levels since 2015, has been more brutal over a shorter time frame.
To say the least, in today’s obviously risk-averse environment, there are more than a few otherwise solid-looking stocks on paper which now look like the proverbial baby thrown out with the bath water. And while some Wall Street pros are saying the price action boggles the mind, I’m reminding investors that today’s blood in the streets is tomorrow’s opportunity.
Amid the market casualties, here are three extreme and oversold stock reactions on the price charts now in position for buying.
Roku (ROKU)
Source: Charts by TradingView
Champion streaming video-on-demand platform Roku (NASDAQ:ROKU) is our first extremely oversold stock to buy. Roku’s business model is of course well-suited to people staying on the couch in lieu of the coronavirus.
The platform also offers a must-have list of streaming services from Netflix (NASDAQ:NFLX), Amazon (NASDAQ:AMZN), Apple (NASDAQ:AAPL) and others that can please the entire family. Now badly-hit shares are also in position to find a technical bottom.
On the weekly price chart shares have slightly penetrated a key angular trend-line. There’s a modest breach coinciding with Roku piercing the lower Bollinger Band, an extreme stochastics position, and shares roughly halfway into an air pocket in-between Fibonacci support zones. All the evidence suggests a bottom is nearby in this oversold stock.
Foot Locker (FL)
Source: Charts by TradingView
Foot Locker (NYSE:FL) is the next of our oversold coronavirus stocks to buy. What makes Foot Locker look like a slam dunk for tomorrow’s investors is the longer-term price chart. Foot Locker stock is now building a solid monthly double-bottom backed by key longer-term Fibonacci and trend-line support dating back to the financial crisis.
Importantly, there’s also Friday’s strong market-defying bid in shares.
If this oversold stock still doesn’t resonate with you, there’s always today’s earnings topper.
ExxonMobil (XOM)
Source: Charts by TradingView
Not that I’ve saved the best for last, but ExxonMobil (NYSE:XOM) is our final oversold stock to buy and for more than a few good reasons. With this week’s slamming of shares on continued and heightened fears of a corona-driven global economic slowdown, this blue-chip’s dividend is now literally the ‘toast’ of the town at more than 6.5%. In fact, shares just surpassed Dow Inc (NYSE:DOW) as the Dow Industrial’s top paying dog.
As a fundamentally well-supported annual income stream, XOM stock investors can expect to get paid for simply parking shares in their account. That’s roughly five-fold what you’ll find in a safe-haven such as 10-year treasuries. But what’s really caught my attention in this oversold stock is that the panic selling has become so extreme, it makes ExxonMobil a knife worth catching.
Technically, this week’s selling pressure has taken ExxonMobil swiftly through key longer-term support as illustrated on the provided monthly chart. It has become so ugly, shares are piercing the 76% retracement level dating back to the financial crisis, while February’s monthly candlestick is almost entirely outside the lower Bollinger Band! That’s right, XOM is hated that much right now.
Bottom-line and to take a cue from Warren Buffett on how to invest, this bloodied and oversold stock is one to buy while other investors are obviously more than a bit fearful.
Investment accounts under Christopher Tyler’s management do not currently own positions in any securities mentioned in this article. The information offered is based upon Christopher Tyler’s observations and strictly intended for educational purposes only; the use of which is the responsibility of the individual. For additional market insights and related musings, follow Chris on Twitter @Options_CAT and StockTwits
