Roar!! Some may finally be thinking and seeing the end as being near with some of this week’s price action in the major averages. But in a market made up of stocks, investors should also be rightfully optimistic. Let’s look at the price charts of three bear market stocks closer to ending those ugly chapters and offering well-discounted stocks to buy with greater authority.
Home Depot (NYSE:HD). Microsoft (NASDAQ:MSFT). Honeywell (NYSE:HON). It’s a difficult pill to swallow for investors fancying the blue-chip Dow Jones Industrials as a safe haven in 2021. Sizable losses into Wednesday’s session and confirmed topping patterns have a way of dampening what had been a very real and determined case of bullish animal spirits in the Dow, as well as the broader S&P 500.
Other spots, or rather risk-assets, and many former top stocks to buy, have been under pressure for some time now. Zoom Video (NASDAQ:ZM). Snowflake (NYSE:SNOW). Advanced Micro Devices (NASDAQ:AMD). Teladoc (NYSE:TDOC). Churchill Capital (NYSE:CCIV). Those are just the tip of the iceberg of stocks in bear markets this year.
Chalk it up to interest rate and inflation fears. Or go ahead and point at obnoxiously rich valuations and hype, chip shortages or what lays ahead for companies on the other side of Covid-19. The excuses behind today’s stocks in bear markets is well-worn. But right now and increasingly, investors may want to see things with a more upbeat outlook.
If we’re to believe Wall Street, stocks are always perfectly priced given all the information available at that time. Hogwash. If that were really true, there’d be no under or over-valued situations and no stocks to buy or stocks to sell, right?
Rather, market prices are simply the result of collective opinion and emotion-driven decisions at any given moment. Having said that and well in front of other stocks which may find themselves the butt end of a new investor cycle, let’s look at three stocks to buy which are well-positioned for better days ahead at the hands of today’s haters:
Bear Market Stocks to Buy: fuboTV (FUBO)
Source: Charts by TradingView
The first of our bear market stocks to buy are shares of streaming sports upstart fuboTV. FUBO reaffirmed it remains a hit in posting triple-digit and street-beating subscriber and revenue growth. To be fair, losses came in weaker-than-forecast. But as with many other past disruptors such as Netflix (NASDAQ:NFLX), there’s a time and place for that to happen as well.
Today though, it’s time to place a buy order in this bear market stock to buy.
Technically, FUBO is shaping up as a deep, second shot Fibonacci-based mirror or two-step pattern. That’s where the size of leg AB matches leg CD or in today’s situation, a second chance low at D2.
With D2 forming a weekly engulfing candlestick on heavy volume, there’s enough evidence in place today to start an August $25/$35 collar without getting sacked and looking optimistically for the win!
3D Systems (DDD)
Source: Charts by TradingView
3D Systems is the next of our bear market stocks to buy. The additive manufacturing specialist announced an extremely strong Q1 report which toppled analyst views and boasted solid top and bottom-line growth, as well as a turnaround from the year-ago period.
Technically, the bear market viewed on DDD’s weekly chart looks similar to FUBO stock as it also sports a bullish engulfing weekly candle in the aftermath of its earnings release.
Here though, shares are also successfully holding a challenge of former angular resistance dating back to 2016 and 76% retracement level.
As with fuboTV, I’m a fan of going out and up in structuring an August $25/$35 collar in order for investors to be in it to win it with greater authority.
Ark Innovation ETF (ARKK)
Source: Charts by TradingView
The last of our bear market stocks to buy is the ARK Innovation ETF. Against the backdrop of hemorrhaging growth stocks, this high-flier and probably 2020’s most talked-about fund story, has a lot going for it.
Not only is ARKK a concentrated bet in top names within on-the-rise markets such as Tesla (NASDAQ:TSLA), Coinbase (NYSE:COIN) and Shopify (NYSE:SHOP), the ARKK stock chart is priced for shopping deep discounts right now.
Technically and as the well-doctored weekly view illustrates, ARKK has broken some key support lines since March. And today, it’s at its most ugly. Shares having retreated by a full 38% and nearly double a popularized 20% decline signaling a bear market.
Admittedly, it looks as though ARKK is ready for another leg down, but charts can change rapidly. As a more diversified instrument that’s also in a testing distance of its 50% retracement level tied to last March’s Covid low, I’m upbeat a more pleasant end of days is nearby for bulls.
If the forecast proves misplaced, a well-placed August $110/$130 collar will keep the powder dry for building a larger position and shouldn’t leave too much on the table if others start feeding at the trough once more.
Stocks owned: On the date of publication, Chris Tyler holds, directly or indirectly, stock and derivative positions in Advanced Micro Devices (AMD and Ark Investments (ARKK, ARKG) but no other securities mentioned in this article.
Chris Tyler is a former floor-based, derivatives market maker on the American and Pacific exchanges. The information offered is based on his professional experience but strictly intended for educational purposes only. Any use of this information is 100% the responsibility of the individual. For additional market insights and related musings, follow Chris on Twitter @Options_CAT and StockTwits.
