These Stocks Are on My Radar as I Watch for Dips to Buy
Here's why I see a nice setup for snagging good deals in the next few weeks.
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The senior indexes are building on Wednesday's breakaway gap, but the Russell 2000 is lagging a little after its huge gains. Breadth is slipping a little. It is likely investors are hesitant to make big moves in front of the Fed interest rate announcement and the press conference by Chair Jerome Powell that will follow.
It is a near certainty that the Fed will cut rates by a quarter-point, but the primary focus will be on whether there are some hints about less aggressive monetary easing as the risk of a rebound in inflation is building.
The Trump election has caused a spike in economic growth expectations, which has been great for the market because it has been assumed that the Fed will not try to cool things off with more hawkish policy. The market has been surprisingly unconcerned about rates that have been rising steadily for about six weeks now. At some point, that trend will matter if it doesn't cool off.
Market conditions are good for more upside, but that doesn't mean that it will be a smooth ride. It would actually be helpful if there was a little more skepticism, and the Fed could deliver that if it liked.
Jason Geopfert of Sentimentrader.com has an interesting statistic this morning. When the Russell 2000 opened higher by 5% or more, as it did on Wednesday, it historically gained a median of 20.5% over the next three months. In other words. a giant move generally signals a burst in momentum that persists for a while. It would be very unusual for the market to abruptly reverse back down without some major outside catalyst.
I'm not doing much trading in front of the Fed decision, but I plan to be a very active dip buyer in the days and weeks ahead. I have a lot of research work to do, but I'm feeling good about the stock-picking environment due to both seasonality and optimism about Trump's policies.
One of my favorite names, Core Scientific CORZ, is up nicely this morning following its earnings report, and I am still looking for buy points as it develops. I'll be watching Xeris Biopharma XERS and Humacyte HUMA closely on their reports on Friday morning.
At the time of publication, DePorre had no position in any security mentioned.
