Stocks had their worst week since the financial crisis last week, with the major indexes rapidly falling into correction territory.
Wednesday came with a bit of a reprieve as Wall Street cheered Joe Biden’s big Super Tuesday wins that put the former Vice President back on track to clinching the Democratic nomination for President.
The Dow ended Wednesday up 4.5%, the S&P 500 gained 4.2%, and the Nasdaq added 3.85%.
While many analysts have warned that the market hasn’t yet reached a bottom, there’s one expert who says there’s no time like the present to scoop up quality stocks that have taken a beating lately.
“Nothing to argue about here: this is a bloodbath,” Blue Line Capital’s Bill Baruch said of the recent market rout amid rising fears about the coronavirus. “But it’s not when you panic. This is when you go shopping.”
Baruch noted that while the Dow ended last week down more than 12%, there’s a floor of support not to far below where the index fell to last week.
“Really, the market ramped up back in 2016, so, let’s use [the] February 2016 low as a trend line,” Baruch said. “There’s a good trend line right above 24,000 in the Dow. I want to be buying into that.”
“Let’s start with Microsoft. It’s still out above the 200-day moving average,” Baruch said. “It’s coming in there pretty [well]. I want to be buying Microsoft into that.”
Microsoft shares gained 2.5% last Friday, ending the day at $162.01 – far off its 200-day moving average at around $145. Since then, the stock has gained 5.3% to $170.55 at the time of writing.
“Now, you have Apple,” Baruch continued. “Apple’s coming into the 200-day moving average. I want to be buying Apple into that.”
Apple shares took a hit last month when the company was was one of the first to issue a guidance warning due to the coronavirus outbreak, but the stock has rebounded since and is currently trading at $302.74 – above its 200-day moving average at the $240 level.
“Apple also is coming into a breakout area that 2018 [top],” Baruch added. “In fact, Apple went from the 2018 sell-off and… stalled perfect at that $324 [level]. Coming into this, this is going to be a very technically driven chart. I like buying Apple into that.”
Baruch isn’t the only one bullish on Apple. Wedbush analyst Daniel Ives said in a note this week that once Apple’s supply chain gets back up to full speed, its iPhone growth story will continue.
“Our thesis since the coronavirus outbreak began is that it is primarily a timing issue for iPhone demand and ultimately once the supply chain gets back towards full capacity, the Apple renaissance of iPhone growth story will resume,” Ives wrote.
“While the last few weeks [have] been an exogenous ‘shock event’ to Apple’s ecosystem on both the supply and demand side due to its China exposure,” Ives wrote, “we believe this will be short lived as the longer term 5G super cycle thesis and services re-rating remain the crux of our bull these on Apple for the next 12 to 18 months.”
Lastly, Baruch likes Chevron after having steered away from oil and gas stocks for quite some time.
“I’ve been a dog on energy [stocks],” Baruch said. “I have not liked them at all,… but now I am paying attention.”
“Chevron has a very constructive channel or trend line from 2003,” he continued. “We’re coming into that. I think there’s some really good support down near $80. I think, if you look and even buy here down at $80 in Chevron, somewhere in this 5% range from where we are right now, you’re going to like it when you look six months to a year out.”