It’s been a volatile start to the year for the major market averages, and the Nasdaq 100 Index (QQQ) has been the weaker index, sliding more than 18% from its highs. Since its January low, the ETF has recovered nearly half of its gains, rallying 10% following an extremely oversold reading on January 24th. This has led to a spike in bullish sentiment, with the fear and brief panic from two weeks ago now replaced with some greed and belief that the market is headed back to new highs in short order.
Given this shift in sentiment and the strong oversold bounce we’ve seen, I believe it’s more likely that the Nasdaq-100 could re-test its lows and even undercut its January 24th low before the correction is finally over. However, this is a great time to prepare a buy-list in case the market does undercut its low, given that this allows one to act if the time comes vs. scrambling to find ideas amid the volatility when it can be challenging to pull the trigger. In this update, we’ll look at two names that look very reasonably valued if we see further weakness over the coming weeks.
