IBD Live Weekly Recap: Handling The Bear Market And Identifying A New Uptrend

TL;DR

The market experienced a sharp decline due to the coronavirus pandemic, but there may be potential opportunities in stocks once a new market uptrend is identified.

Transcript

[Applause] hey everyone its Alisa Cora I'm here wrapping up a week of trading on I be live now the market continued sharply lower this week amid the ongoing coronavirus stock market correction on Thursday the Dow Jones logged its worst day in over three decades as the World Health Organization officially declared the coronavirus a pandemic now stoc... Read More

Key Insights

• ❓ The market experienced a sharp decline this week due to the coronavirus pandemic and was officially declared a pandemic by the World Health Organization.
• ❓ Buying stocks during market corrections is highly risky, as most stocks tend to go down regardless of their fundamentals.
• 🎁 The follow-through day is an important indicator to identify new market uptrends, present in every major US stock market bottom since 1900.
• 🫥 Stocks holding above their 50-day lines and with strong relative strength lines near all-time highs have the potential to become market leaders.
• 🥺 Zoom Video, Netflix, and Tesla are examples of stocks with strong relative strength and potential to lead the market once it starts to bounce back.
• 💯 Tesla, despite the market sell-off, has a perfect relative strength rating of 99, indicating it is outperforming 99 percent of all stocks in the database.
• 🫥 A decisive break of the 10-week line in Tesla could be a signal to exit or reduce positions.

Questions & Answers

Q: What caused the sharp decline in the stock market this week?

The ongoing coronavirus pandemic led to fears and uncertainties, resulting in a market correction and a sharp decline in stock prices.

Q: Why is it risky to buy stocks during market corrections?

During market corrections, the majority of stocks tend to go down regardless of their fundamentals. It is important to wait for a true signal of upward momentum before considering buying stocks.

Q: What is the follow-through day and how can it help identify new market uptrends?

The follow-through day is a key indicator used to gauge when a new market uptrend has officially begun. It has been present in every major US stock market bottom since 1900.

Q: Which stocks are likely to lead the market once it reverses the downtrend?

Stocks that are holding above their 50-day lines and have strong relative strength lines near all-time highs are potential market leaders. Some examples include Zoom Video, Netflix, and Tesla.

Summary & Key Takeaways

• The ongoing coronavirus pandemic caused the stock market to sharply decline, entering bear market territory.

• Buying stocks during market corrections is extremely risky, as most stocks tend to go down regardless of their fundamentals.

• The IBD Live team discussed identifying potential new market uptrends using the follow-through day and highlighted top stocks to watch for once the market turns around.