foxex: Buy the Dip

Chart Advisor | Focus on the Price

Monday, March 02, 2020

1. Oppenheimer says to buy this dip

2. VIX levels still betray nervousness

3. Does this company actually have a COVID-19 cure?

Market Moves

Stocks rebounded strongly from the opening bell, in part because an analyst from Oppenheimer funds declared Apple (AAPL) shares oversold and suggested that investors buy this dip with a price target of $320. Wow. Now because AAPL is a component of all three major indexes, it begs the question of whether one man just did a single-handed lift of the markets. Whether or not this move continues remains to be seen however.

Though all three major stock market indexes rose higher on the day, none of them reached a fifty-percent retrace of the recent severe price drop. The chart below shows that AAPL shares did that and a little more. This is a potentially bullish signal for the rest of the market, since Apple's stock continues to be a bellwether for other stocks.

VIX Levels Still Betray Nervousness

The chart below shows a comparison of the Volatility Index (VIX) and the S&P 500 Index ETF (SPX). The good news is the VIX was measuring at its low just as the SPX was registering near its highest levels going into the close. The bad news is that the VIX level is still over 30, which is historically very high. The VIX futures indexes (orange and yellow lines on the chart) indicate that they are still pricing in continued risk as well, so investors probably haven't seen the last of volatile trading just yet.

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Does This Company Actually Have a COVID-19 Cure?

Coronavirus headlines still weigh heavy on the market price action, but there is something comforting about the fact that investors are still skeptical when they feel they need to be. This market isn't all fluff and rocket-engine hype, at least not yet. The chart below shows how one company's CEO, Joseph Kim of Inovio (INO) claimed that his company could have 1 million units of a cure for the Coronovirus by year's end, they just need help scaling up. Ah. Yes of course.

This is exactly where charts come in handy. Because when the CEO says one thing and the chart says another, you know that the wisdom of the crowds is showing healthy skepticism. Which means that companies with even more publicly available information probably aren't getting away without due diligence either--and THAT is a bullish sign for the markets going forward.

The Bottom Line

Stocks rebounded strongly today on good news for Apple and other companies. the Volatility Index remains high, so prices may fluctuate quite a bit in the days to come. Meanwhile, with Coronavirus headlines dominating the news cycle, it's nice to see not every company that claims to have a cure is instantly rewarded with higher share prices.