3 Stocks to Watch for Bargain Basement Entries

The novel coronavirus epidemic has triggered global selloffs fueled by disruptions in supply chains and impending demand shock. Numerous companies have cited COVID-19 as cause for guidance downgrades prompting analysts to lower expectations for 1H 2020. The S&P 500 (NYSEARCA: SPY)  plunged (-12 percent) in six-trading days at the end of February 2020 ushering in volatility that spiked the VIX as high as 49.50. These events have provided a long-awaited pullback in the equities markets to swinging overbought conditions rapidly the other way into oversold conditions. Traders should be aware that sentiment can remain negative with daily headlines as events unfold. Being nimble and agile are key to avoid getting trapped. Scaling is also a required strategy to get optimal pricing. Here are three stocks to monitor for the proverbial bargain basement prices for entries. Keep in mind these stocks may have reversed into downtrends, so patience and prudence is warranted.

Avis Budget Group

After reporting a homerun Q4 2019 earnings report, shares of automobile rental giant Avis Budget Group (NASDAQ: CAR) soared to multi-year highs at 52.98. However, a one-two punch to the gut from the end of February market sell-off and weak earnings results from competitor Hertz Global (NYSE: HTZ) punished this stock for a greater than (-40 percent) haircut. With a price-to-earnings (P/E) of just 7.50, these shares have reached oversold territory as daily stochastic plunge under the 20-band, with potential for reaching bargain-basement territory at these three wish level entries: 23.86 prior daily double bottom, 20.71 weekly lower BBs and 17.50 sticky 2.50s support. Limit orders or even selling naked puts with the intent to get assigned shares is a viable strategy that only experienced traders may consider.

Walt Disney

International entertainment conglomerate Walt Disney (NYSE: DIS) reported strong Q1 fiscal 2020 earnings sent its shares to multi-year highs at near the 153.55 Fibonacci (fib) price level. In an all too familiar template, shares collapsed as DIS become a victim of the coronavirus epidemic causing the shutdown of its China theme park properties. As travel and leisure stocks continue to get sold off as consumers avoid large crowds, DIS continues to crumble under this narrative. Additionally, CEO Bob Iger also announced his resignation as active CEO on Feb. 25, 2020, to assume the role of Executive Chairman until the end of his contract in Dec. 2021 confusing investors questioning why the sudden urgency. As the one-year anniversary of Disney Plus approaches, critics of the subscription figures will hone in on the drop-offs of the free annual subscription deal from Verizon (NYSE: VZ)customers. To offset the drop-offs, Marvel Phase IV’s rollout of its slate of blockbuster superhero films and exclusive Disney+ shows are set to release in 2020. Shares have reached oversold territory on the full daily stochastic plunge under the 20-band, with potential for reaching bargain-basement territory at these three wish level entries: 105.45 overlapping fibs/daily lower BBs/sticky 2.50s zone, 100.31 fib/sticky 5s zone, 95.17 overlapping fib/double bottom and 91.62 monthly lower BBs. Limit orders or even selling naked puts with the intent to get assigned shares is a viable strategy that only experienced traders might consider.

Twitter   

Twitter (NASDAQ: TWTR) is the source for fast-breaking information especially in times of global disruptions. Granted not always the right information, but it’s the go-to platform. Its daily (DAU) and monthly active users (MAU) soared in its last earnings report and expected to steepen its trajectory this quarter as the coronavirus reaches pandemic status. Activist investor Elliott Management is rumored to have amassed a large stake in the company with the intent to push out CEO Jack Dorsey. Investor sentiment is improving, Elliott Management has a history of putting floors in share prices and user engagement is sure to skyrocket above expectations. Shares have already started to bounce off the full daily stochastic oscillation towards the 20-band. If the daily stochastic can cross back down then traders may get an opportunity at the three wish level entries: 31.55 fib/MSL, 28.89 overlapping fibs and 26.89 fib. Limit orders or even selling naked puts with the intent to get assigned shares is viable strategy that only experienced traders might consider. While there’s no guarantee the market will provide these wish list bargain basement entry opportunities, it’s prudent to be ready to react is gifts are presented. Nimble traders can also utilize the fibs and sticky price levels ahead of the bargain levels to initiate trades. Make sure you do your preparation and plan your scalps ahead of time.