Chicago, IL – March 5, 2025 – Today, Zacks Investment Ideas feature highlights Tesla TSLA, Rigetti Computing RGTI, Oklo OKLO and The Nasdaq 100 Index ETF QQQ.
Savvy investors understand that drawdowns and corrections are a given on Wall Street. Over the past decade, there have been several corrections (defined as a >10% drop off highs) and bear markets (defined as a 20% drop off highs). Unfortunately, most amateur investors lose money because they are psychologically programmed to be fearful when they should be greedy, and vice versa.
“Far more money has been lost by investors preparing for corrections, or trying to anticipate corrections, than has been lost in all the corrections themselves.” ~ Legendary Mutual Fund Manager Peter Lynch
Though most investors become fearful during inevitable market corrections, they should take on an opportunistic mindset instead. That said, investors must understand their time frame, risk management framework, and strategy to succeed. For instance, if you’re DCA (dollar-cost averaging) for a retirement account, nothing should change for your strategy (unless you want to add even more capital during corrections). If you’re an active trader or investor, you want to look for market extremes and take calculated bets. Currently, some market extremes are appearing.
A high-beta stock exhibits more price volatility than the overall market. During bull phases, high-beta stocks outperform, and vice versa. Unsurprisingly, high-beta stocks like Tesla, Rigetti Computing, and Oklo have been hurt the most during the current market correction. However, what may surprise most investors is just how extreme the drop has been. the major indices are masking ugliness “below the surface.” According to Bloomberg, high beta stocks have suffered similar losses to when the S&P 500 Index plunged 30% in March 2020!
The Nasdaq 100 Index ETF retreated to its 200-day moving average (or 40-week MA) for the first time since last August. Why should investors track the 200-day moving average? Each time QQQ tested the long-term moving average since regaining the level in December 2022, QQQ put in intermediate bottoms and rose more than 5% in the following weeks (a large move for a market index).
Tuesday, the CNN “Fear & Greed” Index matched its most “fearful” level since August 2024. Coincidentally, the QQQ tested its rising 200-day moving average at that time, marking the summer lower.
