Trying to find momentum stocks when the stock market is falling into a bear market is next to impossible. However, there are key levels at which to buy five of these former high-flyers in anticipation or a return of momentum.

Which stocks should you be considering?

Start with Apple  (AAPL) . This is the obvious first choice of a stock that has fallen from an all-time high and into bear market territory in less than 12 months. Apple was the first to report quarterly results of these five momentum names. It must stay above its 200-week simple moving average to have a chance to regain upward momentum.

TheStreet's Jim Cramer has long stated that you own Apple, you don't trade it. According to Cramer and Jack Mohr, research director of Cramer's charitable portfolio, Action Alerts PLUS, the current selloff in Apple shares is "overdone" although they understand investors' concerns about iPhone sales numbers compared with the same period a year ago.

"We understand that shares could remain range-bound in the near term until catalysts come to fruition in the back half of the year," they wrote. However, they still maintain a long-term price target of $140.

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LinkedIn (LNKD) reported quarterly results on Feb. 4 then plunged 46% to a 2016 low on Feb. 5. This one-day crash has the stock well below its 200-week simple moving average.

Pandora (P) reports quarterly results after the closing bell on Thursday. Analysts expect the company to report a loss of 6 cents a share. This stock has been below its 200-week simple moving average since the week of Oct. 23.

Tesla Motors (TSLA) reports quarterly results after the closing bell on Wednesday. Analysts expect the company to report a loss of 34 cents a share. This stock began the week below its 200-week simple moving average for the first time ever.

Twitter  (TWTR) reports quarterly results after the closing bell on Wednesday. Analysts expect the company to report a loss of 13 cents a share. This stock set an all-time low on Monday and has not been publicly-traded long enough to have a 200-week simple moving average. 

On this stock, the smallest position in the AAP portfolio, Cramer and Mohr aren't expecting much, considering Twitter a "show me story."

"While we have long touted the company's unlocked potential, and agree that many outside parties likely see the same possibilities, the fact remains that the user engagement issues continue to highlight results," according to Cramer and Mohr. "Recent turnover and management shakeups only add to the murky situation that a buyer would have to inherit, address and ultimately fix, all of which would require substantial time and resources." 

The weekly charts on these five companies are negative. The red line through the weekly price bars is the key weekly moving average (a five-week modified moving average). The green line is the 200-week simple moving average considered the "reversion to the mean."

The study in red along the bottom of the chart is weekly momentum (a 12x3x3 weekly slow stochastic), which scales between 00.00 and 100.00, where readings above 80.00 indicates overbought and readings below 20.00 indicates oversold. A negative weekly chart shows the stock below its key weekly moving average with weekly momentum declining below 80.00 in a trend towards 20.00.

Here's the weekly chart for Apple.


Courtesy of MetaStock Xenith

Apple closed Monday at $95.01, down 9.7% year to date and in bear market territory 29.4% below its all-time high of $134.54 set on April 28.

The weekly chart is negative but oversold, with the stock below its key weekly moving average of $100.43 and just above its 200-week simple moving average of $91.82. Its weekly momentum reading projected to decline to 13.98 this week down from 15.59 on Dec. 5, with both readings below the oversold threshold of 20.00.

Investors looking to buy Apple should enter a good till canceled limit order to buy the stock if it drops to $93.61, which is a key level on technical charts until the end of February. Investors looking to reduce holdings should enter a GTC limit order to sell this stock if it rises to $110.22, which is a key level on technical charts until the end of 2016.

Here's the weekly chart for LinkedIn.


Courtesy of MetaStock Xenith

LinkedIn closed Monday at $109.97, down 51.1% year to date and solidly in bear market territory 60.2% below its all-time high at $276.18 set on Feb. 26, 2015. The stock set a new 2016 low of $102.81 on Monday.

The weekly chart is negative with the stock below its key weekly moving average of $175.51 and below its 200-week simple moving average of $186.51. Its weekly momentum reading is projected to drop to 21.06 this week down from 26.92 on Feb. 5.

Investors looking to buy LinkedIn should enter a good till canceled limit order to buy the stock if it declines to $95.75, which is the low set during the week of Nov. 9, 2012. Investors looking to reduce holdings should place a GTC limit order if the stock rises to $148.56, which is a key level on technical charts until the end of this week.

Here's the weekly chart for Pandora.


Courtesy of MetaStock Xenith

Pandora closed Monday at $7.88, down 41.2% year to date and solidly in bear market territory 65.1% below the Sept. 21 high of $22.60.

The weekly chart is negative but oversold with the stock below its key weekly moving average of $10.29 and well below its 200-week simple moving average of $18.27. Its weekly momentum reading is projected to decline to 7.92 this week down from 9.76 on Feb. 5 falling further below the oversold threshold of 20.00.

Investors looking to buy Pandora should enter a good till canceled limit order to buy the stock if it declines to $7.08, which is the all-time low set during the week of Nov. 16, 2012. Investors looking to reduce holdings should enter a GTC limit order to sell the stock if its rises to $9.22, which is a key level on technical charts until the end of this week.

Here's the weekly chart for Tesla.


Courtesy of MetaStock Xenith

Tesla closed Monday at $147.99, down 38.3% year to date and in bear market territory 48.4% below its July 20 high of $286.65.

The weekly chart is negative with the stock below its key weekly moving average of $191.61 and below its 200-week simple moving average of $157.07. Its weekly momentum reading is projected to decline to 20.29 this week down from 26.76 on Feb. 5.

Investors looking to buy Tesla should enter a good till canceled limit order to buy the stock if it declines to $116.10, which is the low set during the week of Nov. 29, 2013. Investors looking to reduce holdings should enter a GTC limit order to sell this stock if it rises to $190.98, which is a key level on technical charts until the end of this week.

Here's the weekly chart for Twitter.


Courtesy of MetaStock Xenith

Twitter closed Monday at $14.90, down 35.6% year to date and deep in bear market territory 72.1% below its April 8 high of $53.49.

The weekly chart is negative but oversold with the stock below its key weekly moving average of $18.76. Its weekly momentum reading is projected to decline to 8.09 this week down from 9.81 on Feb. 5.

Investors looking to buy Twitter should enter a good till canceled limit order to buy the stock if it declines to $13.63, which is a key level on technical charts until the end of this week. Investors looking to reduce holdings should enter a GTC limit order to sell this stock if it rises to $32.40, which is a key level on technical charts until the end of 2016.

 

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.

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