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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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."