Why Low-Priced Stocks Could Be Your Best Bet in Today’s Market

NYSE: SPY | SPDR S&P 500 ETF Trust News, Ratings, and Charts

SPY – It’s easy to get caught up in the day to day of the markets especially in a climate like this with headline risk, and head-spinning moves in both directions. But I think we’ve done a decent job of navigating this treacherous environment. YTD, the S&P 500 (SPY) is down 11%, while the POWR Stocks Under 10 portfolio is up 5%. The biggest factor is our heavy exposure to energy and lack of exposure to the weakest parts of the market. Yesterday, we took down our energy exposure to a more normal weighting and rebalanced into some laggards. In today’s commentary, I want to explain my logic in more detail and identify some ‘green shoots’. Read on below to find out more….

(Please enjoy this updated version of my weekly commentary published March 10th, 2022 from the POWR Stocks Under $10 newsletter).

First, let’s review the past week…

Over this past week, the S&P 500 is down by 2.4%. Two Thursdays ago, we had a powerful reversal following Russia’s invasion of Ukraine.

There was some hope that this could mark a bottom and that stocks would turn higher. Of course, the implicit part of this argument is that the news flow would be positive or at least not deteriorate further.

Not surprisingly, these hopes were dashed as we gradually leaked lower and gave up the bulk of these gains with many stocks making new lows. Not surprisingly, the news flow remains precarious.

Both sides are dug in and unlikely to compromise. The secondary effects of rising energy and food prices are a negative for stocks and the economy and also could create cascading, tertiary effects like an even more hawkish Fed, a decline in discretionary spending, or political instability in other parts of the world which does seem to follow inflationary spirals.

Then, there is the simple fact that the world is a much more dangerous place today than 3 months ago. This certainly weighs on risk appetites and dents demand for stocks.

Green Shoots

Now, that we’ve laid out the brutal and unpleasant reality of the current situation, let’s talk about the ‘green shoots’.

These are the small positives that I am seeing at the moment. We’ve been noting and accounting them on a weekly basis throughout this correction.

On their own, none of these developments are going to reverse the market’s bearish trend. But, cumulatively, they can start to matter.

And, I think we’re starting to see some impact. Despite the scary headlines and volatility, the market has actually been going more sideways than down. Yes, we’ve had some scary lurches lower under the 4,200 level on the S&P 500, but we’ve found support at these levels.

Take a look at the daily, 3-month chart of the S&P 500 below:

Since the initial drop in late January, there has been so much bad news in terms of geopolitical risk, the Fed tightening, inflation, and a fattening of tail risks.

The market has absorbed all of this bad news and is above January’s low. I, see this as a positive, in a way.

It’s like when a football team throws multiple interceptions, loses a fumble, and gives up a special teams TD but somehow going into halftime, is only down by 10 points.

There’s hope that if the team can play better, it can get back into the game. And, the team is likely to play better given how bad the first half was, while the other team may be due for some miscues of its own.

Some of the other positives that we have covered in previous commentaries: Q4 earnings season that was better than expected, coronavirus case counts continue to plunge, and the market is pricing in 7 rate hikes in 2022.

To sum it up, the stock market is a discounting machine. And, it’s discounted a lot of risk and negativity over the past couple of months.

I like the risk/reward of being aggressively long against the 4,200 level and being cautiously long against the Feb 24 low of 4,100.

Rebalancing Strategy

Yesterday’s trade was about what was discussed above. I see us getting closer to a more, normal trading environment, and I want the portfolio to reflect that.

Further, due to the gains in our portfolio and an overweight position, energy was getting close to a 35% weight. Now, we are at a 15% weight which is much healthier and allows us to peel off some profits.

Over the intermediate-term and longer-term, I think oil goes much higher. In the short-term, I have less conviction.

There’s also the fact that many high-quality stocks are down between 25 to 50% during this market correction, so we decreased our cash position from 24% to 19.5% in addition to plowing some of our energy profits into these opportunities.

 What To Do Next?

If you’d like to see more top stocks under $10, then you should check out our free special report:

3 Stocks to DOUBLE This Year

What gives these stocks the right stuff to become big winners?

First, because they are all low priced companies with explosive growth potential.

But even more important, is that they are all top Buy rated stocks according to our coveted POWR Ratings system and they excel in key areas of growth, sentiment and momentum.

Click below now to see these 3 exciting stocks which could double (or more!) in the year ahead.

3 Stocks to DOUBLE This Year

All the Best!

Jaimini Desai
Chief Growth Strategist, StockNews
Editor, POWR Stocks Under $10 Newsletter


SPY shares were trading at $425.45 per share on Friday morning, down $0.03 (-0.01%). Year-to-date, SPY has declined -10.42%, versus a % rise in the benchmark S&P 500 index during the same period.


About the Author: Jaimini Desai


Jaimini Desai has been a financial writer and reporter for nearly a decade. His goal is to help readers identify risks and opportunities in the markets. He is the Chief Growth Strategist for StockNews.com and the editor of the POWR Growth and POWR Stocks Under $10 newsletters. Learn more about Jaimini’s background, along with links to his most recent articles. More...


More Resources for the Stocks in this Article

TickerPOWR RatingIndustry RankRank in Industry
SPYGet RatingGet RatingGet Rating
.INXGet RatingGet RatingGet Rating
DIAGet RatingGet RatingGet Rating
IWMGet RatingGet RatingGet Rating
QQQGet RatingGet RatingGet Rating

Most Popular Stories on StockNews.com


Inflation Not Fading Fast Enough for Stock Investors

Investors may have celebrated the end of high inflation too soon. The CPI report shows inflation bouncing higher and thus pushing back the start date for Fed rate cuts. This has the S&P 500 (SPY) coming off recent highs. This begs questions like how much more downside could we see? And when will the bull market get back on track? 44 year investment veteran Steve Reitmeister shares his answers to these questions in this timely commentary including a preview of his top picks to stay ahead of the pack. Read on below for more...

3 Auto Stocks to Consider Over TSLA in April

Tesla (TSLA) reported a decline in deliveries in the first quarter, and Wall Street expects the company to deliver fewer vehicles than last year. Furthermore, rising competition, slowing EV sales, and stretched valuation make TSLA unattractive from an investment standpoint. Considering these factors, investors could consider buying fundamentally strong auto stocks Blue Bird (BLBD), Rolls-Royce Holdings (RYCEY), and Stellantis (STLA) over Tesla (TSLA). Read more...

3 Top-Rated Tech Stock Buys for Value in April

The technology sector is undergoing a notable surge, propelled by increasing digitalization endeavors among businesses and governmental support for technological progress. So, fundamentally sound tech stocks Box Inc. (BOX), Teradata (TDC), and Materialise (MTLS), which seem pretty undervalued, might be ideal buys this month. Continue reading...

Top Software Stocks at the Forefront of Market Gains

The software industry's prospects appear bright due to increasing investments in digital transformation, high demand for advanced software services from various sectors, and the integration of emerging technologies such as generative AI. Therefore, investors could consider buying quality software stocks Autodesk (ADSK), DocuSign (DOCU), and Pegasystems (PEGA) for solid gains. Read more...

Updated 2024 Stock Market Outlook

The bull market continues to rage on with the S&P 500 (SPY) making new highs. That is the past...the question is what does the future hold? That is why 44 year investment veteran Steve Reitmeister provides this updated 2024 Stock Market Outlook to help you carve a path to outperformance the rest of the year. Read on below for the full story...

Read More Stories

More SPDR S&P 500 ETF Trust (SPY) News View All

Event/Date Symbol News Detail Start Price End Price Change POWR Rating
Loading, please wait...
View All SPY News