Key Points

• The S&P 500 is down around 4% in the past month.
• The selloff is most notable in Big Tech.
• Shares of NextEra Energy, Exxon Mobil and Amazon are primed for recovery.
• If you’re looking for some stocks with huge potential that could be fantastic “buy the dip” opportunities, make sure to grab a free copy of our brand-new “The Next NVIDIA” report. It features a software stock we’re confident has 10X potential. 

Panic sellers never win. And when shareholders get the jitters because the stock market undergoes a natural correction, it is those who see it as a buying opportunity who are poised to profit over the longer term. 

That has precisely been the case over the past two weeks, as Big Tech names like NVDIA Corp. (NASDAQ: NVDA), Intel Corp. (NASDAQ: INTC) and Amazon.com Inc. (NASDAQ: AMZN) have shocked the market with massive selloffs, driving down prices across the board. 

But as investors turn begin to shy away from the AI and cloud-computing trends (for now), those outflows are resulting in a market rotation that is seeing massive inflows into other sectors — specifically, in value stocks. That is why I am keeping a close eye on buying opportunities in those corners of the market, but also in tech, where technical indicators are suggesting that man of the big names are oversold and likely to see price reversals in the near future.  

A Utility Play That Is Recession-Proof

Certain sectors are prone to depreciation during periods of market volatility or outright recession. Others are considered recession-resistant, and still others can be called recession-proof. These include life’s needs, not its wants. Think of things like food, shelter and electricity. 

The latter is catching my eye right now. The S&P 500’s utilities sector has performed second-best over the past month. Of the index’s 11 sectors, utilities has posted a one-month return of 9.11%, only underperforming real estate (which saw a 9.58% gain), while the technology sector has suffered an eye-catching -10.63% loss over the same period. 

NextEra Energy Inc. (NYSE: NEE) is one company leading the way among its utilities competition. Shares are up 9.86% over the past month, and the Florida-based $158.57 billion market cap company just beat second-quarter earnings by posting 96 cents per share compared to analysts’ estimates of 95 cents per share. The company did miss on revenue, posting a year-over-year change of -17.42%, but a 92.26% increase of net change in cash — an indicator of fundamental strength — suggests underlying strength. 

Like most companies operating in this space, NextEra pays a strong dividend, which currently yields 2.60% or 51 cents per quarter.

Fueling-Up With an Oil Major

Another sector that has historically proven resilient to market corrections and recession fears is energy. Specifically, the oil majors have time and again shown that they offer investors fearful of ongoing pullbacks, corrections or bear markets a safe haven that offers steady prices and pays strong dividends. 

Exxon Mobil Corp. (NYSE: XOM) is exactly that kind of company. Shares are up 14.19% year to date, but they have also risen 3.10% over the past month as more sensitive sectors has seen massive losses in market cap. The $531.67 billion oil and gas company pays a dividend yielding 3.25% or 95 cents per quarter and just beat second-quarter earnings estimates, again, with $2.14 per share. The company’s third-quarter forecast is for $2.29 per share. 

The U.S. is on track to be the world’s largest producers of oil for the seventh year in a row. Exxon Mobil plays a huge role in that landscape. Since its five-year low in March 2020 — induced by the arrival of the COVID pandemic — shares of XOM have risen steadily by 257%. 

A Golden Opportunity to Buy Low in Tech

During its second-quarter earnings call last week, Amazon.com announced that it beat revenue by a country mile, posting $1.26 versus analysts’ estimates of $1.03. It marked the sixth consecutive quarter the company beat on earnings. Meanwhile, revenue came in at $147.98 billion, shy of analysts’ forecasts of $148.67 billion, but still a 10.12 year-over-year gain from its same-quarter revenue in 2023. 

So how did the market reward the tech giant? By tanking its share price. Since August 1, shares of AMZN have nosedived to the tune of -18.50%. While panic sellers continues to offload their shares, the smart money on Wall Street is going to view this as an opportunity to scoop up shares at a massive discount. 

Aside from strong fundamentals, technical analysis supports this thesis. The Relate Strength Index (RSI), which is a momentum indicator that gauges whether equities are overbought, oversold or somewhere in between is generally measured on a scale from 30 to 70. RSI can provide insights into price direction and potential reversals. The higher the RSI reading, the more likely its overbought and looking at a price drop. Conversely, the lower the RSI, the more likely its oversold and nearing a price increase. For shares of AMZN, the RSI reading on the year-to-date chart is currently 30.21, suggesting it is massively oversold and likely nearing a bottom. This is further supported by the fact that it is testing its 200-day moving average, which it has traded above the entire year. 

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