A turbulent week:

The previous week, which opened ominously with bearish headlines on stretched AI valuations and calls for a correction, recovered strongly on Friday afternoon. The Nasdaq Composite, which was headed for the third 2% drop in a week recovered to close just 0.2% lower for the day.

                                  Friday Oct 31st        Friday Nov 7th                      Drop

S&P 500 Close               6,840.20                    6,728.50                                   -1.6%

Nasdaq Comp               23,724.96                 23,004.54                                 -3.04%

The week started with and also saw a lot of turbulence, and from what was looking like a very arresting drop heading into a full blown correction, it recovered strongly on Friday afternoon.

At one time, the difference between the Nasdaq’s intraday high on Oct 29th to its low on Friday was as much as 6%, and similarly for the less volatile S&P 500 it was a 4% drop. 

However, on Friday afternoon, we saw strong, “buy the dip” action, which led the indices much higher, eventually with the S&P 500 closing positive and the Nasdaq closing only 0.2% lower after being 2% down during the day.

As a result, the S&P 500 and the Nasdaq Comp indices closed just 1.6% and 3.04% lower for the week.

In a previous post and the weekly webinar, I had highlighted a few reasons such as overbought AI valuations in market leaders like Palantir, calls from Wall Street CEOs for a correction, and bearish positions from market bears like James Burry. The James Burry $1Bn put option on Palantir was quite ominous, given his reputation for having called the Great Financial Crash of 2008-2010.

The correction may or may not be over, but essentially a healthy pullback in AI names threw out excess speculation, which is good for the long-term health of the market.

Regardless, these are the companies that we can buy during the course of the week. The prices are becoming attractive, and affordable.

Arista Networks (ANET) $135-$137

Duolingo (DUOL) $200-205

Advantest (ATEYY) $128-130

Credo Technologies (CRDO) $165-170

Micron (MU) $245

Shopify (SHOP) $140-150

Cadence (CDNS) $325-330

Synopsis(SNPS) $400-405

Vertiv (VRT) $185-$190

Rubrik (RBRK) $73-$75