Indexes lost their foothold on a key level of support at the 50-day moving average on Monday amid an overall cautionary mood. Now, Investor's Business Daily's stock screener shows mutual funds are buying just 15 stocks, including Meta Platforms, Nvidia stock and three other Magnificent Seven players.
Are they seeing a safe haven in them or a buying opportunity?
Strong support from mutual funds is one of the top criteria for picking stocks. But IBD also recommends buys based on technical and price action as well as fundamental growth.
With that said, just two of the Magnificent Seven stocks present potential buying opportunities.
Nvidia Stock, GOOGL Near Buy Points
The first is Nvidia, which now sits in a flat base with a buy point of 974. Nvidia stock holds a best-possible 99 score on Composite Rating and EPS Rating. Sales and earnings have grown over the past three quarters in a dramatic reversal from the previous three quarters of declines.
With the market under pressure, those buy points may not work. Breakouts have been known to fail when market conditions are not conducive and that can happen even to stocks in the Magnificent Seven.
The other potential pickup is Google-parent Alphabet, which is in a buy zone above an entry of 153.78. The relative strength line has picked up since the stock rebounded from its 200-day moving average.
Alphabet has a Composite Rating of 96 and an Earnings Per Share Rating of 98. Alphabet also reported higher sales and earnings over the past three quarters.
Funds Like Amazon, Microsoft, Meta
Funds are sticking with Amazon and Microsoft as they sit above their 50-day moving averages, but the two are not in bases or near buy points right now. Microsoft is testing its 50-day line but more signs of support are needed before the stock offers an entry off that key level. Amazon is extended with no new base in sight.
Another fund pick is Facebook-parent Meta, which is in a buy range from a three-weeks-tight entry of 488.62. But the three-weeks entry is best used as a follow-on buy, and should be just a fraction of a full-size purchase in Meta stock. Under current difficult market conditions, that rule applies more than ever.
Funds are not buying Tesla and Apple. Both are in a downtrend and below the 50-day line, according to IBD MarketSurge chart analysis.
In addition to Nvidia stock and its Magnificent Seven cohorts, funds also bought Dow Jones leader JPMorgan Chase, Qualcomm, Chipotle Mexican Grill and Copart.
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