Market Could Enter A 'Real Correction,' Expert Warns, Highlights 2 'Recession-Resistant' Companies

As the NASDAQ QQQ, Bitcoin and the Magnificent Seven stocks face a pullback in February, one expert says market price action is looking like a “real correction now.”

Louis Navellier, an investment manager, discussed several market trends on Tuesday in a note to investors. Navellier says volatility in the markets, as observed by a sharp increase in the VIX Index, and low bond yields are evidence the market could enter a correction with a catalyst.

“It’s difficult to identify what the catalyst is to make this the time for a correction, but it is long overdue, and buying the dip is not happening,” Navellier said.

The expert noted the steep decline in consumer confidence in February and said the economy could experience stagflation with a decline in consumer spending.

He also noted companies that are likely to succeed during market downturns.

“Quality names fall the least and are the first to rebound. Look at Costco [Wholesale Corp] COST, it’s up 1.3% today, seen as a safe haven for fiercely loyal customers,” Navellier said. “Apple is still positive for the trailing week on the strength of its massive loyal customer base. Both of these companies have high P/E multiples but are seen as especially recession resistant.”

Navellier is still bullish on the market in the long run.

“While this correction is painful, longer-term trends remain positive. It appears to be an adjustment of valuations rather than serious concerns about a lowering of earnings estimates. It would not be a surprise if NVIDIA [Corp] NVDA delivers big to see a marked recovery.”

Also Read: