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Stocks Speed Into Correction With A More Than 4% Plunge

If you thought we’d seen the worst of this coronavirus selloff… you were wrong.

REALLY wrong!

Thursday’s session saw the steepest drops yet with losses of well over 4% for each of the major indices. That’s in addition to a pair of 3% plunges earlier this week.

The NASDAQ was the only major index to finish a session in the green this week (on Wednesday), but it had the sharpest decline today of 4.61%. In one day! It was off more than 414 points to 8566.48.

The other two major indices each plunged 4.42%. The Dow fell off a cliff by 1190.95 points to 25,766.64. That’s the second 1000-point plunge of the week, which hasn’t happened since February 2018.

The S&P was off 137 points to 2978.76.

Unfortunately, this is historic stuff. These were the largest single-day point declines for the Dow and S&P. And the market has never pulled back into a correction faster than this month.

The losses so far this week are just astounding. It’s the kind of thing we’ll be remembering for a long time to come, just like the Christmas catastrophe of 2018.

The Dow has plunged by more than 3200 points in four days, or 12.5%. The NASDAQ has given back over 1000 points or 11.8%, while the S&P is off 12%.

Let’s remember that the NASDAQ was at a new high of 9817.18 on February 19, while the S&P was at the historic level of 3386.15 on that same day. The Dow was at a new high of 29,551.42 on February 12.

That’s an awful lot of damage in a little bit of time.

The market is just reacting to any coronavirus headline, and the problem is we don’t know what’s around the next corner.

So news of the sickness spreading outside of China, including thousands of potential cases being monitored in California, has investors on edge and wondering how long this can last and how much damage it will do.

And the week’s not even over yet. We still have one more day to go… and we all know how challenging Fridays have been since this whole thing got started.

Today’s Portfolio Highlights:

Commodity Innovators: Stocks that perform well despite a sharp market correction are worth watching. In the case of CME Group (NASDAQ:CME), it’s easy to understand why this futures exchange is bucking the trend. It eats up the volume that’s been surging amid the coronavirus concerns, and should continue to do well as long as volatility is spiked. Plus, most of the commodities in this portfolio are tied to CME. With a great-looking chart and rising share price, the editor considers this a great time to add CME to this new portfolio. Read the complete commentary for more on this new addition.

Stocks Under $10: The plan was to hold onto Lattice Semiconductor (LSCC) until it gained 200%… and it probably would have happened if it weren’t for the coronavirus. Now that the market has dumped over 3000 points in just a few days, Brian would rather protect the triple-digit gain in this name rather than risk it amid all this uncertainty. Therefore, the editor sold LSCC on Thursday and banked a 135% return in a little over a year. He also removed a couple underperformers by selling Endurance International Group (EIGI) and Spark Networks (LOV).

Counterstrike: The market has now pulled back so far that Jeremy bought small positions in solid companies that are on sale at the moment. On Thursday, he added 5% allocations in the following names:

o Proshares Short VIX Short-Term Futures ETF (SVXY)
o JPMorgan (NYSE:JPM)
o Micron Technology (NASDAQ:MU)
o The Rubicon Project (RUBI)

These are half positions, which leaves room for more buying if this selloff continues. Read the full write-up for more on these buys.

Income Investor: The portfolio is getting into marijuana… but not in the way you may think. Instead of buying a grower or processor, Maddy decided to buy Innovative Industrial Properties (IIPR). It’s a REIT that leases industrial properties to marijuana companies in states where it’s legal. At the moment, it owns 51 properties in 15 states. As a REIT, it has a great dividend of 4.2%. It also recently reported strong fourth quarter results, including revenue that tripled from last year. Shares have surged nearly 300% over the past couple of years, so the editor is using this coronavirus correction to pick up this name at a great price. And just think about the potential growth as more states legalize marijuana! Read the complete commentary for more on IIPR, including a look at their plans for 2020.

All the Best,
Jim Giaquinto

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