Why I'm Buying Three Stocks Into This Correction
The market is breaking down. Oil is at $112. And I'm adding to my Long-Term Portfolio on Monday.
Photo by Maxime Gilbert on Unsplash
80% of S&P 500 stocks are below their 50-day moving average.
Read that again. The index is down roughly 2% on the week. But the average stock is already in far worse shape than the headline number suggests. The index hides it. The breadth doesn’t.
This is not a messy pause. It is a real correction with real technical damage. And I am going to walk you through exactly what the charts are saying — and why I am buying three stocks into it anyway.
MACRO - One thing I watch
I don’t try to predict the macro. I watch one thing: the price of oil. Right now it is telling a clear story.
We are near $112 — close to multi-month highs. Energy prices are elevated and so are inflation expectations.
The Truflation real-time CPI index shows a clear spike over the last few weeks.
That has pushed the 10-year Treasury yield sharply higher.
The chain is simple:
Higher oil → higher inflation → tighter monetary policy → no rate cuts → credit availability deteriorates → economic slowdown.
The exact opposite of what the market needs to go up.
So what does this mean for our portfolios?
This is not the environment for new breakout trades. It is the environment for patience — and for selectively adding to quality at a discount. Which is exactly what I am doing.
On the positive side: we came into this correction in a world where corporate earnings were strong and credit was expanding, driven by what I believe is a genuine new industrial revolution in AI and robotics. It would take only “less bad” news — a de-escalation, an oil pullback, a softer inflation print — to let the market stabilize and eventually resume its uptrend.
The question is not if. It is when. And until then, capital preservation wins.
INDEX — What the chart is saying
The S&P 500 closed down -1.9% on the week. More importantly, it closed below the 40-week (200-day) moving average on elevated volume. The 10-week moving average has crossed below the 20-week. That is a meaningful technical event.
Running this through a Stage Analysis lens:
Stage call: Late Stage 3 / early Stage 4 behavior.
The key signals:
The index broke through prior support from the November 2025 correction — that level is now resistance
MACD is rolling over hard
RSI has dropped to approximately 40, signaling weakening momentum
Volume is elevated on the decline — this is distribution, not quiet profit-taking
The 40-week moving average is the line in the sand. Until the index reclaims it on a weekly close, the burden of proof remains on the bulls. From here, unless that happens quickly, there is still room lower.
BREADTH — The number that matters most
Only about 20% of S&P 500 stocks are above their 200-day moving average. Which means 80% of individual stocks are already in a downtrend.
That is a deep and unusually weak reading.
This matters because the index alone can hide the damage. Breadth tells you what is really happening underneath. And right now, what is happening underneath is bad.
Sectors — This is not rotation. This is fear.
Energy (XLE) is the only area showing genuine strength. Highest weighted average, strong 1-, 3- and 6-month performance, still flagged as a leader. That fits the macro backdrop perfectly. But be aware: energy leadership is event-driven. It can reverse fast if the geopolitical situation cools or supply fears ease.
Everything else is weak — and that tells you something important. When defensive sectors are also selling off, this is not money rotating from growth into safety. This is money leaving the market entirely. Cash and equivalents are where it is going.
The weakest areas: Financials (XLF), Cyclicals (XLY), Technology (XLK), and Communication Services (XLC). These sectors are pricing in higher energy costs, slower growth, tighter financial conditions, and credit stress simultaneously.
What is worth watching under the surface:
Even in this environment, a few sub-groups are showing better relative behavior: semiconductors, selected AI names, solar, and space. This does not mean the market is healthy. It means these may become the first leaders when the correction ends. Keep them on your watchlist.
PORTFOLIOS
10X LONG TERM PORTFOLIO — Adding into the correction
Last March 2025 I added 6 stocks to this portfolio. They have returned +113% on average since then. META, NXT, AMD, NVDA, TSM, MU.
Now, in the middle of this geopolitical and macro storm, I am adding 3 more.
The long-term portfolio is designed for exactly this moment — quality companies bought at a discount while others are selling out of fear. I intend to hold these for at minimum a few years, until fundamentals change.
Here are the three:
#1 — AVGO (Broadcom) AI revenue is expected to double year-over-year to $8.2 billion in Q1 FY2026. The company carries $73 billion in AI backlog to be delivered over the next 18 months. VMware adds a high-margin software floor underneath. The 5-year TAM expansion toward custom silicon is a genuine secular wave — not a trend, a structural shift.
#2 — APP (AppLovin) Revenue grew 68% year-over-year in Q3 2025 with EBITDA margins exceeding 80%. That combination is essentially unmatched in the tech sector. E-commerce and self-serve expansion are still early innings. This is one of the most efficient growth businesses I follow.
#3 — RDDT (Reddit) ARPU of approximately $6 versus Meta’s $50+. That gap tells you exactly where the growth ceiling sits — and how far the runway extends. Full-year 2025 revenue reached $2.2 billion, up 69% year-over-year, with net income of $530 million and free cash flow more than tripling. Add AI data licensing as a structurally new and largely unpriced revenue stream.
I will add all three on Monday at opening prices. You can check the full current portfolio here → [link]
10X MOMENTUM PORTFOLIO — Patience is the position
SNDX is my only open position. It is up +10% and holding well in a difficult environment. I am not touching my stop loss.
I am approximately 80% cash in this portfolio right now. That is not a mistake — it is the strategy. This market is not giving clean breakout setups. When it does, I want dry powder ready to deploy quickly. Until then, doing nothing is doing something.
I will spend the full week watching how price behaves before making any new moves.
Stay patient. Stay disciplined. Let the market show its hand.
— Giovanni
Important: This is not investment advice. Please consult a licensed financial advisor before making any investment decisions. AI tools used for editing.