Investors are closely watching high-flying technology and growth stocks like Palantir Technologies Inc. (NASDAQ: PLTR) and IonQ Inc. (NYSE: IONQ) as they pull back from recent highs, raising the question of whether they are approaching an ideal buying opportunity.
According to Chief Market Strategist at Fututrum Equities, Shay Boloor, patience is paramount, echoing the legendary philosophy of Warren Buffett, as these stocks may have further to fall before reaching a key technical support level.
Pullbacks Are Natural After Significant Rallies
In a recent social media post, Boloor noted that “Stocks always almost retest the 200-day MA” after significant rallies.
He warned against the “FOMO” that tempts investors to chase returns, emphasizing that pullbacks are natural. This thesis is now being tested across several names that have delivered staggering returns over the past year, including Robinhood Markets Inc. (NASDAQ: HOOD) and Rocket Lab Corp. (NASDAQ: RKLB).
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The ‘Fat Pitch’ Opportunity Hasn’t Arrived Yet
However, data from Friday’s market close shows that these stocks remain significantly elevated above this key indicator.
Palantir closed at $177.57, well above its 200-day moving average (DMA) of $118.85. Similarly, IonQ ended the week at $67.28, a considerable distance from its 200-DMA of $37.68.
This gap suggests that while a correction is underway, the “fat pitch” opportunity that value-oriented investors seek may not have arrived yet, as per Buffett’s video attached in Boloor’s post.
Buffett’s Stock Market Analogy With Baseball
The situation calls to mind Buffett’s famous investing analogy, based on baseball legend Ted Williams’ book, The Science of Hitting.
Buffett explains that, unlike a batter who must swing at strikes, an investor can wait indefinitely for the perfect opportunity—a stock entering their “sweet zone.”
“You can wait there and look at thousands of pitches,” Buffett stated, emphasizing that there are no called strikes in the stock market. He argues that great wealth is built on a small number of excellent decisions, likening an investor’s career to a “punch card with 20 punches on it.”
For now, as these growth darlings correct, investors are left to decide whether to swing early or demonstrate Buffett-like patience, waiting for the pitch to arrive squarely in their sweet zone—a level that, for many, is the 200-day average.
Price Action
The SPDR S&P 500 ETF Trust (NYSE: SPY) and Invesco QQQ Trust ETF (NASDAQ: QQQ), which track the S&P 500 and Nasdaq 100 indices, respectively, rose in premarket on Monday. The SPY was up 0.42% at $664.59, while the QQQ rose 0.56% to $599.28, according to Benzinga Pro data.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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