Audrey Deschenes
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Audrey Deschenes in Trading. Let's get it started!,

If you have to buy stocks, pick these four industries

Purchasing companies that bucked the market decline ‘is a premise that always works,’ says analyst Carter Worth

Bloomberg News/Landov
Shares of Lennar are up 17% this year. The company is among 10 homebuilders recommended by Carter Worth, a technical analyst at Cornerstone Macro.

The U.S. stock market has pared losses suffered in the six-day decline that started Aug. 17. So now what should investors do?

Most should wait before buying stocks, according to Carter Worth, a technical analyst at Cornerstone Macro, a broker-dealer founded in 2013 and based in New York and Washington D.C. Unlike most broker-owned research firms, Cornerstone’s team only conducts macro research. It doesn’t analyze individual companies.

Before the market correction that occurred from Aug. 17 through Aug. 25, the S&P 500 Index SPX, -0.26% had been trading in “the tightest range on record since 1927,” Worth said in an interview Monday. “At no point was the market up or down more than 3.7% for the year, until mid-August.”

The benchmark index has recovered some losses, but it’s still down 6.7% since Aug. 17. The damage to investor psychology has been so deep that if the market rebounds to where it was, “you will return to the scene of the crime,” Worth said. The 10.9% decline from the high on Aug. 19 through the low on Aug. 24 was the fourth-worst three-day plunge on record, he said, exceeded only by crashes in 1929,1987 and 2008.

FactSet

“Many people are in, but wish they could get out, after the loss they have sustained on paper,” he said. “They will seize that chance. Going higher from here simply returns us to where sellers are lying in wait.”

So Worth argues that “there is nothing to be lost by postponing all new buying.”

http://www.marketwatch.com/story/if-you-have-to-buy-stocks-p...