September is here, folks, and you know what that means: Wall Street's chattering class is out in full force, spouting their usual warnings about the dreaded “September Swoon.”
History buffs will remember the infamous crashes of 1929 and 1987, both of which kicked off in September. The doomsayers will tell you to run for the hills, sell your stocks, and wait for the inevitable bloodbath.
But here at Market Monitors, we don't buy into the hype and hysteria. You see, the mainstream media loves to scare you with sensationalized headlines. It's good for their ratings, but it's terrible for your portfolio.
We know you're smarter than that. You know better than to blindly follow the herd.
And this September, we have a contrarian opportunity on our hands: A chance to buy world-class companies at a discount.
How do we know? It's all about the charts…
Our colleague Greg Diamond, editor of Ten Stock Trader, has a knack for predicting market turning points. He nailed the COVID-19 crash in 2020, the 2022 top, and he's calling for another inflection point coming this month. How does he do it? Simple, he looks at what the market is actually doing instead of getting caught up in the fear.
Forget the “Good Charts” …
Diamond suggests using weekly price charts because they offer a broader perspective and can help you see the true “damage” of market volatility.
He contrasts “good charts” which reflect strong uptrends, with “bad charts” – companies that have seen their price plummet, usually on disappointing results, and have broken through their recent support levels.
Diamond recommends focusing on the “good charts” right now, suggesting that we watch the XLK ETF, which tracks the technology sector and has shown recent strength. However, he believes that these “good charts” are likely to falter soon, and that's where it gets really interesting.
He points to Micron (MU) as an example of a “bad chart”. The memory chip maker has been pummeled this year, cratering after a boom cycle. Its chart is, to use Diamond's word, “ugly,” but he believes the company is likely to see significant bounces soon as over-sold levels correct.
You can read Diamond’s full analysis here.
This approach aligns with that of another colleague, Brett Eversole of Daily Wealth. Eversole points to the Nasdaq's quick rebound after its recent 10% drop as a sign of underlying strength.
He explains: “Similar setups led to 7.4% gains in three months, 11.4% gains in six months, and 12.4% gains over the following year. That's solid outperformance versus a typical buy-and-hold strategy. Plus, the Nasdaq was higher a year later 71% of the time.”
You can read Eversole's full analysis here.
Diamond believes these rebounds will be short-term, as the broader market begins to shift and the “good” charts falter. He is looking for a correction in “good charts” and rallies in “bad charts” to signal a major market inflection point.
That's where we see the contrarian opportunity: …
While everyone else is buying the trendy, strong performers, smart investors can exploit the September Swoon to load up on these “bad chart” stocks at bargain basement prices.
When the market turns, and Diamond’s inflection point appears, these “bad chart” companies will be perfectly positioned to capture outsized gains.
There's also another layer to this story— a catalyst that could turn those short-term bounces into long-term success.
The Fed is widely expected to start cutting interest rates next month. Lower interest rates traditionally stimulate economic activity, leading to increased lending, investment and consumer spending – benefiting companies with beaten down prices and creating even more upside potential for our “bad chart” picks.
So, with that in mind, let’s take a look at two stocks that could deliver massive gains in the coming months:
Micron (MU)
Micron is a classic “bad chart” stock. Its share price has been cut in half this year as the price of memory chips has collapsed.
But there's more to the story than meets the eye.
Micron is also a leading player in the AI revolution. Its memory chips are essential for building and operating AI systems.
Diamond is looking for short-term bounces in companies like this, but Chris Johnson of Money Morning is looking at longer term plays with a “buy the dip” approach, suggesting that investors wait a few weeks for the price to bottom out before jumping in.
Johnson believes that the selloff may actually be an overreaction, as the company’s long-term outlook remains strong. He explains: “NVIDIA’s results were positive, Dell is now catching up with the AI curve as customers are putting in NVIDIA and other AI chips into Dell servers.”
Read Johnson's full analysis of Micron here.
He even provides a specific play on the stock. “My best alternative to play this long-term game with Intel is by way of purchasing the stock at its current price or purchasing the January 16, 2026, $25 LEAPs Calls for a price of $265 per contract. A rally to $30 over the next year would calculate to a minimum theoretical value of $695 per contract.
In addition, with the Fed set to cut rates next month, the long-term prospects for the memory chip industry, and AI in particular, look even brighter. As demand for AI services explodes, so too will the demand for Micron's high-performance memory chips.
Intel (INTC)
Intel has been left for dead by Wall Street.
“The once venerable semiconductor giant has been losing market share for years as competitors like Taiwan Semiconductor and Samsung have surged ahead. Its recent attempt to compete in the booming AI chip market has been lackluster at best.
The stock is trading near multi-year lows, making it another classic “bad chart” candidate ripe for a contrarian investor.
But once again, there’s more to this story than meets the eye.
Johnson believes that a reform of Intel's business could be underway, adding, “This move may be exactly what fires up the base of Intel Investors as the company appears to have the potential to mark a huge turning point for the once semiconductor leader.”
Read Johnson's full analysis here.
However, Johnson is cautious on entry. “From a long-term perspective, there is more value in Intel than the $22.00 price per share reflects. The problem with that is the company has needed a turnaround moment for more than a year… the stock is a speculative long-term play and remains in a long-term bear market trend.”
If Intel can capitalize on this opportunity, Johnson believes the stock could make up considerable ground. “My best alternative to play this long-term game with Intel is by way of purchasing the stock at its current price or purchasing the January 16, 2026, $25 LEAPs Calls for a price of $265 per contract. A rally to $30 over the next year would calculate to a minimum theoretical value of $695 per contract.”
The Fed's imminent pivot to rate cuts could be the catalyst that Intel needs. Lower rates will create a more favorable environment for investment and capital spending – potentially triggering a rebound in the chip industry, and Intel in particular.
These are just two examples of how the September Swoon is an opportunity, not a threat.
While everyone else is looking for the exit, you can load up on world-class companies at potentially generational discounts.
But don't wait! Diamond's inflection point could come next week, setting the stage for massive gains for these “bad chart” stocks.
P.S. Tomorrow, we'll show you how to exploit another trend: The Fed's Pivot to Rate Cuts. We'll reveal three dividend-paying stocks with strong growth potential that are perfectly positioned to soar as rates come down.
