5 Technical Bullish Stocks Ready for a Nice Bounce as Sell-off Ends and Cheap Valuations (Bonus Sell List Included)
3min read The S&P 500 has posted consecutive weekly losses, driven by concerns over Trump's tariff risks further slow the economy and lackluster Q4 earnings from the Mag 7. Technically, a double top chart pattern has formed, with the index attempting to bottom out, indicating potential volatility ahead. We believe the current correction period is nearing its end, and many stocks are now more reasonably valued following the sell-off, setting the stage for a new technical bull market. To hedge against downside risk, we have also prepared a bonus short stock list at the end.
Nvidia (NVDA)
We are confident that nvidia is a buy now. The stock tumbled 8% last Thursday following what many considered an unsurprising report and declined another 3% on Friday but eventually closed 4% higher. This scenario is reminiscent of August 5th, when the stock tested $100 after several sell-offs and soon rallied 28% in just two weeks.
Regarding Nvidia's latest earnings: the new Blackwell GPU is hot-selling with robust guidance, and China's DeepSeek is driving further demand as more computing power is required for inference. Jensen Huang stated that reasoning AI needs 100 times more AI chips. With amazon, google, and Meta committing to massive AI spending this year, and China tech giants catching up in the AI race, ramping up NVIDIA's H20 chip, these factors support Nvidia's bullish outlook.
Why did the stock face a huge sell-off last week? The stock has been under downward pressure due to macro headwinds, lower risk sentiment from other tech companies' disappointing earnings, and valuation concerns. Nvidia's earnings were the final trigger for some investors to sell shares, even forcing some bulls to cash out. However, Friday's V-turn indicates that bulls are stepping up again, recognizing the strong fundamentals and reasonable valuation given the sell-off. Nvidia's P/E ratio has now dropped to 34, making the valuation more reasonable considering its high growth potential.
From a technical perspective, Nvidia tested its support level last Friday but eventually recovered. The short-term bottom may have already formed, with a potential 13% upside to $140. The stock may face challenges again, but if it can break the downward high-high chart pattern, it is ready for further gains.
Amazon (AMZN)
Amazon remains on our bull list, with the share price returning to December levels after lackluster earnings and currently 13% below the February 4th historical high. However, the stock dropped only 2% last week, outperforming the Nasdaq 100's 3.38% decline, indicating emerging investor interest. Amazon's fundamentals and technicals show strength. The e-commerce and cloud giant would benefit from AI assistants providing more customized recommendations and stimulating online shopping while offering cloud services for tech companies. The CEO also emphasized that cloud capacity is currently affecting growth, supporting further company expansion.
Technically, Amazon's MA(3) downward trend is slowing compared to MA(7,10), implying a potential short-term bounce. If MA(3,7,10) all turn upward, a further rally is likely.
TSMC (TSM)
Our view on TSMC is moderately bullish. The stock is testing the $180 support level, returning to November lows. Apple and Nvidia's strong reliance on TSMC and its dominant position in chip foundry, along with a 50%+ gross margin, make the valuation attractive. However, Trump's tariff risks have lowered TSMC sentiment despite robust business fundamentals. Overall, the demand for AI and consumer electronics will increase in the next few years, supporting TSMC.
Technically, the RSI is around 21, a level not seen since last April. Following that level, the stock experienced a continued rally, marking a bullish uptrend. Investors should closely monitor the MA(3) for a potential turnaround to confirm the onset of a bull market.
Arm Holdings (ARM)
Arm Holdings shares are also attractive after the recent selloff, nearing support levels. Nvidia and Arm both benefit from the AI wave and share similar properties. Its parent company Softbank is collaborating with OpenAI on the Stargate project, further boosting Arm's growth. Additionally, Arm is working on offering custom data center CPUs, with Meta as the first customer, solidifying its fundamentals.
Technically, Arm's RSI fell to 23.8, a level last seen on August 7. After that, the stock jumped 26% in two weeks and maintained an upward trend. As the current macro sell-off nears its end, Arm is poised for a resilient bounce.
Salesforce (CRM)
Salesforce shares have been sliding due to disappointing earnings last week. However, AI monetization efforts resulted in an 18% increase in Q4 net income despite a 9% year-over-year sales growth. Technically, the RSI is around 22, a level last seen on January 10th, after which the shares jumped. Having lost 20% from its historical high, the current valuation and oversold conditions could push the stock higher.
Bonus Short Stock List
To hedge against further sell-offs, here is a list of short stocks with brief summaries (from a fundamental or technical standpoint):
Tesla: Despite technical bounce signals, the fundamentals are weak as Musk's political interventions could deteriorate Tesla's sales and earnings. Robotaxi is still far off, and China's FSD is below expectations, presenting a conflict of interest as Musk also leads DOGE.
Costco: Earnings are due on Thursday, and the stock is currently overvalued. It may face a sell-off similar to Walmart's after earnings, compounded by tariff warnings.
Raytheon: The stock is at a historical high with an RSI of 81. Trump may reduce military spending.
Eli Lilly: Shares are heading to October levels, with a potential Trump investigation looming. The demand for weight loss drugs is also a concern.