How to Find the Best Stocks After a Market Correction
Why Timing the Bottom is About Sentiment, Not Fundamentals
If you ever say, “I can’t buy it, it’s gone up 10% in a week,” you will struggle as an investor. If you think, “It’s up 100%, I’ve missed it,” you doom yourself to conservatism. Chickens don’t make money.
You will never find a ten-bagger if you’re selling at a 10% gain. Thirty-five stocks in the All Ordinaries have more than doubled in the last year, and 90 are up more than 50%. Do not sell because something has gone up—sell because it’s going down.
In a recovery, the stocks that rise the fastest are often the ones that fell the hardest. If the market has already started bouncing, you must buy stocks that have already gone up. Sometimes, you have to buy stocks that have gone up a lot.
The Key Signs of a Market Bottom
No one knows exactly when corrections will come. Those who seemed to predict them were only right in hindsight. They made noise at the right time, and then, after the fact, claimed victory.
You can’t predict a market bottom before it happens—but you can recognise it when it arrives. The key signs to watch for:
- Extreme negative sentiment—when the herd has given up.
- A sudden change in market commentary—the shift from panic to cautious optimism.
- A big up day or week after heavy selling—a key signal that the bottom may be in.
- Volatility dropping and buying volume increasing—showing that money is flowing back into stocks.
The best way to time a top or bottom is to read Marcus Today. Not kidding!
Using Market Sentiment to Buy at the Right Time
Why You Can’t Predict the Bottom – But You Can React to It
Do not think you can be clever enough to predict the bottom before it happens. You can’t predict the big sell-offs, just like you can’t predict the exact turning point. But you can watch the signs and act decisively.
The stock market has an average gain rate of 9% per year. If the market has run well beyond that pace, it becomes vulnerable. But don’t act based on warning signs alone—wait until the correction begins, then react.
Yes, be more alert when things get ridiculous, but still—wait for the move. When warning signs turn into a major sell-off, be ready to be decisive.
Indicators That Show a Recovery is Starting
The moment to buy is not when things look cheap – it’s when sentiment turns. Fundamentals won’t tell you when to buy.
Instead, watch for:
- Large up days on high volume—big money stepping back in.
- Insider buying and institutional fund flows increasing—smart money making its move.
- Riskier assets leading the bounce—growth stocks and speculative names rebounding first.
At extreme moments, the market lifts all boats on the way up, just as it sinks them on the way down. If you’re trying to time the market, watch the herd—don’t follow it.
Stock Selection After a Correction
What Stocks Rebound the Fastest?
Catching the bottom of a correction is all about sentiment.
When everyone has lost faith in the market and is doing 200 miles an hour with their hair on fire, they generally also lose sight of fundamentals.
That’s an opportunity. But you don’t buy on the numbers—you buy on sentiment changing for the better.
You need to spot that, and the way to do it is the same way you spot the top: On the balance of probabilities.
If the market has fallen a lot, has a big up day or week, and the tone of the commentary is changing for the better, on the balance of probabilities, that is a bottom.
Watch the herd, don’t join the herd.
Avoid These Stocks After a Market Crash
Fundamentals are useless when it comes to timing the market. It’s why value investors can never time the market—a PE ratio will never tell you when to sell or buy.
Sentiment watching (price watching) gives you a much better chance.
At extreme moments, the market drives all—sinks all boats, lifts all boats. Focus all your attention on identifying the “Pivot Point” in the market.
In corrections, the woods are on the move—forget the trees until the forest is going up again.
It’s no good saying “NAB is cheap” when the GFC is starting.
When the market is crashing, everything will look cheap halfway through the sell-down—but you don’t buy falling stocks because they’re cheap.
That’s for Buffett quoters.
You can’t time the market on fundamentals.
Lessons from Past Market Crashes
What History Teaches About Buying the Dip
Stock selection comes second to the market.
In a recovery, stock selection is where you will make the most money—but not until you get the market right first.
If you get that right, you’ll make money in everything.
Market first, stocks second.
Case Study: How Stocks Recovered from the GFC and COVID Crash
The recovery will come fastest and hardest in the stocks that have suffered the most extreme sentiment swings.
In a recovery, it is not the stocks with the best fundamentals that recover the best (far from it).
It is the stocks that involve the most sentiment in the price—often the stocks with no fundamentals but the most growth prospects.
The stocks that people made the most money in before the top, and lost the most money in during the correction.
They rebound the earliest, and they rebound the most.
The money is in identifying and timing the extremes of sentiment.
Spend the time in cash listing the “fad” stocks you’re going to buy in the recovery.
It’s not NAB.
Final Thought: Corrections Are Your Greatest Opportunity
At the end of the day, market corrections are not a threat—they are an investor’s best friend. Instead of fearing them, welcome them. They provide the chance to sell at the top and buy at the bottom.
If you buy into the industry narrative that “timing the market is impossible,” you’ll miss some of the best opportunities of your investing life.
Corrections create wealth for those who know how to take advantage of them. The only question is—will you?
If you want to stay ahead of the game and never miss a crucial market insight, join us at Marcus Today. Get notified when new analysis drops, so you’re always in the loop and ready to act when it matters.
In case you missed it.. check out last week’s article HERE where I discussed:
- Sharp Corrections and Market Recoveries – Why corrections happen and why they should be welcomed.
- When to Hold, When to Sell – How to act when a correction starts and why timing matters.
- The Myth of Defensive Stocks in a Sell-Off – Why defensive stocks won’t save you.
- Why Holding Cash Is More Powerful Than You Think – The role of cash in corrections and recoveries.
Don’t just watch the market—stay ahead of it. Join us.
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Marcus Today’s 5-Step Checklist for Timing the Market—from me to you.
A no-nonsense guide to knowing when to hold, when to sell, and how to stay ahead of the herd. Follow these five steps, ignore the noise, and make smarter moves in the market.
✔ Ride the trend – When the market is going up, leave it alone. Ignore the noise, don’t sell just because something has gone up. The best gains happen in the final, irrational push.
✔ React, don’t predict – You can’t call the top in advance. Instead, watch for actual signs of a downturn and react when things start going wrong.
✔ Watch the herd, don’t follow it – The market is driven by emotion. Stay objective, logical, and ready to move when sentiment shifts.
✔ Be decisive when the moment comes – The worst mistake is doing nothing when a clear market top is forming. Sell when multiple warning signs align.
✔ Accept that you won’t sell at the peak – You’ll never perfectly time the top. Expect some losses from the peak before selling, and move on without regrets.