Dear Sheryl,

When it comes to big market swings, October has been one of the busiest months in my memory. This month so far, I’ve recorded seven podcasts and posted a total of nine Flash Alerts.  The last time I sent this many Flash Alerts in one month was in February 2009.

Today, Wall Street continued to slosh around in a washing machine market. As I write this, the benchmark indices have been hit by a “tech correction,” which in turn was sparked by Amazon.com Inc.’s (AMZN) earnings report. Many of you have written in about today’s pullback, so I’ve recorded another market podcast to brief you on the latest move.

You can listen to today’s Special Market Podcast here.

Let’s take a moment to talk about Amazon, because I currently recommend it in Growth Investor.

Now, Amazon did post a stunning 83% earnings surprise, along with 10,328% earnings growth and 29% sales growth. However, Amazon missed analysts’ sales estimates by a hair, and it guided slightly below analysts’ expectations for the fourth quarter. Amazon is being cautious with their guidance, so that spooked investors. In my opinion, investors are overreacting to one line item in an otherwise strong report.

So, I still consider AMZN a buy on the dip. I don’t recommend getting caught up in the panic selling because I expect it’ll rebound strongly in the coming days.

This earnings season, we’re seeing a lot of knee-jerk reactions to earnings announcements. With all of the algorithmic trading systems out there, there are a lot of programs that automatically sell when they detect words like “miss” and “lower guidance.” This creates an environment where investors panic before actually stopping to consider the true fundamentals behind their investments.

As frustrating as that is, we do not want to follow the crowd. The fact is that the underlying economic environment is still very strong. Just today, the Commerce Department issued its preliminary estimate for the third quarter: GDP growth was an annual rate of 3.5%.  That means corporate profits should remain very healthy.

In the end, our best defense from the ongoing stock market volatility is a strong offense of fundamentally superior companies. Our Buy List stocks clearly have stunning fundamentals. So we need to let their earnings come out and help our stocks rebound from the recent pullback.

Another thing to look forward to is the coming wave of stock buyback announcements, which should come after earnings season winds down.

Again, you can listen to today’s Special Market Podcast here.

If you encounter any technical issues with playing the recording, please contact my customer service team, and they’d be happy to get you squared away.

I'll be in touch after the market closes with yourNovember Issue of Growth Investor.

Sincerely,

Louis Navellier