Investing With IBD Ep. 353 A Deep Dive Into Deep Bases
Dec 30, 2025
David Saito-Chung, IBD's Deputy Markets Editor, shares insights on identifying and capitalizing on deep bases following significant declines. He emphasizes the relevance of deep bases, illustrated by Palantir's rebound after a 47% drop. The discussion also covers managing drawdowns using moving averages and the importance of historical examples, including Chrysler's breakout linked to geopolitical events. Additionally, David highlights sector trends to watch for 2026, stressing the importance of nimbleness with high-flyers in today's volatile market.
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Deep Bases Can Hide Future Leaders
- Deep bases often form after sharp, news-driven market declines and can house future market leaders.
- David Saito-Chung shows Palantir and others fell 30–50% yet later became winners in 2025.
Use The 40‑Week Line As A Decision Point
- Ask yourself whether your stock would close below its 40-week moving average before deciding to sell.
- Use that decision point to choose between locking profits or holding for long-term leadership potential.
AppLovin's Cup‑Within‑Cup Comeback
- AppLovin plunged ~62% from its early‑year high then later rallied strongly on exceptional earnings.
- The stock formed a cup within a larger cup and offered breakout trades well below the prior left‑side high.