The major indices took a good first step toward breaking their three-week losing streaks on Friday, as bond yields continued to rebound and lifted stocks to another 1% advance.
The NASDAQ is back above 8000 after soaring 1.35% (or about 106 points) today to 8002.81. Not to be outdone, the S&P retook 2900 with a rise of 1.21% to 2923.65. The Dow advanced nearly 1% (or about 250 points) to 26,135.79.
This marks two consecutive sessions of 1% gains for the indices and a three-day winning run for the Dow and S&P.
Stocks are still recovering from last Wednesday’s dramatic selloff, which was brought on by a bond yield inversion. Since then, the market has appreciated a more relaxed tone from President Trump toward China (including a 90-day reprieve for Huawei) and stimulus measures from struggling overseas economies.
However, many investors, including some of our editors, are having trouble trusting this rally. It’s been less than a week since that Wednesday selloff, which saw the market get frantic over fears of a recession.
For a lot of people, it’s going to take more than a few days in the green to get over that scare while the trade conflict with China remains unresolved.
Maybe they’ll get some reassurance before this week is out. Fed Chair Jerome Powell will be speaking at the annual Jackson Hole Symposium on Friday, where he’ll have the opportunity to reiterate that the Fed will do what it takes to keep the economy moving in the right direction.
Or as far as investors are concerned, this is his opportunity to talk about lowering rates again next month and possibly afterwards.
If that’s not enough Fed for you, we’ll be getting the minutes of the July meeting on Wednesday. And we’ll receive more data on the strong U.S. consumer with earnings reports from retail giants like Home Depot (NYSE:HD) and Target (NYSE:TGT), among many others, as earnings season comes to an end.
Today's Portfolio Highlights:
Technology Innovators: Over the past four quarters, Internet software company Model N (MODN) has an average positive surprise of 308%. Just think of the beats that this company has been reporting! They’ve all been triple-digits in that time with the most recent surprise up to 500% amid a beat-and-raise quarter released just two weeks ago. Furthermore, rising earnings estimates have lifted this revenue management solutions provider to a Zacks Rank #2 (Buy). Read the full write-up for more on this new addition.
Options Trader: This strong start to the week sparked a busy session for the portfolio, as Kevin sold one name for a triple-digit profit and added three new positions. The editor decided to “take our money and run” in Evergy (EVRG), which came within 1% of his target. Close enough! The service sold to close the 4 Dec. 60 Calls for a return of 100%.
Meanwhile, Kevin added 6 bull call spreads in National Health Investors (NHI), which is a REIT that invests in income-producing health care properties. He also picked up 2 bull call spreads each in Zacks Rank #2 (Buy) neuroscience company Neurocrine Bioscience (NBIX) and Zacks Rank #1 (Strong Buy) luxury furnishings company Restoration Hardware (RH). There’s too much information on all these moves to mention here, so make sure to read the complete commentary for all the specifics.
Surprise Trader: Earnings estimates for Buckle (BKE) have been positive enough to make this retailer a Zacks Rank #1 (Strong Buy). Dave thinks that upward trajectory could be signaling an earnings surprise and good guidance when the company reports before the bell this Friday, August 23. He added BKE on Friday with a 12.5% allocation. The editor also sold half of InterActive (IAC) to secure a profit of 9.8% in two weeks. He’s going to let the rest run and see how far it can go. Learn more about today’s moves in the complete commentary.
Black Box Trader: The portfolio swapped out three positions in this week’s adjustment and logged a couple of positive returns. The following positions were sold today:
• XPO Logistics (XPO, +4.1%)
• Cigna Corp. (NYSE:CI, +3.9%)
• AmerisourceBergen Corp. (NYSE:ABC)
The new buys that replaced these names are:
• Commercial Metals Co. (CMC)
• Walmart (NYSE:WMT)
• Wesco Aircraft Holdings (WAIR)
Read the Black Box Trader’s Guide to learn more about this computer-driven service designed to take the emotion out of investing.
All the Best,
Jim Giaquinto
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