SPECIAL ALERT: Remember, the December episode of the Zacks Ultimate Strategy Session is now available for viewing! Don’t miss your chance to hear:
▪ Tracey Ryniec and Madeleine Johnson Agree to Disagree on whether Black Friday, when consumers rush to stores to get deals the day after Thanksgiving, is over in 2020 as online shopping takes precedence
▪ Kevin covers his position on stop-loss orders in Zacks Mailbag
▪ Sheraz Mian and Jeremy Mullin choose one portfolio to give feedback for improvement
▪ Market conditions from both fundamental and technical views
▪ The full list of top-performing stocks over the past 30 days
▪ New stocks added to the Zacks Ultimate portfolio
▪ And much more
Simply log on to Zacks.com and view the December episode here. And please let us know what you think of these monthly episodes. Email all feedback to mailbag@zacks.com.
The major indices reached new intraday highs this morning, but tech really took a header later in the day and pulled the market off its record-setting run.
How big of a problem was tech on Wednesday? The NASDAQ plunged 1.94% (or about 243 points) to 12,338.95.
That’s quite a definitive end to four consecutive days of new highs for the index. The FAANGs were all solidly lower, especially Netflix (NASDAQ:NFLX, -3.7%). Furthermore, Amazon (NASDAQ:AMZN) and Apple (NASDAQ:AAPL) were each off by more than 2% as well.
Of course, it didn’t help that the FTC filed an antitrust lawsuit against Facebook (NASDAQ:FB, -1.93%) that could force the social media giant to get rid of some major apps.
The other declines were modest by comparison. The S&P, which also reached a new high yesterday, slipped 0.79% to 3672.82. Therefore, it’s back below 3700 after reaching that milestone for the first time ever yesterday.
Speaking of milestones, the Dow is still above 30K for the fourth straight day. But the index did decline 0.35% (or about 105 points) to 30,068.81.
The economy may not be acting very normal these days, but Washington sure is. Despite both sides of the aisle talking recently about the need for a stimulus deal before the holidays, they’re back to calling each other names and failing to compromise.
The media is talking about “stalled” negotiations… but you really need some positive movement before “stalling”.
With stocks right around all-time highs and the positive vaccine news already priced in, the market is going to need some actual progress to move much higher from here.
So it makes all the sense in the world for stocks to take a step back today and for tech to lead the way lower.
Let’s see if we get that catalyst before the year is out.
Today's Portfolio Highlights:
Counterstrike: Right before earnings season back in early October, Jeremy picked up Keysight Technologies (NYSE:KEYS). This provider of electronic design and test instrument systems has been a winner for the portfolio, but the editor sold the stock today as its stalling over his targets. This position brought a nice gain of 21.8% in two months. The portfolio also sold United Natural Foods (NYSE:UNFI) and added 6% more to its Stamps.com (NASDAQ:STMP) position as it tries to break its 200-day. This provider of Internet-based postage services was originally bought on November 10. Read the full write-up for more.
Home Run Investor: The portfolio cashed in a “true” home run on Wednesday as Canadian Solar (NASDAQ:CSIQ) was sold for a return of approximately 100% in about six months. The solar company slipped all the way to a Zacks Rank #5 (Strong Sell), so it was time to go. In other news, Brian wanted some exposure to the financial services sector, which is “starting to show solid signs of life again”. He bought Donnelley Financial Solutions (NYSE:DFIN), a Zacks Rank #2 (Buy) Internet software name that's closely tied to that sector (which you could probably tell by its name). The company has beaten the Zacks Consensus Estimate in each of the last four quarters, but the editor was most impressed that those beats have been getting bigger with the most recent being 231%. As far as the valuation is concerned, Brian is getting in “at a great spot here” with 9x forward PE and a price-to-book of 2x. Read the full write-up for more on today’s action.
Healthcare Innovators: This service had the best-performing stock among all ZU names on Wednesday as Editas Medicine (NASDAQ:EDIT) rose 17.1%. The gene-editing company submitted an Investigational New Drug (IND) application to the FDA for EDIT-301, a medicine for sickle cell disease. You may remember that Kevin sold EDIT in November for a more than 40% return, but added it again on December 2. Since then, it has already become the second-best performer in the portfolio with a gain of nearly 62%, which also makes it one of the major movers in the past 30 days.
Options Trader: "The market is still waiting on Congress to get its act together and pass the much needed stimulus bill. There's plenty of optimism that something will get done by year's end. But it's frustrating, especially for those individuals and businesses hardest hit by the virus, to have to wait for so long. But the belief is that something is coming.
"In the meantime, and in spite of the rise in coronavirus cases, the economy continues to rebound.
"And with the soon to be available vaccines, which will mark the beginning of when we can start getting back to normal, both the economy and the market are poised to soar." -- Kevin Matras
Until Tomorrow,
Jim Giaquinto
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