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It felt kind of like the good old days (i.e. a couple months ago) on Monday with tech going crazy and leading the market higher, leaving the major indices with their fourth straight day of gains as we begin a fresh earnings season.
The NASDAQ surged 2.56% (or nearly 300 points) today to 11,876.26. All of the FAANGs were higher, especially Apple (NASDAQ:AAPL, +6.35%) and Amazon (NASDAQ:AMZN, +4.75%).
Tomorrow will be a big day for both of these heavy hitters. AAPL has one of its big events where the iPhone 12 will be launched, which will include 5G wireless connectivity.
And Tuesday also marks the beginning of AMZN’s Prime Day, which was postponed from July due to the pandemic. More than 1 million items will be discounted in the two-day event.
Meanwhile, the S&P rose 1.64% to 3534.22, while the Dow advanced 0.88% (or around 250 points) to 28,837.52.
Stocks are coming back from some strong performances, which included the NASDAQ soaring 4.6% for its third straight week of gains. The S&P and Dow each advanced more than 3% over the five days for a second straight week of green.
Not bad after failing to register a positive week throughout September!
This rally is taking place despite the absence of a stimulus deal. After all the back and forth last week, President Trump recently raised his offer to $1.8 trillion from $1.6 trillion.
However, Speaker Pelosi isn’t a fan, leaving the economy empty-handed in this regard with the election now three weeks away. And Washington is also dealing with a Supreme Court confirmation hearing.
But we can be sure of one thing this week: earnings season is about to begin! It unofficially kicks off tomorrow with a couple big financials: JPMorgan (NYSE:JPM) and Citigroup (NYSE:C).
The following day brings Bank of America (NYSE:BAC), Goldman Sachs (NYSE:GS), Wells Fargo (NYSE:WFC), and U.S. Bancorp (USB), among others.
And then things will really heat up! So get ready…
Today's Portfolio Highlights:
Surprise Trader: It’s earnings season yet again, so be prepared for a lot of action from this portfolio in the weeks ahead. Dave got things started this week by adding Silgan (SLGN), a supplier of rigid packaging for consumer goods products. More specifically, it’s the largest metal-container supplier for food products on this continent, which makes it a play on the record profits still coming from grocery stores. This Zacks Rank #2 (Buy) has an Earnings ESP of 3.81% for the quarter coming before the bell on Wednesday, October 21. The editor added SLGN on Monday with a 12.5% allocation, while also selling Acuity (AYI). Read the complete commentary for more.
Counterstrike: As promised on Friday, the portfolio started this week with a couple new additions. Jeremy picked up jeans staple Levi Strauss (NYSE:LEVI) and organic food distributor United Natural Foods (NYSE:UNFI), who beat their Zacks Consensus Estimates by 130% and 49%, respectively, in the most recent reports. These companies both topped revenue expectations and guided higher, as well. Shares moved upward after these results, but then came back down to earth and right in the wheelhouse of this portfolio. The editor sees good technical support for these two, so he added LEVI with a 6% allocation and UNFI with a 7% allocation on Monday. In addition, Alphabet (NASDAQ:GOOGL) moved a bit quicker than expected and was sold today for a 9% return in less than three weeks. The complete commentary has all the specifics on today’s action.
Technology Innovators: The market’s uptrend is giving this portfolio the chance to pick up some much-needed positions, which led to today’s addition of Viasat (VSAT). Shares of this satellite play moved higher after a solid beat, but then the stock gave it all back. Now it’s coming to life again and Brian wants to be on board. VSAT beat the Zacks Consensus Estimate in each of the last four quarters with a surprise of more than 53% in its most recent report. Earnings estimates have soared to a profit of 25 cents next year from a loss of 15 cents this year. Such a massive swing explains VSAT’s status as a Zacks Rank #1 (Strong Buy). See the full write-up for more on this addition.
Healthcare Innovators: The genomic sequencing innovator Illumina (NASDAQ:ILMN) was beaten down last month after downgrades and panic over a questionable acquisition. But Kevin kept calm and didn’t sell this name when it plunged 25% because he believed there was solid fundamental value under $300, even as major Wall Street banks were lowering their targets to $280. Now that the stock has fully recovered, but remains a Zacks Rank #4 (Sell), Kevin has decided to cash-in the bounce for a 20% profit. But don’t be surprised if he gets back in after growth returns to estimates. Learn more in the full write-up.
Stocks Under $10: When Brian bought Surface Oncology (NASDAQ:SURF) back on the first day of September, he knew this biotech name would eventually be an attractive buyout target. So it’s no surprise that the market was buzzing today that this immunotherapy company was looking into a sale. As a result, the stock soared more than 32% on Monday, which was the best performer among all ZU names and more than three times better than the runner up. SURF is now up more than 39% since being added to the portfolio.
Marijuana Innovators: Cannabis stocks continue to rise in the wake of last week’s one-two punch, which included Vermont becoming the 11th state to legalize recreational marijuana and Senator Harris’ pro-marijuana comments at the Vice Presidential debate. Dave is skeptical that the latter point is as bullish as it seems, but nonetheless this portfolio saw three names in the top five on Monday. Those winners were Aphria (NASDAQ:APHA, +10.8%), Canopy Growth (NYSE:CGC, +8.5%) and MTech Acquisition (KERN, +6.1%).
Black Box Trader: All four of the stocks that left the portfolio in this week's adjustment were positive. Today the service said 'goodbye' to:
• TRI Pointe Group (TPH, +6%)
• LKQ Corp. (NASDAQ:LKQ, +4.3%)
• Jabil (JBL, +3.2%)
• Sportsman's Warehouse (NASDAQ:SPWH, +0.8%)
The new buys that replaced these names were:
• C.H. Robinson Worldwide (CHRW)
• D.R. Horton (DHI)
• Lennar (NYSE:LEN)
• PulteGroup (NYSE:PHM)
Read the Black Box Trader’s Guide to learn more about this computer-driven service designed to take the emotion out of investing.
Until Tomorrow,
Jim Giaquinto
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