Technology finally joined the party on Tuesday, as the NASDAQ left its counterparts in the dust with an advance of 1.1% to 5275.6. Since the election, the space had been lagging other industries like financials and industrials. Meanwhile, the Dow kept up its winning ways with a seventh straight session of gains, improving 0.29% to 18,923.1. The S&P went from a breakeven performance on Monday to a 0.75% increase on Tuesday to 2180.4. The Russell was also at a new high, suggesting that the small caps are coming along for the ride as well.
Much of this rally can be credited to the end of the election, but it should also be mentioned that the economy continues to release solid numbers. Today, the retail sales report beat expectations with a 0.8% increase, while there was an upswing in activity for the Empire State Manufacturing Survey. The end of the election and solid fundamentals have the editors talking about S&P 2200 and new highs once again.
“We will make new highs before Thanksgiving. Maybe even before the week is out,” said Steve in RTA. Kevin Matras thinks we will eventually hit 2400, but didn’t say when. And in Counterstrike, Jeremy stated: “(N)ow the bears are in trouble as a break higher will bring about 2200 quickly” (see more on this below).
The portfolios were active yet again Tuesday as RTA used the sector rotation to sell parts of two names for big profits and then added more of two other positions that were beaten down without reason. Zacks Short List had four swaps this week, including two names with solid returns. Large-Cap Trader added its next two buys, while Brian bought one position each in Game Changers and Stocks Under $10. Learn more about all this in the highlights section.
Big Returns for RTA and Short List
→ When the Reitmeister Trading Alert bought MKS Instruments (MKSI), Steve thought that this semiconductor-related name could get back to its previous high of $54.73. Well, the sector rotation made that a reality! The editor trimmed the position on Tuesday for a nice profit of 19%. The portfolio now holds a 6.2% allocation in the name. By the way, RTA also gave American Woodmark (AMWD) a haircut as we're nearing its quarterly report. Steve lessened the position's risk and got a solid return of 9.6%. The portfolio still has a 6% allocation. There were also buys today (see below).
→ This week’s adjustment for Zacks Short List had four swaps, including the short coverings of Salesforce.com (NYSE:CRM) for a nice 10% profit and Paycom Software (PAYC) for a solid 7.8% gain. Learn about all of today’s buys and sells below.
Today's Portfolio Highlights:
• The next two picks for Large-Cap Trader were released this morning, each with 8% allocations. Firstly, John added Regeneron Pharma (REGN), a biopharma company that’s focused on treatment for serious medical conditions. This Zacks Rank #2 (Buy) has a Zacks VGM Score of “B” and is part of a space in the top 32% of the Zacks Industry Rank. REGN had a positive EPS surprise of 6% in its most recent report. Annual EPS for 2016 is around $8.65, before improving to $9.10 in 2017.
The other buy today was Lennox International (LII), a provider of climate control solutions. Therefore, it’s part of the Building Products/Air conditioning & Heating industry, which puts it in the top 8%(!) of the Zacks Industry Rank. It has a Zacks VGM Score of “A” and, like REGN, reported a positive earnings surprise of 6% in its most recent announcement. Get a lot more information on both of these new buys in the complete commentary.
• Sector rotations are crazy things. Sometimes they create quick profits (such as the 19% surge for MKSI mentioned above), but other times it beats down undeserving companies. Steve LOVES to capitalize on illogical plunges, so he couldn’t resist the “insane” selloff in Dick’s Sporting Goods (DKS) despite a solid quarter. The editor added more shares of DKS on Tuesday for Reitmeister Trading Alert, bringing the portfolio’s allocation up to 9.1%. But that wasn’t all! Euronet Worldwide (EEFT) also took a beating unnecessarily, prompting Steve to add more shares to that position as well and bringing the allocation up to 7.5%. Read the full write-up for a lot more on all of today’s moves.
• Shares of Mastec (MTZ) soared approximately 20% since the election, but that didn't scare off Brian from adding this construction services company to Game Changers on Tuesday. This move is part of the editor’s plan to realign the portfolio with the new administration taking power next year. On Monday, he added four names and let us know another one was coming today. MTZ is a Zacks Rank #2 (Buy) with a Zacks Style Score of “A” for growth and “B” for value. Brian is putting the remaining cash into MTZ. Read the full write-up for more specifics on this new addition.
• In addition to short covering CRM and PAYC for nice returns as mentioned above, Zacks Short List also got out of RSPP and EQT in this week’s realignment. The new additions that replaced these names are Cavium (CAVM), Continental Resources (CLR), Cheniere Energy (LNG) and Williams Companies (NYSE:WMB). Learn more about this emotion-free portfolio that takes advantage of falling and volatile markets by reading the Short List Trader Guide.
• The first of three new additions to Stocks Under $10 was released on Tuesday. The portfolio picked up The Container Store Group, Inc. (TCS), a specialty retailer of storage and organizational products. The stock had a dramatic run up yesterday, but Brian thinks there’s still more upside to come. He is especially emboldened by TCS’ status as a Zacks Rank #1 (Strong Buy) and the Zacks Style Scores of “A” across the board. Get a lot more info on this new addition in the complete write-up.
• “Oil and Tech gave equities an extra push that was missing over the last few trading days. The help was needed to test the 2175 level on the S&P futures and now the bears are in trouble as a break higher will bring about 2200 quickly.
“The Trump rally is confirmed now, a full 7% higher from the panic selling just a week ago. I have 2240 targets in the S&P 500 and I wouldn’t be surprised if we see this target hit before Christmas.
“Looking at the portfolio, four out of five stocks performed well today. With the markets breaking out, Counterstrike will be maintaining the long only portfolio for the time being. It’s just too hard to be short at the moment,” said Jeremy in Zacks Counterstrike, who plans to add a couple more stocks in the next few days.
Have a Great Evening,
Jim Giaquinto
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