It’s never a good thing when stocks lose ground over the course of a week, but you’ve got to feel a bit relieved that this week's losses were not worse. Wednesday’s selloff was nothing short of hysterical, but gains on Thursday and Friday limited the damage. As the closing bell rang on Friday, the Dow and S&P each slipped by about 0.4% for the week, while the NASDAQ was off around 0.6%.
For today’s session, the S&P was up 0.68% to 2381.7, the Dow advanced 0.69% to 20,804.8 and the NASDAQ increased 0.47% to 6083.7.
Moving forward, the problem is that the market could be at the mercy of news headlines from here on out. There’s now more concern than ever about President Trump’s pro-growth agenda getting passed, and any negative stories will feed into that fear. As Jeremy stated in today’s Zacks Counterstrike: “I think next week is do or die for the bulls. They have to push over 2400 or the bears will take control. (T)he longer we sit under 2400 the better the chance for a larger sell off.”
Unlike the past few days, the portfolios were very busy to close out the week. Some of the editors are just picking up stocks on the dip, while others are protecting their positions from any further volatility. Let’s just get to it below:
Today's Portfolio Highlights:
Reitmeister Trading Alert: It was time for some “fresh blood” in the portfolio, so Steve swapped out three positions on Friday. He got rid of NUE, ACCO and AMC, and replaced them with a trio of Zacks Rank #1s that add diversification, impressive earnings momentum and are high on the Zacks Industry Rank. These new buys are:
• CSX Corp,. (NASDAQ:CSX) recently showed just how successful its turnaround has been with an earnings beat of 18%. Steve thinks this stock could make it to $60 by year’s end. It was added with a 7.2% allocation.
• US Concrete (USCR) struggled for 18 months, but its recent earnings beat of 318%(!) strongly suggests that its struggles are over. The editor thinks USCR could make it to $80-$90 by the end of the year, with $100 as a possibility if the turnaround continues. It was added with a 7% allocation.
• Western Digital (NASDAQ:WDC) is a leading storage provider at a time when we REALLY need its services. The company recently reported another “explosive” earnings announcement as estimates are now 37% higher for next year. It was added with a 6.8% allocation.
Read the full RTA write-up for a lot more on today’s moves.
ETF Investor: The mega-caps are driving a lot of the money in the market right now, so Eric decided to add iShares Global 100 ETF (IOO) on Friday to get the portfolio more aligned with this trend. This fund has a decent level of exposure to Europe and is less concentrated in tech, which is good for the portfolio since it already has a sizable tech exposure. IOO may also provide some protection if volatility continues to take a toll on the small caps. Read the full write-up for more.
Zacks Counterstrike: The recent earnings report from Children’s Place (PLCE) was just “too good to ignore”…and the high-frequency traders surely didn’t. Shares of the company dipped after it beat expectations by 30 cents and raised its full-year guidance. Once the HFTs are done playing, Jeremy thinks this Zacks Rank #1 is heading back up to post-earnings highs. So he bought it with a 12% allocation. Meanwhile, the editor also added another 3% allocation to its VelocityShares Daily 2x VIX (TVIX) position, as he believes volatility will remain active until the S&P can get back to 2400. Read more in the complete commentary.
TAZR Trader: Despite the market’s bounceback from Wednesday’s selloff, Kevin believes that the odds for testing lower supports near S&P 2300 have increased in the short term. As a hedge against this volatility, the editor added a 5% position in ProShares Ultra VIX Short-Term Futures ETF (UVXY). The fund will serve to tighten up risk and protect this 75% long portfolio. Read more about Kevin’s “2-Point Rationale” in the full write-up.
Surprise Trader: With a choppy and headline-driven market, Eric decided to lock in some gains on Friday. He sold parts of five positions…and all of them were positive:
• Sold 25% of Deere (DE) for a 5.6% return
• Sold 25% of Wal-Mart (NYSE:WMT) for a 4.5% return
• Sold half of Western Digital (WDC) for a 3.9% return
• Sold half of Visteon (VC) for a 3.3% return
• Sold half of Johnson & Johnson (NYSE:JNJ) for a 1.2% return
Options Trader:: “Was Wednesday a one-and-done scenario? Two up days does not tell the whole story yet. We'll find out soon enough. And I suspect we could see some more volatility. But I see strong support at 2,345. And then at the reactionary lows from last month at 2,322. But I'd be hard pressed to make a case for anything much below there.
“Again, as I wrote earlier this week, politics aside, the economy is just too strong to make anything out of the recent pullback. Employment is at record lows for this bull market, new jobs are being created at a robust clip, countless economic reports are showing the economy picking up steam, Q1 earnings could not have been better, the recent GDP Now forecast from the Atlanta Fed is pegging Q2 GDP at a whopping 4.1%, and Consumer Sentiment continues to log readings near record highs.
“Look, the market is in full-on bullish mode. And there is a strong possibility (I think probability) that the current bull market will go down in history as the longest and largest bull market EVER. Remember, I'm still expecting 2,600 by year's end, and for the S&P to double within the next 5 years.” -- Kevin Matras
Have a Great Weekend,
Jim Giaquinto
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