The market hasn’t soared in 2017 because it wants corporate tax cuts in 2019. It wants those cuts NOW!!! So when the Senate tax plan called for a delay, the major indices responded with sharp declines.
“As I said in the commentary yesterday, any phase in of the corporate tax rate is a negative,” said Jeremy Mullin in Counterstrike. “So when the headline came out that the rate wouldn’t be effective until 2019, the markets sold off aggressively. However, when another headline came out saying the rate would go into effect right away, the market rallied.”
Yes, the Big 3 came well off their lows by the closing bell, though were still solidly in negative territory. The Dow’s winning streak ended as it slipped 0.43% to 23,461.9 and the S&P was off 0.38% to 2584.6. Even without the tax talk, it was a rough day for technology, sending the NASDAQ lower by 0.58% to 6750.1.
“We better get used to the ping pong action as headlines come out. Until we know exactly what we are getting, I expect volatility with each headline,” said Jeremy.
One good thing about a pullback is the opportunities it affords investors, and the editors certainly took advantage of that today. On Thursday, four of the portfolios bought positions, including Insider Trader, TAZR Trader, Surprise Trader and Technology Innovators. There were also double-digit winners by Healthcare Innovators and Stocks Under $10. Let’s get right to it:
Today's Portfolio Highlights:
Insider Trader: Shares of consumer staples giant Church & Dwight (CHD) are down 11% over the past three months, but it had a solid third-quarter report. The CEO and CFO obviously see an opportunity here, which is why they each bought shares of their own company after the report. However, Tracey was even more impressed with the September purchase by the EVP of Global Human Resources, who is compensated differently than the higher-ups and needs to use her own money to buy. Plus, who knows better than HR how a company is REALLY doing? Tracey added CHD on Thursday with an allocation of about 8%. Read the complete commentary for more.
TAZR Trader: If corporate tax cuts are pushed back to 2019 or further, then Kevin thinks this market is ripe for profit-taking. Instead of selling any holdings, the editor wants to try and hedge any spike in volatility by buying a 4% allocation in VelocityShares Daily 2X Short-Term ETN (TVIX). Read the complete commentary for more on this move.
Surprise Trader: Earnings estimates are pushing higher for Tyson Foods (NYSE:TSN), as the chicken giant has been showing some momentum lately. Dave added the stock on Thursday with a 12.5% allocation ahead of its quarterly report on November 13.
Meanwhile, Home Depot (NYSE:HD) has a slightly positive Earnings ESP for its report on November 14th. But perhaps more importantly, the editor thinks this home improvement retailer saw an increase in business due to the active hurricane season. So he bought a 12.5% allocation in this name too. Read the full write-up for more on these new additions, including the two sells that made room for these moves.
Healthcare Innovators: Another beat-and-raise quarter has put Inogen (INGN) on a course for 20% growth or more. Given such a trajectory, Kevin isn’t sure how long this maker of portable oxygen concentrators can support a 90X multiple. Therefore, he decided to sell INGN and take the nice 43.4% profit in just six months.
Stocks Under $10: The portfolio is set for a complete overhaul soon, and Brian Bolan started today with a number of sells. The big winner of the group was Bristow Group (BRS), which was sold for a profit of approximately 45%. The company operates a fleet of helicopters that service the energy sector, and its only been in the portfolio for about two months. Get ready for more moves next week.
Technology Innovators: Despite a great beat-and-raise quarter earlier this month, most investors have still never heard of Axcelis Technologies (ACLS). But Brian Bolan has! The company produces ion implantation equipment used in the fabrication of semiconductors. In other words, it is a feeder to an industry that has seen big growth for the last several quarters. The editor feels that things are getting better for ACLS, so he used today’s pullback as an opportunity to add the name to the portfolio. Read the full write-up for more on this new addition.
Options Trader: “The markets pulled back a bit today after differences emerged between the Senate and House tax plans.
“The biggest contention that likely impacted the market the most was the Senate’s floated proposal that the corporate tax cuts be delayed until 2019. I also heard the Senate’s version would have a higher repatriation rate as well.
“I, for one, still believe this will get passed. Quite frankly, it’s good for the country, good for the economy, and good for ordinary Americans. Plus, if the Republicans have any hope of getting re-elected next year, they absolutely have to get this done. And knowing their own self-interest is on the line, this (if nothing else) should compel them to act.
“But the smart money, in my opinion, remains bullish that tax cuts/reform gets done this year, without implementation delays, and the market continues its record advance.
“Seeing how the markets came off of their lows by day’s end underscores this optimism.” -- Kevin Matras
Until Tomorrow,
Jim Giaquinto
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