Dow Finally Breaks Losing Skid To End Rough Week

We knew coming into Friday’s session that the major indices were likely to be in the red for the week…and they were. However, investors can go into the weekend with a bit of relief since the Dow finally broke its 8-session losing streak!

The biggest news of the week came right at the beginning. On Monday night, President Trump announced that he was looking to add 10% tariffs on $200 billion worth of Chinese goods with another $200 billion on deck if China retaliated.

The Dow was already stuck in a losing skid when the announcement was made, and it continued right up until today. For the first time since Monday of last week, the index finished in the green with a gain of 0.49% (or nearly 120 points) to 24,580.9. It got some help from a sharp rise in oil prices and survived more trade headlines when POTUS suggested 20% tariffs on European cars. It was still down 2% for the week.

The S&P got onto the plus side with an advance of 0.19% to 2754.9, completing a weekly loss of nearly 1%.

It was a bit of a topsy-turvy day when compared with most of the last two weeks. The Dow was up, the NASDAQ and Russell 2000 were down. Both of these indices hit new highs this week as they are less exposed to all the trade turmoil.

But on Friday the NASDAQ was off by 0.26% to 7692.8, snapping four straight weeks of gains. The Russell 2000 was down 0.20% to 1685.6.

In the portfolios, Value Investor made some changes now before trade tensions escalate any further. The service sold two names that are likely to be impacted by such news and bought three that should be able to weather the storm. TAZR Trader added more of a company that’s experiencing an undeserved selloff, while Blockchain Innovators picked up a new one. Read the highlights section for specifics on these moves and more...

Today's Portfolio Highlights:

Value Investor: The trade and tariff issues forced some changes to the portfolio on Friday. Firstly, Tracey sold Lithia Motors (LAD) and CAI (CAI, +3.5%) because these stocks would be especially susceptible to rising tensions between the U.S. and other countries.

The editor also added three new names that should hold up better during trade disputes. Those new buys are:

• KMG Chemical (KMG)
• Westlake Chemical (WLK)
• CVS (CVS)

The first two are chemical names that recently reported strong quarters, while the third is a well-known pharmacy that’s in the process of being merged with Aetna (NYSE:AET). Read the full write-up for a lot more on all these moves, and don’t miss the latest Value Investor video (make sure to click on the June video link.

TAZR Trader: Despite a strong quarterly report, shares of SMART Global Holdings (SGH) got shellacked today as analysts and investors fret over a currency accounting issue and a recent acquisition. As he explained thoroughly yesterday, Kevin thinks these fears are misplaced and obscuring all the positives for this "'lil' Micron" in the hot chip space. The editor said he would be a buyer at under $40, so the slip to $35 today was a no-brainer. He added more to the position on Friday and looks to go to the bank once this overreaction is corrected. Learn more in the full write-up.

Stocks Under $10: When a stock moves all the way to a Zacks Rank #5 (Strong Sell), it’s time to get out. Such is the case for Lattice Semiconductor (LSCC). Fortunately, Brian Bolan gets to bank a profit of more than 19% for less than two months’ time in the portfolio. The editor will have a replacement pick on Tuesday.

Blockchain Innovators: Gain Capital (GCAP) recently expanded its offering to include Ethereum, Ripple, Bitcoin Cash and Litecoin. Shares of this Zacks Rank #2 (Buy) retail forex exchange operator have dipped below $8, giving Dave a great opportunity to add this name to the portfolio. GCAP would benefit from increased trading volumes on the futures contract in Ethereum that’s been in the news. The portfolio also sold Accenture (ACN) today. Read the full write-up for more.

Have a Great Weekend,
Jim Giaquinto