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Coronavirus cases continued to rise over the weekend, but the market decided not to worry about it on Monday. Instead, the major indices each gained well over 1% to begin a holiday-shortened week.
The biggest winner was the Dow, which soared 2.32% (or about 580 points) to 25,595.80. The index got a lot of help from Boeing (NYSE:BA), which soared 14.4% as test flights for the beleaguered 737 Max began today.
The airline giant has been a drag on the index for more than a year now, since a pair of crashes in early 2019 grounded the aircraft and led to several lawsuits.
Meanwhile, the S&P jumped 1.47% to 3053.24, while the NASDAQ improved 1.2% (or nearly 117 points) to 9874.15.
The indices rallied into the close. Stocks are coming back from their second negative week in the past three.
This was the penultimate session for the month of June and each of the indices are heading into the final day with gains for the month. It’s been a wild ride as stocks were very optimistic to start the month before growing increasingly skeptical of the recovery in the back half.
Unfortunately, we won’t see as strong a month as May (when each of the indices soared by more than 4%), but a positive result would still be encouraging given the herky-jerky recovery amid a rise in virus cases.
We also got some help today from really positive pending home sales, which soared 44.3% in May. That’s the largest one-month spike in the survey’s history and showed that buyers were willing – even eager – to put their money to work.
This might be a short week since the market is closed on Friday, but it won’t be an uneventful one. The government employment situation report will be released a day early on Thursday.
You may remember that the last one was unexpectedly and impressively positive, with the economy adding 2.5 million jobs and the unemployment rate moving lower to 13.3%.
It should be a big factor in sentiment as we begin the three-day, July 4th weekend.
Today's Portfolio Highlights:
Insider Trader: The E&Ps aren't doing nearly as badly as you’d think from their stocks, so Tracey decided to make another buy in the volatile energy space on Monday. The editor picked up Magnolia (MGY), a small-cap, Zacks Rank #2 (Buy) exploration & production company that’s well off its March lows but still down 52% year-to-date. Several companies from this space will likely declare bankruptcy, but Tracey doesn’t think MGY will be one of them. And neither does their CEO apparently, who bought shares of his own company FIVE times this month in a series of 'confidence' buys. The stock was added today with a 10% allocation. However, the editor warns that this one will be a wild ride, so get ready to be “whipped around”. The complete commentary has a lot more on this new addition.
TAZR Trader: The portfolio kicked off the week with a pair of buys: Ciena (NYSE:CIEN) and Inseego (NASDAQ:INSG). CIEN is a Zacks Rank #2 (Buy) provider of optical networking equipment that reported a beat-and-raise quarter early this month. Analysts have upgraded their outlooks, and the stock is expected to see profit growth of 38% this year. INSG is a small-cap “pioneer” in 5G and intelligent IoT device-to-cloud solutions. It got a lot of attention and a share price surge after partnering with Verizon (NYSE:VZ) to rollout 5G in San Diego. It also reported a beat-and-raise quarter, while its 2020 sales consensus is up 37% to more than $300 million. Kevin put 10% into CIEN and 7% in INSG. Read his complete commentary for much more on these moves.
Surprise Trader: This portfolio will see a “major purge” this week as Dave gets ready for the beginning of earnings season. Yep, it’s almost that time once again! The editor started today by selling CarMax (NYSE:KMX) for an approximately 0.65% profit in about two-and-a-half weeks. The new buy is MSC Industrial (NYSE:MSM), a Zacks Rank #2 (Buy) distributor of metalworking and maintenance, repair and operations (MRO) supplies to industrial customers. It has a positive Earnings ESP of 4.95% for the quarter coming before the bell on Wednesday, July 8. The editor added MSM on Monday with a 12.5% allocation. Read more about today’s moves in the full write-up.
Healthcare Innovators: Two innovative companies with tons of potential were added on Monday: Acadia Pharmaceuticals (ACAD) and Axcella Health (NASDAQ:AXLA). ACAD has a central nervous system drug that's already approved for Parkinson’s disease psychosis, but might also be used for dementia-related psychosis, depression, and negative symptoms of schizophrenia. These opportunities hold billions of dollars of potential, though there is some event risk with the FDA and clinical trial data. Sales of ACAD are expected to grow 30% this year and another 67% next.
AXLA is a Zacks Rank #2 (Buy) emerging pharma company focused on liver diseases, especially the development of EMMs for NASH, sickle cell, muscle atrophy and others. This stock has a highly speculative risk/reward profile, but Kevin is taking a chance given the potential upside for research into NASH, which is begging for a partnership with a big pharma name. Read the editor’s full write-up for a lot more on these new buys.
Black Box Trader: This week's adjustment included three swaps. The stocks that were sold included:
• Louisiana-Pacific (NYSE:LPX, +0.66%)
• Herbalife (NYSE:HLF)
• Lennar (NYSE:LEN)
The new buys that replaced these names were:
• Commercial Metals (CMC)
• Dine Brands (DIN)
• Phillips 66 (NYSE:PSX)
Read the Black Box Trader’s Guide to learn more about this computer-driven service designed to take the emotion out of investing.
All the Best,
Jim Giaquinto
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