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Financials Vs. Tech

Published 11/15/2016, 07:15 AM
Updated 07/09/2023, 06:31 AM


NOTE: Now that the election is over, we can look toward 2017 with a lot more clarity. ETFs have surged in popularity with 216 new products launched so far this year…and it’s not expected to slow down anytime soon. Neena Mishra is our Director of ETF Research, and Steve has put her in charge of this week’s Zacks Confidential. Read her review of the ETF industry in 2016, her outlook for 2017 and get a few of her favorite recommendations. Best ETF Strategies for 2017.



The next grudge match for the market looks to be the financials vs. tech. As the market works through its feelings of a Trump presidency, these two areas have been going in opposite directions with the major indices stuck in the middle. The Dow continues to make new records even if it doesn’t move very much, while the NASDAQ slumps and the S&P just treads water.

Specifically, the Dow hit a new high with a 0.11% increase on Monday to 18,868.7, while the S&P was practically breakeven with a tiny loss of 0.01% to 2164.2. The NASDAQ had a more pronounced decline of 0.36% to 5218.4. Basically, spaces that are expected to perform well under President Trump are doing pretty good right now, including financials, industrials and energy, among others. Unfortunately, that leaves other spaces like tech out in the cold.

It was a very active session in the portfolios on Monday with Black Box Trader leading the way. This computer-driven service sold six names in this week’s adjustment…and four of them turned out to be double digit winners! It also added six more names as replacements. Zacks Counterstrike bought two names that dropped after solid quarterly reports, while Game Changes added four stocks to reflect the country’s new leadership in 2017. Finally, Surprise Trader went back to the semiconductor space for its latest addition. Read more below:


Four Double Digit Winners for Black Box

→ What a day for Black Box Trader! The portfolio sold six names in this week’s adjustment…and five of them were positive. But what’s even better is that four of those five sells were double digit winners: Lincoln National (NYSE:LNC, +25.8%), LPL Financial (LPLA, +16.4%), Quanta Services (NYSE:PWR, +10.6%) and Seagate Tech (STX, +10%). Meanwhile, the sale of Amkor Tech (AMKR) brought a profit of 6.9%. Read about all the buys below:


Today's Portfolio Highlights:

• It bears repeating. The Black Box Trader had FOUR double digit winners in this week’s adjustment (LNC, LPLA, PWR and STX). It also had another winner in AMKR, while HCA was the only sell in negative territory. Wow! It replaced these names by adding Chemours Co. (CC), Best Buy (BBY), Humana (NYSE:HUM), Leidos Holdings (LDOS), Sysco Corp. (NYSE:SYY) and Team Health (TMH). Read the Black Box Trader’s Guide to learn more about this computer-driven service designed to take the emotion out of investing.

• Shares of Western Digital (NASDAQ:WDC) popped to $62 from $54 after its solid quarterly report late last month, which included positive surprises on the top and bottom lines along with a raised Q2 guidance. But then the HFTs started playing their games and pulled it back down into the mid-$50s. Therefore, WDC is all set up for Zacks Counterstrike. Jeremy added it on Monday with a 13% allocation. The portfolio is getting a leader in data storage solutions that enjoys a Zacks Rank #1 (Strong Buy) and a position in the top 15% of the Zacks Industry Rank. The editor wanted to get in under $60 with expectations for $64 in short order and possibly all the way up into the lower $70s.

But that’s not all. The portfolio also took a 9% allocation in Momo (MOMO), a free location-based services instant messaging application for smartphones and tablets that caters primarily to China. Its forward PE of 41 has caused shares to drop of late, despite a solid quarterly report with a positive EPS surprise of 35% and a raised guidance for Q4. Jeremy thinks the sellers have been way too aggressive for this Zacks Rank #2 (Buy) company, which means it’s another good candidate for Zacks Counterstrike. The idea here is to get long in anticipation of a bounce back to pre-earnings levels in the mid-$20s. Learn a lot more about both of these moves in the complete commentary.

• It’s time to “Make Game Changers Great Again”. In other words, Brian added stocks to the portfolio on Monday that should benefit from the new leadership in 2017. It’s an attempt to get ahead of the curve. The editor added NCR Corp. (NCR) with an allocation of 8.2% and Bank of America (NYSE:BAC) with an allocation of 7.6%. Both of these companies are Zacks Rank #2s (Buys). He also added a 6.4% allocation in Magellan Health (MGLN) and a 6.3% allocation in Futurefuel (FF). These were both Zacks Rank #1s (Strong Buys). The moves will put the bulk of the portfolio’s cash to work with one more addition to be released tomorrow. Learn about each of the new positions in the complete write-up.

• After cashing in a BIG profit with NVDA, Eric decided to stay in the semiconductor world for the most recent addition to Surprise Trader. The portfolio added a 12.5% allocation in Marvell Technology (MRVL) on Monday, which is part of a space in the top 10% of the Zacks Industry Rank. The company just reached Zacks Rank #1 (Strong Buy) status, as its most recent estimates are markedly higher than the full consensus. Now, EPS growth for both this year and next are expected in the triple digit percentage range. The editor especially liked MRVL’s Earnings ESP of 40% for the quarter being reported after the bell on Thursday. Read a lot more about this new pick in the complete commentary.

• "The great gains we saw after the election last week held firm today. The Dow eked out another new all-time high. The S&P is still just 1.36% away from their all-time highs. And the Nasdaq is also just a little more than 2% away.

"But the market looks poised to finish the year off strongly as both the reality of the present economy picks up steam, and the promise of even better things to come becomes clearer.

"As a reminder, the economic news is quite good: we've been in a long-standing uptrend, with near full employment, low interest rates, and the economy tracking at a 3% GDP rate.

"As the economy moves forward, so should the market," said Kevin in Options Trader.

All the Best,
Jim Giaquinto

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