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Fresh Start for November as Dow, S&P Each Gain Over 1%

Published 11/02/2020, 09:15 PM
Updated 07/09/2023, 06:31 AM

Now that’s a good way to start off a new month, especially after October was ruined by a horrible final week.

The Dow advanced 1.6% (or about 423 points) on Monday to 26,925.05, while the S&P rose 1.23% to 3310.24. The NASDAQ lagged its counterparts but still advanced 0.42% (or around 46 points) to 10,957.61.

Last week, the Dow lost more than 6%, while the S&P and NASDAQ each slipped over 5%. These losses turned October into the second straight monthly loss for the market.

Today’s gains make a nice dent in those deficits, but there’s still a long way to get back to where we were.

The market was due for a bounce, and a strong ISM Manufacturing report helped it along. The number was 59.3 for October, which was better than September’s 55.4 and blew past expectations of just under 56.

This solid report comes after other positive data in recent days, including an historic GDP of 33.1% for the third quarter and another better-than-expected weekly jobless claims number that came in below 800K.

Unfortunately, these numbers are coming at a time when coronavirus cases are on the rise and new lockdowns are being considered. In fact, England has already announced new restrictions beginning this week.

These problems were the main reason for last week’s sharp slide, especially since Washington was incapable of passing new stimulus measures. However, the market managed to look past these concerns today.

And there’s going to be plenty of other things that could capture investors’ attention this week, including a Fed meeting and other economic data that culminates with the big Employment Situation Report on Friday. And, of course, we’re still in earnings season.

Oh, one more thing, you’ve probably heard that there’s a presidential election tomorrow. That could certainly move the market too, especially if we don’t get a winner Tuesday night. So let’s hope for the best…

Today's Portfolio Highlights:

ETF Investor: This portfolio didn’t have much exposure to fast-growing mid-cap companies, but Neena remedied that on Monday by adding Invesco NASDAQ Next Gen 100 ETF (QQQJ). This fund was launched just about two weeks ago and holds “next-generation” companies that aren’t included in the NASDAQ 100. It’s highest allocation is in tech, but it also delves into healthcare and consumer discretionary. It’s reasonably priced at 0.15% and it already has more than $100 million in assets. The editor also sold First Trust Dorsey Wright Dynamic Focus 5 ETF (FVC) and Invesco FTSE RAFI US 1000 ETF (PRF), which are underperforming but still bring profits of 26.3% and 12.5%, respectively. Get more specifics on today’s moves in the full write-up.

Counterstrike:
Last week’s selloff wreaked havoc with most of the market, but that just gives Jeremy a chance to buy a couple solid stocks at bargain prices. On Monday, he added beverage company National Beverage (NASDAQ:FIZZ) and appliance staple Whirlpool (NYSE:WHR). These stocks are both Zacks Rank #1s (Strong Buys) that beat Zacks Consensus Earnings Estimates by double-digits in their most recent quarters. They also dropped to support levels in last week’s melee and now seem ready to recover that lost ground. Jeremy feels that FIZZ could eventually get back to its all-time highs at $125, while WHR has a nice 2.6% divided to keep investors happy while it gets to the editor’s target of $215. FIZZ was added with a 6% allocation, while WHR goes in with 10%. Meanwhile, the portfolio also sold DICK'S Sporting Goods (DKS) and Advance Auto Parts (NYSE:AAP) today for gains of 5.4% and 1.9%, respectively. Read the full write-up for more on all of today's action.

Surprise Trader: Not every medical-type company jumped during the pandemic. For example, Vericel (NASDAQ:VCEL) makes advanced cell therapies for the sports medicine and severe burn care markets, which is NOT under the covid umbrella. Therefore, its revenue growth forecast of more than 40% for next year with earnings growth of 430% seems more sustainable as we eventually get back to normal. Dave added this Zacks Rank #1 (Strong Buy) on Monday. The company beat by more than 14% last time, and has a healthy Earnings ESP of 69.23% for the quarter coming before the bell on Thursday, November 5. The editor added VCEL on Monday with a 12.5% allocation. Read the full write-up for more.

Marijuana Innovators: It was a solid session for this portfolio with three of the best performers among all ZU names, including the top two spots. Those big winners were Aphria (NASDAQ:APHA, +11.8%) and Canopy Growth (NYSE:CGC, +11.5%). Constellation Brands (NYSE:STZ) also made the list with a gain of 6.75%.

Black Box Trader:
Due to a technical issue that left the portfolio with only nine positions, this week’s adjustment includes three sells and FOUR new additions. The stocks that left the portfolio today were:

• Sealed Air (NYSE:SEE)
• KBR, Inc. (NYSE:KBR)
• Hanesbrands (NYSE:HBI)

The new buys that replaced these names included:

• Best Buy (BBY)
• Brinker Int’l (EAT)
• Bunge (NYSE:BG)
• Target (NYSE:TGT)

Read the Black Box Trader’s Guide to learn more about this computer-driven service designed to take the emotion out of investing.

Options Trader: "But all eyes will be on tomorrow's election.

"While most are expecting election uncertainty to remain for the rest of the week, if not longer given the additional time to count mail-in ballots, there are others who believe we could have a very good idea who the winner is by the end of the night.

"In fact, that's what Goldman Sachs (NYSE:GS)' Michael Cahill and Alec Phillips wrote in a note, just a little over a month ago, saying: 'it seems fairly likely that there should be enough information on election night from states that will report results quickly for the market to be able to gauge the likely winner. In other words, the S&P can trade the likely outcome, even if the AP does not call the race.'

"We shall see. In the meantime, the economy continues to improve. And as long as it does, that should be good news for the market." -- Kevin Matras

All the Best,
Jim Giaquinto

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