Market Steps Back as Morning Rally Fades

The major indices set intraday highs at the opening bell on Tuesday, but the record-setting pace couldn’t be sustained and stocks moved modestly lower in the penultimate full session of 2020.

The NASDAQ slipped 0.38% (or nearly 50 points) to 12,850.22, while the S&P was off 0.22% to 3727.04. The Dow was also down 0.22% (or about 68 points) to 30,335.67.

The latter two indices snapped three-day winning streaks. All three of them started the session at all-time highs after yesterday’s rally.

With stocks set for impressive gains this year despite unprecedented craziness, it’s not much of a surprise that investors may want to coast a bit into the finishing line.

If we’re looking for a reason for today’s slide, you could blame at least part of it on the Senate blocking a House-approved measure to increase the stimulus checks to $2000 from $600.

Investors would like Americans to have as much money as possible as we wait for the vaccines to take hold amid a rise in coronavirus cases.

However, the market didn’t hyperventilate from the headline as we know it can when it gets anxious. In fact, stocks came off their lows and chopped around for the rest of the session.

For now, Wall Street seems content with the stimulus package, the vaccines and the epic bounce off the coronavirus lows from late March. Let’s see how long that lasts as we move into the New Year.

As far as the current year is concerned, we have about a day-and-a-half left. That’s enough time to add a little bit more to those yearly totals…

Today's Portfolio Highlights:

Counterstrike: One of 2020’s hottest stocks was The Trade Desk (NASDAQ:TTD), a technology platform for advertising that soared to $972 from $200. However, end-of-the-year positioning has pulled the stock below $800... and therefore right into Jeremy’s sights. TTD is still a Zacks Rank #1 (Strong Buy), so the editor picked it up on Tuesday with a 5% allocation. The portfolio also sold Pinterest (NYSE:PINS) today for a 23.4% return in less than two months. Read the full write-up for more on today’s moves.

Large-Cap Trader: New Year’s is a great time for new ideas, which is exactly what John has been doing in this portfolio. Last week, he sold the top eight names for some big profits and today he swapped out three positions. The service got out of Jabil (JBL, +8.9%), Tapestry (NYSE:TPR, +2.1%) and Lab Corp. of America (LH, +1.7%), which were all added on November 24. Take that cash and spread it equally over these three new buys:

• HP Inc. (NYSE:HPQ) – a Zacks Rank #2 (Buy)
• Target (NYSE:TGT) – a Zacks Rank #1 (Strong Buy)
• WestRock (NYSE:WRK) – a Zacks Rank #1 (Strong Buy)

These names are major players in computer hardware, Internet retail and paper packaging products, respectively. In addition to strong Zacks Ranks, they are also high up in the Zacks Industry Rankings and have impressive histories of earnings surprises with double-digit average beats over the past four quarters. Make sure to read the full write-up for more on these moves.

Insider Trader: The momentum stocks in the portfolio have been sliding lately, so Tracey decided to exit them on Tuesday and take double-digit profits in three names. She sold Arlo Technologies (NYSE:ARLO) for a 47.9% profit in a little over a month, American Outdoor Brands (NASDAQ:SWBI) (AOUT) for 22.6% in three months and Enterprise Products Partners (NYSE:EPD) for a 15% return in a little over three months. Learn more in the full write-up and be ready for a new buy tomorrow.

Zacks Short Sell List: The portfolio made four changes in its final adjustment of the year. The stocks that were short-covered on Tuesday included:

• SolarEdge (SEDG, +6%)
• Netflix (NASDAQ:NFLX,)
• Ceridian HCM (CDAY)
• Shift4 Payments (FOUR)

The new stocks that were added to fill these open spots were:

• Alteryx (NYSE:AYX)
• ConocoPhillips (NYSE:COP)
• Las Vegas Sands (NYSE:LVS)
• Visa (NYSE:V)

Learn more about this emotion-free portfolio that takes advantage of falling and volatile markets by reading the Short Sell List Trader Guide. By the way, this service easily had the best performer of the day among all ZU names as the Arcturus (ARCT) short soared 54.17%.

All the Best,
Jim Giaquinto