NASDAQ Joins S&P in Record Territory as Tech Rebounds

A rally in the final moments of Monday’s session not only gave the S&P its third straight closing high, but also helped the once-beleaguered NASDAQ make its own history. Overall though, it was another quiet summer session as we move toward the Fed meeting later this week.

Tech has been on a roll recently, as investors appear to have chilled out a bit over the rising inflation. The NASDAQ has outperformed its counterparts for over a week now, and today it finally reached a milestone. The index was up 0.74% (or nearly 105 points) to 14,174.14. That’s the first closing high since April 26.

The S&P accomplished that feat last Thursday (for the first time since May 7) and has added onto it in the subsequent two sessions. It increased 0.18% today to 4255.15, its third consecutive closing high.

The Dow has been left out in the cold, even though it was the index of choice until very recently as investors flocked toward recovery names at the expense of tech. It stumbled 0.25% (or about 85 points) to 34,393.75, which means its still more than 1% away from its own closing high.

These trends are continuing from last week, in which the NASDAQ jumped 1.8% over the five days but the Dow slipped 0.8%. The S&P was in the middle with a 0.4% advance.

Normally this would be a lazy summer week, but we’ve got a pretty important Fed meeting in the days ahead that investors will be watching with great interest. They’re not going to make any changes to their super accommodative policies this time, but we all know they can still move the market with just a slight change in their language.

Investors want to know if the Fed is starting to think about raising rates or other tapering measures in the wake of a strong earnings season, solid jobs growth and – most importantly – sharply rising inflation. The market has been rather calm in the face of surging inflation indicators like the CPI, but that could change if the tone becomes too hawkish too quickly.

“Huge event risk coming Wednesday. The dot-plot will likely set the stage for market from now until the end of the month. If the market’s reaction to the CPI number last week is any indication, I suspect the rally will continue,” said Dave Bartosiak in today’s Surprise Trader.

Today's Portfolio Highlights:

Stocks Under $10: This full portfolio (15 names) kicked off the new week with a buy on Monday, but first it had to sell something to make room. Brian decided to cash out of MRC Global (NYSE:MRC), which brought a return of 23.5% in a little over four months. The new buy is Crescent Point Energy (NYSE:CPG), a Zacks Rank #2 (Buy) oil play that has beaten the Zacks Consensus Estimate for four straight quarters with an average surprise of 163% over that time. The editor really likes the valuation, which is especially affordable for a company that posted topline growth of 20% in the most recent quarter and is expected to generate 81% this year. Read the full write-up for more info on these moves.

Blockchain Innovators: Since the last time Conduent (NASDAQ:CNDT) was in the portfolio back in February 2019, this business process services company plunged under $2 in early 2020 and then recovered. It’s now a Zacks Rank #2 (Buy) that has beaten or met the Zacks Consensus Estimate for four straight quarters. Dave thinks it’s time to welcome CNDT back into the service. Meanwhile, earnings estimates for Cowen Group (NASDAQ:COWN) have taken a turn for the worse and the stock is now a Zacks Rank #5 (Strong Buy). Therefore, the editor sold the stock on Monday. However, he nearly doubled up on this name and is cashing in a more than 90% return in eight months. Read the complete commentary for more. In other news, this portfolio had a top performer today as Coinbase Global (COIN) rose 6.6%.

Commodity Innovators: The long-awaited metal pullback finally came, so Jeremy is shifting the portfolio to gold from oil. The editor added SPDR Gold Shares (NYSE:GLD) on Monday because he wants to get long on gold here before a move back above $2000. This position has a long-term holding period. Meanwhile, crude broke above $70 and came very close to the service’s $72 target this morning. Jeremy thought this was a good time to sell ProShares Ultra Bloomberg Crude Oil (UCO) and cash in a profit of 12.1% in less than a month. Read the full write-up for a lot more on these moves and the editor’s plans moving forward.

TAZR Trader: The appetite for stocks right now is insatiable, so Kevin made three moves on Monday to capitalize on the upward momentum. The editor added AMD (AMD) and Qualcomm (NASDAQ:QCOM), which are two of the best values in chips right now and should wake up and head for their highs along with the NASDAQ breakout. AMD is also a Zacks Rank #2 (Buy). Meanwhile, he added a small starter position in Baidu (NASDAQ:BIDU), the 'Google (NASDAQ:GOOGL) of China' that is forging its AI expertise into driverless cars. The company’s Zacks Rank has improved of late and its trading under 3X sales growing 20%+. Read the full write-up for more on today’s moves.

Black Box Trader: Half of the portfolio was changed in this week's adjustment, which included two double-digit gainers. The stocks that were sold on Monday were:

• Tenneco (TEN, +37.2%)
• Oceaneering Int'l (OII, +12.5%)
• Target (NYSE:TGT, +0.9%)
• American Axle (NYSE:AXL) & Manufacturing (AXL)
• Timken Steel (TMST)

The new buys that filled these spots were:

• CNH Industrial (NYSE:CNHI)
• Navient (NASDAQ:NAVI)
• Party City Holdco (NYSE:PRTY)
• Signet Jewelers (NYSE:SIG)
• Toll Brothers (NYSE:TOL)

Read the Black Box Trader’s Guide to learn more about this computer-driven service.

Insider Trader: "We will hear from Chairman Powell again this week. No one actually believes they will announce tapering but Wall Street is worried about it anyway given some of the inflation pressures.

"But with the job market still weak, the Fed is unlikely to make any moves. Employment is a big part of its mandate. And they believe that the inflation is transitory.

"The Fed is likely to hold pat, for now." -- Tracey Ryniec

Have a Great Evening,
Jim Giaquinto