NASDAQ, S&P Recover Last Week’s Losses... And Then Some!

What a change of pace! The NASDAQ and the S&P more than made up for last week’s losses as the market resoundingly snapped out of its recent malaise

Remember how we couldn’t close even slightly higher last week? The major indices each dropped by more than 2% as investors worried that we may have turned a corner from the good times of January and February.

However, the NASDAQ bounced back with help from a strong performance out of tech to gain 3.8% this week, while the S&P jumped 2.9% over the 5 days.

The Dow would have been right there with its counterparts if it wasn’t for Boeing (NYSE:BA), which had a rough week as its 737 Max jets were grounded around the world (including the U.S.) after a second deadly crash in less than 5 months.

But the index still managed a weekly gain of more than 1.5%.

As has become common during this trade conflict, we enjoyed more good vibes on the process Friday though no concrete progress. The two sides say they’re getting closer to an agreement, as we saw news reports today about a telephone conversation that China Vice Premier Liu He had with U.S. Treasury Secretary Steven Mnuchin and U.S. Trade Representative Robert Lighthizer.

Fortunately, the market took a “glass-half-full” approach to this news and rallied, rather than shrugging it off amid the frustration.

The NASDAQ got a lot of help from a strong tech space all week, especially with the semiconductors. The index rose 0.76% Friday to 7688.53. The S&P has put some distance between itself and the important 2800 mark with a gain of 0.50% to 2822.48. (Take a look at Jeremy Mullin’s S&P analysis in the highlights section below.)

The Dow was weighed down all week by the Boeing trouble, but it still muscled through a solid performance. It got some relief from a 1.5% rise in BA today, though the stock is still down about 10% for the week. The index managed to gain 0.54% (or about 139 points) on Friday to 25,848.87.

Today's Portfolio Highlights:

Insider Trader: With the market having a great week, the portfolio decided to swap out a couple large-cap companies. Tracey sold Medtronic (NYSE:MDT) for an approximately 11% return in a little over 2 months after the medical technology company regained some of its recent weakness. She also got out of Home Depot (NYSE:HD) with a 3% return as there seems to be a lack of near-term catalysts for this home improvement giant.

Both of the new buys today are large caps as well, which saw insider activity when shares were near 52-week lows. Activision Blizzard (NASDAQ:ATVI) is down about 39% over the past 12 months as the video game maker is in a “transition year”. However, a director bought 100,000 shares earlier this week. Meanwhile, health insurers have taken their lumps in 2019, including Cigna (NYSE:CI). But Tracey thinks the selling is overdone… as does the President of CI's Government Business who picked up shares earlier this week. When taking all trades into consideration, the portfolio will remain 100% invested with each of the new buys getting an allocation of about 9%. Read the full write-up for more.

Stocks Under $10: The portfolio doesn’t have much exposure to the healthcare space, so Brian Bolan considers today’s addition of Apyx Medical (APYX) to be another diversification play. The company, which was formerly known as Bovie Medical, is a Zacks Rank #1 (Strong Buy) that’s known for its Helium Plasma Technology, which has uses in the cosmetic surgery and hospital surgical markets. As part of the Medical – Products space, it is in the Top 29% of the Zacks Industry Rank. The editor really likes its growth rate of 60% for the most recent quarter and its topline growth guidance of 50% to 55% for this year. See the complete commentary for more.

TAZR Trader: Analysts did not appreciate the recent fiscal fourth quarter report from Cloudera (CLDR). Kevin has been keeping close tabs on their responses… and most of them have been lowering their targets on this enterprise software solutions company. The portfolio originally bought this stock in early February, and the editor now sees an opportunity to buy more at a bargain price. It looks like the analysts were “in the dark” about how to evaluate this recently-merged company (CLDR bought fellow Hadoop and Big Data company Hortonworks early this year). Kevin also added to the portfolio’s SHORT position in AppFolio (APPF). Make sure to read the full write-up for the specifics on these moves.

Surprise Trader: It may not be earnings season, but there are still reports coming down the pike. Case in point, Darden Restaurants (NYSE:DRI) is scheduled for before the bell on Thursday, March 21. In addition to a positive Earnings ESP, Dave also liked seeing an analyst raise his earnings estimates on DRI for the current quarter and current year. The higher revision in the runup to a report is a bullish sign for this owner of the Olive Garden and LongHorn Steakhouse brands. DRI was added on Friday with a 12.5% allocation. Read the complete commentary for more.

Counterstrike: "Indices broke out to new highs on the year, seeing levels not seen since early October. There really wasn’t news, just a grind higher that is helping shorts get pushed out of the market, as bulls anticipate a trade deal with China.

"If the S&P can push higher next week, we will be in breakout mode. The resistance at 2800 would be confirmed to be a failure for the bears and if short, there will need to be covering. I could see the 2874 level coming into play over the next month if the bad news headlines can stay away. From there, the next target level to the upside it 2970, which would be all-time highs. The only way this happens is with a trade deal with China.

"This is the first time I’ve talked about upside price targets in a while. The market has provided overwhelmingly positive price action and the charts are telling a different story than they were a month ago. We have seen these V-shaped recoveries before and it looks like the Q4 selloff has been all but forgotten. While our portfolio has been mostly long during this sell off, my commentary has been on the bearish side. I think we can move past that now and stand with a neutral to slightly bullish stance." -- Jeremy Mullin

Have a Great Weekend,
Jim Giaquinto