The tech-heavy NASDAQ made a valiant effort on Tuesday to comeback from a couple of very rough sessions, but it ultimately failed to see the rally through to the end. The index spent the majority of the day on positive ground even as its counterparts slipped into the red. By the end of the day though, the NASDAQ too had given back all its gains and finished with a loss of 0.19% to 6762.2.
The Dow had been making new all-time highs while the other two major indices struggled. But today it joined the malaise as a late shift lower brought about a loss of 0.45% to 24,180.6. The S&P also has a three-session losing streak now after a slip of 0.37% to 2629.6.
“The selling to kickoff this week isn’t really all that troubling to me. I’ve set up some key levels to watch here on the S&P 500,” said Dave in Momentum Trader and Surprise Trader. “I expect the levels to hold and will look to add exposure to the market should the market come down to retest them.”
Dave was one of the active editors on Tuesday, as he bought a company for Momentum Trader that’s in the midst of a “proper pullback” with plenty of room to run higher from here. Also, Stocks Under $10 added an energy name, while Short List swapped out two positions in its weekly realignment. Read the highlights section below for more on these moves.
Today's Portfolio Highlights:
Momentum Trader: As mentioned several times in the last few days, this pullback in tech is opening some intriguing opportunities. For example, SolarEdge (SEDG) has undergone a “proper pullback to the 50-day”, and Dave decided to capitalize on the move with a 12.5% allocation in the name. SEDG is a Zacks Rank #1 (Strong Buy) that develops inverter systems for solar photovoltaic installations. The company has pulled back to its 50-day moving average, but the editor believes the stock is oversold and due for a bounce from this level. Read the full write-up for more on this new buy.
Zacks Short List: Both of the stocks that were short-covered in this week’s adjustment were positive. The portfolio got out of Yandex (YNDX, +6.8%) and Sina Corp (SINA, +7.9%). The new buys that replaced these names are: Liberty Global (NASDAQ:LBTYA) and Vulcan Materials (VMC). Learn more about this emotion-free portfolio that takes advantage of falling and volatile markets by reading the Short List Trader Guide.
Stocks Under $10: The portfolio swapped out energy names on Tuesday, as Brian Bolan got rid of the underperforming Hornbeck Offshore Services (HOS) and replaced it with SunPower (SPWR). This new buy isn’t as dependent on oil and has put together three straight quarters of positive surprises. SPWR makes silicon solar cells and solar panels, so the recent strong guidance from First Solar (NASDAQ:FSLR) is a good sign. Yet, shares of the company have slipped of late. The editor sees this as a great time to buy a Zacks Rank #1 (Strong Buy) with a bright future. The complete commentary has more on this new addition.
Counterstrike: "I think the question coming into today was if this selling was simply sector rotation or is tech a canary in the coal mine. We have seen this before (earlier in the year), after a couple weeks of aggressive selling, tech eventually moved to all-time highs.
"This morning things looked bleak for tech. Right before the open, we saw more selling. The first couple minutes stocks like NVDA, LRCX, NFLX, TSLA and GOOGL all made new weekly lows. However, a massive buy program was turned on like a light switch and all the tech stocks exploded higher. The Nasdaq futures (NQ) saw a 100 handle move higher in the first hour and a half.
"At the same time, retail and financials were weak. The conclusion I have after today’s action is we are simply seeing more rotation. While the Nasdaq was strong the S&P was weak, the exact opposite of yesterday off the open. This type of divergence can drive a trader nuts as they try to figure it out. Rather than overthinking it, I think it’s best to reduce position size until correlations normalize and things make sense again." -- Jeremy Mullin
Have a Great Evening,
Jim Giaquinto
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