Setting Records While Preparing for Big Tech Reports

We got a volatile start to the final week of January, but two of the major indices still finished Monday’s session at new highs as the market prepares for a busy slate of earnings.

Those upcoming reports include a few monster tech names, which explains why the NASDAQ managed a fourth straight day of new records. It rose 0.69% (or about 92 points) to 13,635.99.

The index jumped 4.2% last week, thanks in large part to better-than-expected subscriber additions from Netflix (NASDAQ:NFLX). Now it can look forward to releases from Apple (NASDAQ:AAPL) and Facebook (NASDAQ:FB) after the close on Wednesday.

Each of these stocks soared by more than 9% last week, and added another 2.77% and 1.28%, respectively, today.

We’ll also be getting reports from Microsoft (NASDAQ:MSFT) tomorrow and Tesla (NASDAQ:TSLA) on Wednesday, both after the bell, along with over 350 other companies set to go to the plate from all over the market.

Meanwhile, the S&P set a new record by rising 0.36% to 3855.36, but the Dow slipped 0.12% (or nearly 37 points) to 30,960. These indices were up 1.9% and 0.6% last week, respectively.

It was a rather wild session for the market with the indices spending part of the afternoon in the red before righting the ship and then advancing into the close.

It felt all the more erratic given a huge short squeeze that impacted several stocks, including GameStop (NYSE:GME, +18.1%).

It’s been a pretty good start to earnings season, but this week’s reports will go a long way in substantiating investors’ positive sentiment. We’ll leave you today with words from Zacks’ Director of Research, Sheraz Mian:

“We are off to a great start in the Q4 earnings season, with a historically high proportion of the reporting companies not only beating consensus EPS and revenue estimates, but also providing positive and reassuring guidance and commentary about the current and coming periods,” he said in his recent article titled “Q4 and 2021 Earnings Estimates Keep Going Up”.

Today's Portfolio Highlights:

Value Investor: The portfolio started this week by adding two Zacks Rank #2 (Buy) stocks; one from the oil space and one from the banking space. Magnolia (MGY) is a mid-cap oil company with one of the best balance sheets in the industry. Earnings are expected to jump to 55 cents in 2021 from a loss of two cents in 2020. Meanwhile, Bank OZK (NASDAQ:OZK) runs a traditional commercial bank, but the main business is its huge real estate loan portfolio called the Real Estate Specialties Group. The company’s fourth quarter report last week was considered “one of their best quarters ever”. Tracey needed more exposure to the banks, given the possible GDP of over 4% for the next 18 months. Read the complete commentary for all the value specifics of these new buys. By the way, this portfolio also had one of the best performers of the day among all ZU names as B&G Foods (BGS) jumped 13.2%.

Counterstrike: Today was probably the best profit day ever for this portfolio, but don't get used to it. "(W)hat we had today is pure short capitulation, combined with euphoria created in social media sites like reddit and twitter," said Jeremy. The result was that three portfolio positions surged in one hour what would usually take several months to accomplish. Therefore, Jeremy took some big profits. He sold half of BlackBerry (NYSE:BB) for a 151.8% return in less than three weeks! The editor also sold iRobot (NASDAQ:IRBT) for 49.1% and National Beverage (NASDAQ:FIZZ) for more than 40%. Make sure to read his complete commentary for more on today's wild moves. Unsurprisingly, BB was the best performer of the day by climbing 28.4%.

Surprise Trader: Not only has Belden (NYSE:BDC) beaten the Zacks Consensus Estimate for four straight quarters now, but it also looks like earnings have finally leveled off and are now turning up. The company is a Zacks Rank #2 (Buy) that designs, manufactures and sells cable, connectivity and networking products, which means it’s in the top 14% of the Zacks Industry Rank. It will be going for five beats in a row when reporting before the bell on Wednesday, February 10. BDC has a positive Earnings ESP of 4.46%. Dave added the stock on Monday with a 12.5% allocation, while also selling Pinnacle Financial (PNFP) for a 4.4% return in two weeks. Read the complete commentary for more.

TAZR Trader: The short squeeze-palooza on Monday convinced Kevin to trim a few positions and take some big profits off the table. The portfolio sold half of Inseego (NASDAQ:INSG) for an 83.8% return, a third of Quidel (NASDAQ:QDEL) for 46.3% and half of BigCommerce (BIGC) for 18.5%. Read the full write-up for more.

Black Box Trader: Half of the portfolio was replaced in this week's adjustment. The stocks that were sold included:

• Mattel (NASDAQ:MAT)
• L Brands (NYSE:LB)
• Cleveland-Cliffs (NYSE:CLF)
• AES Corp. (NYSE:AES)
• U.S. Steel (X)

The new buys that replaced these names were:

• DICK'S Sporting Goods (DKS)
• Graphic Packaging (NYSE:GPK)
• KB Home (NYSE:KBH)
• PulteGroup (NYSE:PHM)
• Tri Pointe Homes (NYSE:TPH)

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

All the Best,
Jim Giaquinto