Much of the market continues to fret over a potential trade war with China, so investors are looking to keep the profits flowing by focusing on small caps.
While the major indices were sluggish to begin the week, the Russell 2000 gained 0.51% to a new record of 1692.5. Apart from the trade headlines, this economy is humming along nicely after a strong earnings season and historically low unemployment (among other positive datapoints). Investors aren’t going to sit this out.
We saw more of the same attitude in the NASDAQ on Monday. This index is considered the least susceptible to trade concerns among the Big 3, which means it had enough fuel after the weak morning to come all the way back for a slight gain of +0.01% to 7747 thanks to another good day for technology.
On the other hand, the Dow just completed its fifth straight day in the red. However, it is only down by about 335 points (or 1.3%) in that time, which is actually rather tame. In the recent past, we've seen the index plunge much more dramatically in a single session on bad news. The market may hate the uncertainty over all this trade talk, but it still seems to be holding out hope that some deal can be struck before the tariffs announced last week take effect on July 6.
Meanwhile, the S&P was off 0.21% to 2773.8. All of the indices had a very rough morning, but once again came well off their lows by the closing bell.
In the portfolios on Monday, Dave cashed in a double-digit winner in Momentum Trader, and then added a new stock to that portfolio and to Surprise Trader. Technology Innovators took advantage of shorts in its latest addition, while Black Box Trader swapped out five names and banked a double-digit profit. Learn more in the highlights section below:
Today's Portfolio Highlights:
Momentum Trader: The market is so full of opportunities right now that Dave is having trouble holding onto winners…even double-digit winners! Case in point, Callaway Golf (ELY) was sold today for a profit of nearly 11% in less than a month. In more normal market conditions, the editor would let this name run a little longer. Instead, he’s taking the gain and using the proceeds on a new opportunity.
BioLife Solutions (BLFS) is a regenerative medicine company that uses such things as T-cells and stem cells in their treatments. Shares had broken through to new 52-week highs thanks to strong revenue growth projections for this quarter, the current year and next year. Dave added the name this morning when it was selling off, but it has since moved higher again. Get more specifics in the complete commentary.
Technology Innovators: Last week, Brian Bolan talked about “going after the shorts” with his next round of buys, which is exactly what he did today with the addition of Teladoc (TDOC). This telehealth services company is heading higher again and now the editor thinks it could be destined $70 or more as its 42% short position gets squeezed out. Learn more about this new addition in the complete commentary.
Surprise Trader: The electronics – connectors space is in the top 4% of the Zacks Industry Rank thanks to rising earnings estimate revisions across the board. Dave sees a quick turnaround opportunity with Methode Electronics (MEI), which beat by 21 cents last quarter and is scheduled to report again before the bell on Thursday. The editor added this Zacks Rank #2 (Buy) manufacturer of electronic components and subsystems on Monday with a 12.5% allocation. Read the full write-up for more.
Black Box Trader: The portfolio swapped out five names in this week’s adjustment. Of the stocks sold, three were positive and one was a double-digit winner. The positions that left the portfolio are:
• Urban Outfitters (NASDAQ:URBN, +19.2%)
• HD Supply (HDS, +2.9%)
• Cigna Corp (NYSE:CI, +2%)
• Aflac Inc. (NYSE:AFL)
• Guess Inc. (GES)
The new buys that replaced these names are:
• Anthem Inc. (ANTM)
• Envision Healthcare (EVHC)
• G-III Apparel (GIII)
• Santander (MC:SAN) Consumer (SC)
• Textron (NYSE:TXT)
Read the Black Box Trader’s Guide to learn more about this computer-driven service designed to take the emotion out of investing.
Zacks Confidential: Despite some challenges and setbacks, investors are still finding areas where they can make money. That’s because we’re in a secular bull market, which means stocks tend to ignore most bad news on a long-term basis. Tracey Ryniec has been one of the biggest proponents of this historic bull market, and that’s why the equally bullish Kevin Matras handed her the keys to this week’s Zacks Confidential. Make sure to read her detailed article, which includes three stock picks, by clicking: Where to Find the Winners in this Secular Bull Market.
All the Best,
Jim Giaquinto
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