S&P, Dow Break Losing Streaks As Stocks Rebound

The editors were talking yesterday about how important this session could be for the market. Technically-speaking, stocks had their backs against the wall and needed to move higher or risk further downside. Looks like they passed the test!

Though beginning solidly in the red, the major indices each regrouped at midday and ended with a very respectable and welcomed rally that put an end to a few losing streaks. In fact, it was the first positive close of the week for each of them (except for a 0.01 of a point gain for the NASDAQ on Tuesday that’s only being mentioned for the sake of thoroughness).

By the way, the NASDAQ enjoyed the best performance in the session with a surge of 1.72% (or more than 122 points) to 7259.03. Apple (NASDAQ:AAPL) was getting beaten up with a more than 8% drop this week through Wednesday. But the iPhone maker got some of that back today with a nearly 2.5% advance. Except for Facebook (NASDAQ:FB), the FANGs as a whole were higher with Google (NASDAQ:GOOGL) up 2%. The index may be right back under pressure tomorrow, though, as the report for chipmaker NVIDIA (NASDAQ:NVDA) disappointed the market, sending shares lower by more than 16% afterhours as of this writing.

The S&P broke a 5-day losing streak with an advance of 1.06% to 2730.2, while the Dow snapped a four-day skid by increasing 0.83% (or more than 208 points) to 25,289.27. The latter index came all the way back from a 200-point loss. In addition to Apple, the financials also had a nice rebound with JP Morgan leading the way with a more than 2.5% advance.

According to news reports, the U.S. and China may be getting serious about finding some resolution on trade during the G-20 meeting in a couple of weeks. Of course, there’s nothing concrete to hang our hats on yet, but a deal is not likely to get done until the two sides get to talking. If this uncertainty can actually be put in the rear-view mirror, then the market would be open for a monster rally to finish 2018. That’s a humongous “IF” though….

Today's Portfolio Highlights:

Momentum Trader: Even during rough corrections, there are a few companies that buck the trend lower and seem to ignore the chaos all around. Shenandoah Telecom (SHEN) is one of those names. This Zacks Rank #1 (Strong Buy) beat the Zacks Consensus Estimate by more than 100% in its quarterly report and then soared to new highs past $46 from $36, As Dave says: “Imagine the potential during a bull run!” The editor is impressed with this company’s ability to prosper at such a difficult time, so he bought SHEN on Thursday with a 12.5% allocation. Read the full write-up for more.

TAZR Trader: What a difference a turnaround session can make! Not too long ago, Kevin was circling the wagons to protect from another possible leg lower. However, stocks bounced after a negative open as panic subsided. The editor now sees a reduced risk for a “flash-crash”. Therefore, he took the opportunity to get more long by adding a 10% allocation in the Direxion S&P 3X Bull ETF (SPXL). Tech is especially bouncing back on Thursday, so Kevin also added a 10% position in ProShares UltraPro QQQ (TQQQ), his favorite tech leverage play. The plan from here is to stay agile until the market gives us more evidence that a corner has been turned. But Kevin personally sees a 70% chance that the market has put in a short-term low. Read the full write-up for more on these moves and the editor’s outlook.

Surprise Trader: If Dave is buying here toward the end of earnings season, then it’s probably a retailer. He already picked up Target (NYSE:TGT) earlier this week, and today he added Urban Outfitters (NASDAQ:URBN). This Zacks Rank #2 (Buy) specialty retailer has beaten the Zacks Consensus Estimate for five straight quarters and has a positive Earnings ESP of 2.28% for the quarter coming after the bell on Monday. Analysts expect 63 cents per share for next week, which would mark a 53% gain year-over-year. Read the full write-up for more on this buy.

Have a Good Evening,
Jim Giaquinto