The market was a little less enthusiastic to start the second week of 2018, but two of the major indices still finished at all-time highs. We are on the cusp of a new earnings season, so its understandable for investors to take a “wait and see” stance instead of sticking their necks out too far. That’s especially true for the big banks. Several of them will report as soon as Friday, which could explain why the Dow lagged its counterparts.
All three major indices started the session in the red...but things had changed by the closing bell. The NASDAQ only spent a fraction of the morning on the negative side, and had gained 0.29% to 7,157.4 by the end. The S&P also reversed course with an increase of 0.17% to 2747.7. Both of these indices have now registered fresh all-time highs in each of the first five days of 2018. Unfortunately, the Dow didn’t join them. The index looked like it too would break away from a soft morning, but eventually finished with a loss of 0.05% to 25,283.
“The atmosphere in the market has so far been the same all year: very bullish. There is no reason to believe the bullishness will stop,” said Jeremy Mullin in Counterstrike. “However, we are due for a pullback so please keep that in mind.”
The portfolios sprung back into action on Monday after a couple of quiet days late last week. With earnings season on the horizon, Dave added two stocks in Surprise Trader that are scheduled to report on Friday. He also added once to Momentum Trader. The Black Box Trader replaced half of its 10 names this week, and most of the stocks that left were positive. Learn more about these moves in the highlights section below, and take a look at this week's Zacks Confidential.
Today's Portfolio Highlights:
Surprise Trader: Things are about to get a whole lot busier in this portfolio...starting today. Dave added two Zacks Rank #2s (Buys) on Monday that are each scheduled to report before the bell on Friday. The first stock is Infosys (INFY), an IT services stock that has beaten the Zacks Consensus Estimate for five straight quarters. In addition, earnings are beginning to turn the corner into positive territory.
The editor also wants more exposure to banks due to the strong economy and rising rates. Therefore, he bought PNC Financial Services (NYSE:PNC) on Monday. This company is not a small regional bank (which would likely see the biggest benefit in this environment), but it is still much smaller than behemoths like JP Morgan Chase (NYSE:JPM). Dave added each stock with 12.5% allocations. Read the complete commentary for more.
Zacks Confidential: There’s no reason why stocks cannot continue to move higher in the coming months...both here at home and abroad. One of the best ways to take advantage is by investing in entire industries across different countries, which is exactly what ETFs allow. In this week’s Zacks Confidential, Kevin asked our ETF expert Neena Mishra to offer her take for the New Year. Read about the global economy’s biggest drivers moving forward and the best investing areas: Top ETF Picks for 2018.
Momentum Trader: Asset management firms should continue to do very well as the market keeps moving higher. Therefore, Dave added a 12.5% allocation in OM Asset Management (OMAM). This Zacks Rank #1 (Strong Buy) stock is breaking out to new highs again...and is part of a space in the top 26% of the Zacks Industry Rank. Read the full write-up for more on this new addition.
Black Box Trader: Half of the portfolio was replaced in this week’s adjustment, and four of the departing stocks were positive:
• Wal-Mart Stores (NYSE:WMT, +4.1%)
• Cigna Corp. (NYSE:CI, +2.7%)
• Leucadia National (NYSE:LUK, +1.5%)
• PBF Energy (PBF, +0.2%)
• Restoration Hardware (RH)
The new buys that replaced these names are:
• Allstate Corp. (NYSE:ALL)
• Fiat Chrysler (FCAU)
• Prudential Financial (NYSE:PRU)
• Tri Pointe Group (TPH)
• XPO Logistics (XPO)
Read the Black Box Trader’s Guide to learn more about this computer-driven service designed to take the emotion out of investing.
All the Best,
Jim Giaquinto
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