There’s an old saying that goes something like: “You can catch more flies with honey than with vinegar". Both sides of the trade ruckus took those words to heart today, and the result was a broad market rally.
Chinese President Xi Jinping took a gentle approach in his address to the Boao Forum on Tuesday, which included ideas to open the country’s financial markets, better enforce intellectual property protection and lower tariffs on automobile imports. Most importantly though, there was no further “tough talk” about the trade concerns that have been pressuring the market for over a month now.
President Trump followed suit with a tweet, of course, thanking President Xi for his “kind words” and saying the two leaders could “make great progress together".
“There indeed will continue to be trade tensions as negotiations take place. But that’s far different than a trade war. And the market is cheering that narrative,” said Kevin Matras in Options Trader.
The NASDAQ led the way on Tuesday with a surge of 2.07% to 7094.3, thanks in part to a 4.5% rise in Facebook (NASDAQ:FB) as founder and CEO Mark Zuckerberg testified in a Senate hearing on the trust issues that have been impacting the social media giant.
The Dow jumped 1.79% to 24,408 and the S&P was up 1.67% to 2656.9. It was a nice change from yesterday’s session, when news of the FBI’s raid of the President’s lawyer ruined what was shaping up to be a strong rally. Although it may not seem like it, the major indices have actually risen in 5 out of the last 7 sessions.
In the portfolios, Stocks Under $10 got into a technology name with commercials that are all over the television right now. ETF Investor cashed in a double-digit fund, while TAZR decided to be nimble in this unpredictable time by taking profits on 5 positions (one of which was a 50%+ winner). Also, Short List swapped out two names this week. Learn more in the highlights section below:
Today's Portfolio Highlights:
Stocks Under $10: It’s time to get back into technology and Brian Bolan has found a company that you probably know something about. Trivago (TRVG) provides internet-related services and products in the fields of hotels, lodging and metasearch. If you haven’t used them, then you’ve probably seen their commercials. This space is pretty hot right now and the stock has an impressive Earnings ESP of 18% for the quarter being reported in about a month. It’s at the very low end of its 52-week range, which means the editor is picking this one up on the cheap. He expects TRVG to rally more than $10 in the coming months. Read the complete commentary for more on this new addition, and don’t be surprised if there’s another buy shortly.
ETF Investor: With broad U.S. exposure to Financials, Technology and Consumer Discretionary, FlexShares Mstar US Market Factors Tilt ETF (TILT) has only been able to perform in-line with the broader market these past few volatile months. Since it charges a much higher fee than other ETFs, Neena decided this was a good time to end its 2-year stay in the portfolio and secure a double-digit return. She sold TILT on Tuesday for an approximately 30% profit.
TAZR Trader: This rally doesn’t fool Kevin. The editor believes that new correction lows are still widely possible. So to protect the portfolio’s commanding lead over the S&P in the past year and to prepare for new buys in the future, he decided to take profits on several positions. The following stocks were sold today:
• SMART Global Holdings (SGH, +52.1%)
• Square, Inc. (NYSE:SQ, +18%)
• Lam Research (NASDAQ:LRCX, +11.7%)
• NASDAQ 100 3X Bull ETF (TQQQ, +10.8%)
• NVIDIA (NASDAQ:NVDA, +4.3%)
Read the complete commentary for more on these moves and to stay on top of Kevin’s analysis for this volatile market.
Zacks Short List: The portfolio made a couple swaps in this week's adjustment. The stocks that were short-covered include Brown-Forman (BF.B) and Blackhawk Network (HAWK, +3%). The new additions that replaced these names are Flowserve Corp. (NYSE:FLS) and Incyte Corp. (INCY). Learn more about this emotion-free portfolio that takes advantage of falling and volatile markets by reading the Short List Trader Guide.
Until Tomorrow,
Jim Giaquinto
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