Stocks Can't Follow Through in Low Volume Session

Despite a positive start to Tuesday’s action, the market couldn’t add onto yesterday’s impressive rally as choppy trading eventually chipped away at the gains and left us with a rather lackluster session.

The NASDAQ was the best performer again today… but only because it had the narrowest loss. It slipped 0.03% (or 4 points) to 13,657.17, which means it held onto nearly all of yesterday’s 1.4% surge.

Meanwhile, the Dow declined 0.24% (or about 81 points) to 34,312.46, while the S&P was off 0.21% to 4188.13. These indices were up 0.54% and 0.99%, respectively, on Monday, but couldn’t decide on a direction today amid low volume.

“I am surprised there wasn’t follow through, but because it is the end of the month, it’s not surprising to see some back-and-forth action," said Jeremy Mullin in today’s Counterstrike.

“Some big players want positions off the books, while other big players want to mark up prices. This gives us a tug of war, while retail traders get stuck in between.”

The consumer confidence report was a mixed bag, as the 117.2 result fell short of expectations north of 118. But the result is still just 0.3 below April’s 117.5, so it’s pretty strong out there despite concerns of rising inflation.

However, a 5.9% drop in new home sales in April suggests that consumers may be more hesitant to spend on big ticket items. Sales moved lower to 863K from the previous month’s 917K. Meanwhile, the Case-Shiller national home price index soared 13.2% annually in March, suggesting that the robust rise in home prices may be scaring off potential buyers at the moment.

“The surprise today was the weakness in new home sales and consumer confidence coming in below expectations. That said, the market didn’t sell off in a meaningful way and the action really sets up for a strong move tomorrow,” said Brian Bolan in Stocks Under $10.

And if you’re missing the hustle and bustle of big earnings reports, then you’ll be happy to hear that graphics chip pioneer NVIDIA (NASDAQ:NVDA) will be reporting after the bell tomorrow. The company was up 0.23% today and has an Earnings ESP of 1.94%. It has now beaten the Zacks Consensus Estimate for nine straight quarters.

Today's Portfolio Highlights:

Headline Trader: With chip stocks finally finding support and a $52 billion bill being considered to confront the shortage; Dan feels that “now is the time to jump into this momentum-building segment". On Tuesday he added Synopsys (NASDAQ:SNPS), a global leader in semiconductor IP and electronic design automation tools. Basically, EDA provides the foundation for digital chips being used in all the most innovative new technologies, including AI, cloud computing, the IoT and 5G. SNPS reported a “blowout” quarter last week, which continued a long stretch of outperforming the Zacks Consensus Estimate. “The pandemic created the perfect storm for the future of this business, with digital adaptation accelerating 10 years in just 10 months,” according to the editor. He believes the company is poised to rise to $300. Read the complete commentary for an in-depth analysis of SNPS.

Zacks Short Sell List: This week's adjustment swapped out two portfolio positions. The stocks that were short-covered on Tuesday included Sunrun (NASDAQ:RUN) and Shopify (NYSE:SHOP), while the new buys that filled these opened spots were Chegg (NYSE:CHGG) and Shake Shack (NYSE:SHAK). Learn more about this emotion-free portfolio that takes advantage of falling and volatile markets by reading the Short Sell List Trader Guide.

Stocks Under $10: With crypto coming under pressure lately, gold has been increasing in value. Brian is taking advantage of this situation by adding Comstock Mining (LODE), a Zacks Rank #2 (Buy) gold miner with earnings estimates that have “radically” jumped to a profit of 23 cents from a loss of 13 cents for this year. The company beat by 150% last quarter and analysts expect topline growth of 60% for the full year. Read the complete commentary for a lot more on this new addition.

Insider Trader: "That growth stock momentum from the last 2 days petered out today as stocks finished mixed on the session.

"However, it really felt like a lot of people have already gone on their Memorial Day vacations.

"No one even cares about this week's earnings reports, even though we'll be hearing from tech powerhouses NVIDIA (NVDA) and Salesforce (NYSE:CRM).

"But keep an eye on the retailers. They are the key to where the economy is heading in the second half of 2021." -- Tracey Ryniec

Have a Great Evening,
Jim Giaquinto