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If you weren’t concerned when the major indices took a header late in the session on Tuesday, then you haven’t been paying attention. Yesterday, the S&P slipped below its 200-day and the NASDAQ turned negative for the year; two events that had the market and several of our editors worried about even stiffer drops to come.
However, stocks moved sharply higher in the last hour and retained the advance through the closing bell. Each of the major indices gained more than 1% to recoup at least some of yesterday’s dramatic selloff and ease the nerves of investors for the moment.
The Dow had the best performance on Tuesday and came closest to getting back all of Monday’s losses. It was up 1.65% to cross back over 24K at 24,033.4, compared to yesterday’s slip of 1.9%. The S&P got back a little more than half with an advance of 1.26% to 2614.5.
Tech rebounded a bit in the session after being the big loser yesterday. Amazon (NASDAQ:AMZN), which has been getting pelted by President Trump on Twitter lately, rose nearly 1.5%, while Facebook (NASDAQ:FB) was up almost 0.5% after being down earlier in the day. As a result, the beleaguered NASDAQ managed a 1.04% pop to 6941.3, though that’s less than half of yesterday’s 2.74% slump.
"With the S&P back over the 200-day the bulls can feel a little better about the price action. In addition, the Nasdaq came very close to the 200-day but was front-run before heading higher. This is a positive sign and I expect we could be seeing a bounce soon as we head into earnings season," said Jeremy in Counterstrike.
In the portfolios, Dave added to Surprise Trader and Momentum Trader, while Counterstrike bought a couple of tech names on hopes that the NASDAQ will continue to advance. Short List swapped out two positions this week and cashed in a double-digit winner along the way. Read more in the highlights section below:
Today's Portfolio Highlights:
Surprise Trader: Business is about to pick up in this portfolio as earnings season is right around the corner. But that’s still a week or so away, which means it’s slim pickings right now. Nevertheless, Dave found a company that’s reporting before the bell this Thursday and has an impressive 11.35% Earnings ESP. The stock is Lamb Weston Holdings (LW), a Zacks Rank #2 (Buy) in the frozen potato-based food industry. The editor added it with a 12.5% allocation and sees it as a quick turnaround/quick profit idea before earnings season really kicks into gear. Read the full write-up for more.
Counterstrike: After several weeks in a tech slump, the NASDAQ is approaching its 200-day. Jeremy believes the index will hold the line and rally at this level as we approach earnings season. Therefore, the editor is all set to dip back into tech. On Tuesday he bought Salesforce (CRM) and Micron (MU) with 10% allocations each. The stocks have both pulled back to their 50-day MAs and should rally from this area. CRM is a Zacks Rank #2 (Buy) on-demand business services company, and MU is a Zacks Rank #1 (Strong Buy) semiconductor solutions leader. Read the full write-up for a lot more on these additions and all of today’s other business in the portfolio.
Momentum Trader: Today’s rally has been modest compared to yesterday’s selloff, but it was enough for Dave to get some capital deployed. The editor added Stoneridge (SRI) on Tuesday with a 12.5% allocation. Shares of this Zacks Rank #1 (Strong Buy) soared to $30 after a huge earnings beat last quarter, but have since pulled back. Dave thinks the trend to the upside will continue. SRI is an independent designer and manufacturer of highly engineered electrical and electronic components, modules and systems. Read the full write-up for more.
Zacks Short List: Both of this week’s short-covered stocks were positive, including a double-digit winner. The names that left the portfolio were Charter Communications (NASDAQ:CHTR, +13.7%) and Tal Education (TAL, +5.8%). The new buys that replaced these positions are GoDaddy Inc. (GDDY) and Brown-Forman (BF.B). Learn more about this emotion-free portfolio that takes advantage of falling and volatile markets by reading the Short List Trader Guide.
All the Best,
Jim Giaquinto
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