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The market is enjoying the best of both worlds right now, as stocks have cooled off from the hectic pace earlier this month but are still managing new highs and strong weekly performances.
Each of the major indices finished Friday’s session at new highs and also tallied weekly gains of more than 1%. That’s a nice way to head into a long, three-day weekend.
The NASDAQ advanced 0.50% (or nearly 70 points) today to 14,095.47 and jumped 1.7% for the week. The S&P was up 0.47% to 3934.83, while the Dow increased 0.09% (or about 27 points) to 31,458.40. The latter two indices rose 1.2% and 1%, respectively, over the five days.
Earnings season is more than halfway done… and it’s been a pretty good performance even if the market didn’t always reward the results. As stated in previous commentaries, earnings growth resumed a quarter earlier than expected.
For the approximately 370 S&P companies that have reported so far, earnings have beaten the Zacks Consensus Estimate more than 80% of the time and revenues have positively surprised over 75% of the time.
For all the specifics on this season, make sure to read our Director of Research Sheraz Mian’s most recent Earnings Preview article titled “Earnings Estimates Keep Going Up”.
Despite being a day light, there’s still hundreds of reports coming next week. Some of the bigger names going to the plate include CVS (CVS) on Tuesday, Shopify (NYSE:SHOP) and Baidu (NASDAQ:BIDU) on Wednesday, Walmart (NYSE:WMT) on Thursday and Deere (NYSE:DE) on Friday.
Meanwhile, the market’s recent breather has many people, including some of our editors, wondering about a correction, which is only natural given how crazy things have been of late. Sooner or later, of course, we will get one. As we know, such pullbacks are healthy and even necessary to keep long-term uptrends going.
For the moment though, investors are just too excited about more stimulus, the ever-accommodative Fed and the vaccine rollout. And the strong earnings season is just icing on the cake.
So enjoy the long weekend and we’ll see you back here on Tuesday...
Today's Portfolio Highlights:
Headline Trader: For better or worse, we live in a headline-driven society these days where the stock market often takes its cues from the news. The rise of the retail investor has only exacerbated this trend, as we recently saw with the squeeze craze. We've got a brand new service that capitalizes on this environment, and its aptly titled Headline Trader. Daniel Laboe is the editor and he's already posting commentaries, but his first picks start on Tuesday. So take a look at the Guide and be ready for the inaugural pick after the weekend!
Blockchain Innovators: This portfolio is green all the way through and has seen a lot of its positions make the Top Movers list of late, including today (more on that in a minute). Dave is hoping that WISeKey International (WKEY) will keep the good times going. This name is a cybersecurity and Internet of Things (IoT) company. But most impressively, it has its own coin dubbed WISeCoin. It’s a tokenized service for authenticating people, products and machines to secure the IoT by preventing unauthorized third-party interactions. The editor sees a golden cross in the technicals, which means a rally may be in store. He added WKEY on Friday, while also selling Iteris (NASDAQ:ITI) for a nice 40% return in less than five months. Getting back to the scoreboard above, this portfolio had two top performers today with Cowen Group (NASDAQ:COWN, +18.4%) and Danoas Corp. (DAC, +8.6%).
Technology Innovators: As Brian said in last night’s commentary, there’s a big time player out there that’s actively selling shares of many holdings. A couple times this week we’ve seen some out-of-the blue selling in an otherwise raging bull market. The editor isn’t calling for a correction, but wants to be a little proactive and lower exposure across all his services to play it safe. Therefore, this portfolio cashed in two double-digit winners on Friday. Ichor Holdings (NASDAQ:ICHR) was sold for a more than 51% return in less than three months, while Advanced Energy Industries (NASDAQ:AEIS) leaves with an approximately 48% profit in a little under four months.
Home Run Investor: It’s been three months since the portfolio added infrastructure & road construction company Construction Partners (NASDAQ:ROAD), and Brian doesn’t want to be “roadkill” on this one. He sold the stock on Friday for an 18% return, while also getting out of AdaptHealth (NASDAQ:AHCO) for a loss after slipping to a Zacks Rank #4 (Sell).
Stocks Under $10: The portfolio cashed in two double-digit winners on Friday as part of Brian’s plan to take some profits. Cornerstone Building Brands (NYSE:CNR) and Harmonic (NASDAQ:HLIT) were both added back in mid-September and leave today with gains of 44.8% and 32.4%, respectively. CNR looks to have stalled and HLIT has slipped to a Zacks Rank #4 (Sell).
Surprise Trader: Better days could be ahead for steel companies, so Dave added one on Friday by picking up Ternium (TX) with a 12.5% allocation. Top and bottom line expectations for 2021 are much higher than 2020. More immediately though, the company has a positive Earnings ESP for its fourth-quarter report coming on Tuesday, February 23 after bell. TX has beaten for nine straight quarters now, including a surprise of 165% most recently. Dave also decided to cut ties with Sonoco Products (NYSE:SON) for a slight loss. Read the full write-up for more on today’s moves.
Have a Great Weekend!
Jim Giaquinto
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