Each of the major indices were up by more than 1% at their highest points of Monday’s session. However, the end result was very different as that rally was spoiled by a late-session selloff that not even technology could save.
In fact, the tech sector led the move lower, sending the NASDAQ to the worst performance of the day by far. The index, which has been surprising investors with its resilience in the face of rising coronavirus cases, plunged 2.13% (or about 226 points) to 10,390.84.
It had been up by nearly 2% earlier in the day.
The S&P briefly moved onto positive ground for the year after rising by 1%, but it too faltered and finished lower by 0.94% to 3155.22.
The Dow managed to stay in positive territory… but let’s not get too excited. The index soared by 2.2% (or over 500 points) at the high point, but it finished in the green by only 0.04% (or about 10 points) to 26,085.80.
The market has been largely ignoring the rise in cases of late, so it wasn’t much of a surprise that the day started so strongly despite another rough weekend. Florida was especially hit hard.
Plus, we enjoyed some good news on the vaccine front as two of the candidates from Pfizer/BioNTech were granted fast track designation.
But it wasn’t to last, and news that California was closing indoor operations again just exacerbated the reversal. This delay in reopening is exactly what the market doesn’t want to hear, because it means a delay in the economic recovery as well.
That’s a rough start to the week, especially with stocks on a roll after back-to-back weeks with all major indices moving upward.
Has the market moved as high as it can in this perilous environment without good news on cases or reopenings? Or is this just another one or two-day pullback?
Let’s see where the rest of this week takes us. And don’t forget that the beginning of earnings season is upon us with JPMorgan (NYSE:JPM), Citigroup (NYSE:C) and Wells Fargo (NYSE:WFC) all reporting tomorrow.
Today's Portfolio Highlights:
Counterstrike: This crazy forward momentum is rewarding investors who chase stocks, and Jeremy isn’t going to fight the trend even though it’s not really his style. On Monday, he added Turtle Beach (NASDAQ:HEAR), an audio technology company that beat by 69% in May and then raised its guidance in June. The editor thinks this stock could soar about 30% from here to more than $23. Meanwhile, in the first post-earnings buy of the quarter, the portfolio also added Greenbriar Companies (GBX). This supplier of transportation equipment to railroads beat the Zacks Consensus Estimate by 452% last week while revenue also crushed expectations. Jeremy thinks this name could jump about 25% from here, so he’ll be buying more on any dips. HEAR and GBX are both Zacks Rank #1s (Strong Buys) that were added with 5% allocations. The portfolio also sold half of (DPZ) for an 8.4% return. Read the full write-up for more on today’s moves. By the way, the ProShares UltraPro Short QQQ (SQQQ) position was one of the best performers today with a gain of 6.15%.
Surprise Trader: With earnings season about to kick off, be prepared for A LOT of new additions to this portfolio in the coming weeks. Dave got things started on Monday by buying Bancorp (NASDAQ:TBBK) South Bank (BXS), a regional bank in the Southeast. The editor sees tons of opportunity in regional banks, which have lagged so far this year. However, the editor agrees with analysts that a migration from large cities in the north to towns in the south will be a big benefit for that part of the country and its banks. BXS has beaten expectations for three straight quarters now, including a healthy surprise of more than 43% last time. It has a Positive Earnings ESP of 1.09% for the quarter coming after the bell next Monday, July 20. The portfolio added BXS on Monday with a 12.5% allocation, while also selling MSC Industrial (NYSE:MSM).
Technology Innovators: The past two quarters have seen big beats for US Cellular (USM) and Brian likes its valuation at the moment. Perhaps most importantly, rising earnings estimates for this year and next have made this wireless carrier a Zacks Rank #1 (Strong Buy). Therefore, the editor added USM on Monday.
Black Box Trader: The portfolio refreshed half of its positions in this week's adjustment. The stocks that left the portfolio today included:
• Patterson Cos. (PDCO, +1.7%)
• Lakeland Industries (NASDAQ:LAKE, +0.9%)
• Lowes Cos. (LOW)
• LPL Financial (NASDAQ:LPLA)
• WillScot (NASDAQ:WSC)
The new buys that filled these open spots were:
• Deutsche Bank (DE:DBKGn) (DB)
• Nautilus Group (NYSE:NLS)
• PulteGroup (NYSE:PHM)
• Sally Beauty (NYSE:SBH)
• Vista Outdoor (NYSE:VSTO)
Read the Black Box Trader’s Guide to learn more about this computer-driven service designed to take the emotion out of investing.
Until Tomorrow,
Jim Giaquinto
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