The market calmed down quite a bit from yesterday’s exuberance as it continues to reposition after the recent blockbuster vaccine update, which hopefully signals that we're nearing the end of this pandemic.
On Tuesday, money was still moving out of the “stay home” names and into the “recovery” ones. As a result, the indices were again mixed.
Everyone’s still buzzing about Monday’s encouraging vaccine news out of Pfizer (NYSE:PFE) and partner BioNTech, stating that the treatment was 90% effective in preventing Covid.
Two of the major indices briefly hit new records yesterday after the announcement, but came back to earth amid a tech selloff.
The same thing pretty much happened today, but without the Dow surging past 1500 at its peak.
Instead, the index cooled off and added ‘only’ 0.90% to 29,420.92. It may seem odd to say a more than 250-point gain constitutes a “cooling off” period, but it’s actually the Dow’s smallest advance this month.
The index soared more than 1800 points last week despite a small loss on Friday, and then added on another 830 points yesterday. So we’re talking about a gain of more than 2900 in November... and the month isn't even half over.
The S&P couldn’t keep yesterday’s momentum going. It slipped 0.14% to 3545.53 after rising more than 1.1% on Monday.
The NASDAQ did manage to keep the momentum moving, but it was in the wrong direction. The tech-heavy index slipped 1.37% (or about 160 points) today to 11,553.86.
That marks a two-day slide of nearly 3%. But don’t feel too bad. It soared approximately 9% last week.
“Since the vaccine has been announced, there has been a violent rotation out of tech growth and into value,” said Jeremy in Counterstrike.
“I think this is a massive overreaction by the quants, but it does make sense to see the money move into the companies that would benefit from the virus being gone.”
Today's Portfolio Highlights:
Surprise Trader: Since reporting a solid third quarter late last month, shares of Altra Industrial Motion (NASDAQ:AIMC) have soared. Dave wants to let this winner run a bit longer, but would also like to secure some of those gains. Therefore, he sold half of AIMC on Tuesday for a more than 32% return in a little under a month. The new buy is Beacon Roofing Supply (NASDAQ:BECN), which beat by more than 50% last time and is part of the highly-ranked Building Products industry (Top 15%). This Zacks Rank #2 (Buy) has a positive Earnings ESP of 3.38% for the quarter coming after the bell on Thursday, November 19. The editor added BECN on Tuesday with a 12.5% allocation. See the complete commentary for more on today’s action.
Counterstrike: With the market finally calming down a bit after six days of sharp rallies, Jeremy felt it was time to make some additions. He had “multiple alerts going off” but managed to narrow it down to these three buys:
• Stamps.com (NASDAQ:STMP) – provider of Internet-based postage services
• Pinterest (NYSE:PINS) – popular social media platform
• Camping World (CWH) – provides services/products for RV fans
The editor added each name with a 6% allocation. STMP and CWH are Zacks Rank #1s (Strong Buys), while PINS is a Zacks Rank #2 (Buy). Read the full write-up for more details on each of these names, including recent earnings, potential stops and double-down areas.
TAZR Trader: Regulatory risk is always a big deal for a company like Alibaba (NYSE:BABA), but its all the more concerning when China begins making it an even bigger issue. And it looks like that might be happening. Therefore, Kevin sold more of BABA on Tuesday for a nice return of approximately 36% in about six months. If this seems familiar, it’s because the editor sold a third of BABA less than a week ago for a profit of more than 60%! Read the full write-up for more on this sell, as well as an update on Alteryx (NYSE:AYX).
Zacks Short Sell List: This week's adjustment replaced half of the portfolio. The stocks that were short-covered include:
• BioMarin Pharma (BMRN, +2.5%)
• Illumina (NASDAQ:ILMN, +1.3%)
• American Tower (NYSE:AMT, +0.15%)
• Las Vegas Sands (NYSE:LVS)
• Hexcel (NYSE:HXL)
The new buys that replaced these names were:
• A-Mark Precious Metals (NASDAQ:AMRK)
• ConocoPhillips (NYSE:COP)
• Marriott Int'l (NASDAQ:MAR)
• StoneCo (STNE)
• Sysco (NYSE:SYY)
Learn more about this emotion-free portfolio that takes advantage of falling and volatile markets by reading the Short Sell List Trader Guide.
Options Trader: "There's still a lot more work to be done. But given the increasing number of coronavirus cases, it's nice to see that more treatments are hitting the market, and that a vaccine could be here sooner rather than later.
"Adding to the market's favorable tone is a continuing strong earnings season. It's winding down now. But we've seen a strong performance so far.
"And after Q3's unprecedented GDP growth, and forecasts for a strong Q4, not to mention expectations for 2021 to have the strongest full-year GDP in 38 years, you can see why expectations are high for more earnings gains, and market gains to come." -- Kevin Matras
All the Best,
Jim Giaquinto
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