The Season's Going According To Plan (so Far)

Hopefully, today’s session is a microcosm of this whole earnings season. A few solid reports are released, and then the market heads to new highs. It’s the best case scenario…and today it worked perfectly. However, there’s still a lot of earnings season to come.

For today though, strong results from the likes of Caterpillar (NYSE:CAT) and McDonalds set the stage for a good session. The S&P gained 0.29% to a new high of 2477.1, while the NASDAQ barely kept its winning ways alive with a 0.02% advance to its own record of 6412.2 (for its 12th rise in 13 days). The Dow didn’t make history today, but it still jumped 0.47% (or 100 points) to 21613.4.

"The underlying strength in the economy, which is being underscored by a strong earnings season so far, continues to underpin the market as it marches up to its expected year end price target of 2,600," said Kevin in Options Trader.

Despite a few days with little activity, the editors had been itching to make some moves. On Tuesday, Zacks Counterstrike and RTA both sold positions (or parts of positions) for nice profits. The former portfolio also shorted a stock today. Meanwhile, Momentum Trader, Surprise Trader and Stocks Under $10 also bought. Finally, Short List swapped out two names for the week. Let’s get right to all the moves...

Today's Portfolio Highlights:

Zacks Counterstrike: Due to the volatile nature of Momo (MOMO), Jeremy decided to trim this Chinese social-networking stock on Tuesday. It is likely to just chop around the mid-$40s until its August 22nd report...so why not make some money now? The editor sold half of MOMO for a return of 16.7%. By the way, he also sold all of PLCE today.

But that wasn’t all. Jeremy has been teasing that a short was on its way, and today he made good. Shares of Casey's General Stores (CASY) have rebounded a bit after a disappointing quarterly report last month, but the editor thinks this Zacks Rank #5 (Strong Sell) has further to fall. He shorted the position on Tuesday with a small 5% allocation and expects it to slip all the way past $100. Read more about today’s moves, including a look at CASY’s chart.

Momentum Trader: Shares of Datawatch (DWCH) have soared into the double digits after its latest earnings report. Given the huge demand for its Monarch data prep and analytics platform, Dave believes that this breakout could continue. He added this Zacks Rank #1 (Strong Buy) on Tuesday with a 12.5% allocation. The full write-up has more on this new position.

Reitmeister Trading Alert: Long-time subscribers of the portfolio know how much Steve loves to sell or trim positions right in front of their earnings dates. You can never be sure what’s going to happen when a company reports, so it’s usually a good idea to bank some profits beforehand. On Tuesday, he made the following moves:

• Sold shares of MasTec (MTZ) for a nearly 15.5% return. The portfolio is holding onto a 6.7% allocation.

• Sold shares of Eastman Chemical (EMN) for more than 9.7%. He’s also keeping a 6.7% allocation.

• Sold ALL remaining shares of Western Digital (NASDAQ:WDC) for a 6.5% profit.

Read the full commentary for more specifics on this profit taking.

Surprise Trader: Waste Management (WM) heads into tomorrow’s quarterly report with a lot of momentum. This Zacks Rank #2 (Buy) has an excellent history at earnings season with just one miss in the past 3 years. But most importantly, it’s Earnings ESP for Wednesday’s report is positive, suggesting that its outperformance will continue. This all makes WM a much more attractive pick right now than Union Pacific (NYSE:UNP), which had a disappointing response to its most recent earnings beat. Therefore, Eric swapped these companies on Tuesday, selling UNP and buying WM with a 12.5% allocation. The full write-up has a lot more on these moves.

Stocks Under $10: The portfolio is back up to its full complement of 20 names with today’s addition of ConforMIS (CFMS), a medical technology company that specializes in joint replacement implants. The stock has come down quite a bit since testing $25 shortly after coming to market two years ago. Today, it is a little over $5, which Brian thinks is a great risk-reward level. Plus, the editor was especially impressed with the company’s revenue growth. Take a look at the full commentary for a lot more on CFMS, including its earnings history, estimate revisions and valuation.

Zacks Short List: This week’s adjustment included two swaps. The portfolio short-covered Williams Companies (NYSE:WMB) and Restoration Hardware (RH), and then replaced those spots by adding ConocoPhillips (NYSE:COP) and RSP Permian (RSPP). Learn more about this emotion-free portfolio that takes advantage of falling and volatile markets by reading the Short List Trader Guide.

Have a Great Evening,
Jim Giaquinto