Two Sharp Rallies in Three Days

The market is feeling pretty hopeful now that all of the states have begun to slowly re-open their economies, which led the major indices to their second sharp rally of the week on Wednesday.

The NASDAQ was out front again with an advance of 2.08% (or about 190 points) to 9375.78. Most of the FAANGs were higher in the session, especially Facebook (NASDAQ:FB +6%). The social media pioneer reached a new high, as did retail giant Amazon (NASDAQ:AMZN, +2%).

The S&P (NYSE:SPY) jumped 1.67% to 2971.61, while the Dow rose 1.52% (or around 369 points) to 24,575.78.

This has been a yo-yo of a week so far. Stocks soared by around 3% on Monday and then gave some of it back on Tuesday. But today’s rally leaves the market solidly higher for the week heading into the final two days.

The latest round of earnings reports for retail giants included Target (NYSE:TGT) and Lowe’s (NYSE:LOW)… and a pattern is emerging.

These retailers, along with Home Depot (NYSE:HD) and Wal-Mart (NYSE:WMT) yesterday, are experiencing higher sales and same-store sales as they’ve been able to stay open during the coronavirus. They’re also seeing a sharp rise in online sales growth, led by TGT’s 141%.

However, they’re also spending a lot of money to operate during this pandemic and haven’t been getting much love from the market. For example, TGT dipped nearly 3% today while LOW could only muster a 0.1% advance despite an 11.2% surge in same-store sales.

Still, let’s look on the bright side. These are names that could have led the market sharply lower, especially with all the skittishness over consumer sentiment.

Instead, there’s a good chance for a solid weekly performance if we steer clear of any surprises and if the market can shrug off what’s likely to be another difficult jobless claims report tomorrow.

Today's Portfolio Highlights:

Surprise Trader: Warehouse clubs are doing pretty well during this coronavirus shutdown as people look to stock up for long stretches at home. So Dave is expecting positive results from BJ’s Wholesale (BJ) when it reports before the bell tomorrow, May 21. The editor’s confidence is supported by a positive Earnings ESP of 4.09%. If analysts are correct and the company reports 35 cents on Thursday, then that would mark a year-over-year improvement of nearly 35%. BJ was added on Wednesday with a 12.5% allocation. The portfolio also sold Sapiens (SPNS) to make room for the new addition. Read the full write-up for more on today’s moves. By the way, this portfolio had one of the best performers of the day with CURO Group (CURO, +11.3%).

"The market looks poised to breakout here. The market continues to ignore current economic situations, looking forward to the reopening of the economy and the ensuing boom. Some say we are back into a new bull market. Cycles happen faster than ever nowadays and this sure feels rather bullish. We are not out of the woods yet as that 200-day lingers overhead." -- Dave Bartosiak

Home Run Investor: The portfolio swapped out two names on Wednesday. Brian is a bit wary of biotechs that have sharply advanced, so he decided to save his nerves and sell Cue Biopharma (NASDAQ:CUE) for a 26.6% profit in in less than a month. He also sold La-Z-Boy (LZB) for a slight loss after the furniture company dipped to a Zacks Rank #5 (Strong Sell). The new buys are Model N (NYSE:MODN) and Allot Communications (NASDAQ:ALLT). MODN provides revenue management solutions for life sciences and technology companies, while ALLT provides intelligent IP service optimization solutions. Both of these stocks are Zacks Rank #2s (Buys). Read the complete commentary for all the specifics on today’s moves.

All the Best,
Jim Giaquinto