Market Jumps as Earnings Take Center Stage

It’s finally earnings season! Maybe the market can start focusing on events that are directly related to investors and our thriving economy, rather than convulsing over presidential tweets or whatever the daily headline might bring.

It’s very early, but the start of this season suggests that the quarter won’t disappoint the lofty expectations of analysts. On Monday, Bank of America reported better than expected results, which goes nicely with last week’s strong numbers from other financials like J.P Morgan Chase and Citigroup.

And after the bell today, Netflix announced that it added significantly more subscribers than expected in its quarter. As of this writing, shares of the streaming giant are up more than 5.5% after hours.

The major indices started the week on a strong note. The Dow climbed 0.87% (or more than 200 points) to 24,573, while the S&P gained 0.81% to 2677.8. The NASDAQ was up 0.70% to 7156.3. 

"It’s great to see the market focusing on the economy and earnings once again. If the market can maintain that focus, there’s no reason why we shouldn’t breakout to new highs in the coming weeks/months. And that’s exactly what I think the market will do," said Kevin Matras in Options Trader. 

In addition to the earnings news, the market also got help on Monday from an easing of Syria concerns. Last week, the U.S. and a couple of allies launched precision missile strikes against that government in response to a recent chemical-weapons attack on citizens. In the days before the strike, President Trump wrote some tweets that unnerved the market, especially given Syria’s relationship with Russia. However, the operation seems to have been successful, alleviating the market’s concerns for now.

In the portfolios, Counterstrike has been putting off new trades amid this unpredictable market, but today’s performance convinced Jeremy to add to a couple of existing positions. Meanwhile, TAZR got back into one of its favorite stocks today, and Black Box Trader swapped out five positions. Read the highlights section below for more...

Today's Portfolio Highlights:

Counterstrike: With the indices possibility moving higher during earnings season, Jeremy finally feels comfortable enough to make some moves. The editor added more allocation to two existing positions. Atlas Air Worldwide Holdings (AAWW), a provider of outsourced aircraft and aviation operating services, has jumped 10% since it was added to the portfolio in late March. Jeremy thinks it will runup into its earnings early next month, so he added 6% more to the holding.

Meanwhile, Micron (MU) recently held its 50-day in a Fibonacci long setup, which was what the editor expected when he bought this semiconductor solutions leader earlier this month. The stock moved lower this morning, providing the perfect opportunity to add 5% more to this Zacks Rank #1 (Strong Buy). By the way, the portfolio also sold half of IDEXX Labs (IDXX) for a return of approximately 7.5%. Read the full write-up for more on all of today’s activity.

TAZR Trader: Diversification isn’t just important among industries, but within them as well. Case in point, Kevin decided not to buy Lam Research (LRCX) on Monday since the portfolio already has one of its peers. Instead, the editor added a company that’s “in a class by itself”: NVIDIA (NVDA). The company’s leadership position in AI differentiates it among semiconductors. The pullback in the group today gave Kevin the perfect opportunity to add a 7% position. The portfolio has pulled a number of double-digit profits out of NVDA in 2017 and so far in 2018; in fact, it is one of the service’s all-time movers with a gain of nearly 36% earlier this year. Learn more in the complete commentary.

Black Box Trader: Half of the portfolio was swapped out this week. The stocks that were sold include:

• Fiat Chrysler (FCAU, +4.3%)
• Dollar General (DG, 3.6%)
• Anthem Inc. (ANTM, +0.6%)
• XPO Logistics (XPO)
• Kohl's Corp (KSS)

The new buys that replaced these names are:

• Flowers Foods (FLO)
• HD Supply Holdings (HDS)
• Interpublic Group (IPG)
• Avis Budget Corp (CAR)
• Ciena Corp (CIEN)

Read the Black Box Trader's Guide to learn more about this computer-driven service designed to take the emotion out of investing. 

Zacks Confidential: Energy is easily the most hated industry in the S&P…and for good reason. Investors suffered through the oil price crash in 2015 and then were fooled by a false bottom. So traders abandoned the space and are not being tempted by the rebound in crude oil prices. But Tracey Ryniec says the 2018 recovery is for real and could pay off investors with the guts to get back in. Kevin has asked Tracey to explain the reemergence of the energy trade in this week’s Zacks Confidential. Read her article and get three top stock picks by clicking: How to Play the Energy Stock Comeback. 

Surprise Trader: "Last night’s bullishness in the futures markets continued on through the session today. Earnings season is in full swing here with a host of big reports coming up. Netflix set the stage after the bell today, beating subscriber growth estimates in the US and propelling the stock up near all-time highs. During the day, a wave of buying helped boost shares across the board. 

"The market already told us that it’s not going to be overly concerned with Syrian developments. For weeks now, I’ve been saying that earnings season can’t come soon enough. Well, now I think we can finally rejoice because it’s here. The strength I believe we’re going to see should be enough to overpower any short-term nerves over geopolitical risks. 

"The quarterly growth rate expectations are astronomical for this quarter. In December, analysts predicted 9% growth for the quarter. Now we’re looking at 16.6% earnings growth. Those bullish numbers should shake off the risks the market is perceiving right now and help to take us back to the stratosphere. It never happens linearly during earnings season, so expect to have some choppiness." -- Dave Bartosiak, who also heads Momentum Trader and Blockchain Innovators. 

Until Tomorrow,
Jim Giaquinto

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