New Month, New Quarter, Same Old Selloff

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Any hope that Friday’s rally signaled a turning point for the market were crushed early on Monday. Instead, the major indices started the day solidly in the red and never even flirted with the idea of rebounding. Stocks did come off their lows of the session, but a combination of Chinese tariffs and another bad day for tech kept the market down.

The NASDAQ got the worst of it, dropping 2.74% to 6870.1 and moving into the red for the year. Amazon dipped by more than 5% as President Trump continues his twitter storm again the retailing giant, while Facebook slipped another 2.75%. The S&P fell 2.23% to 2581.9 and ended below its 200-day moving average. The Dow was off 1.9% to 23,644.2.

In the portfolios, TAZR Trader sees a “W” bottom test after today’s pullback, so it added more of a bullish ETF to prepare for a bounceback in technology. Stocks Under $10 picked up a play on the rising price of crude oil. And Black Box Trader swapped out six names in its weekly adjustment. Learn more about all these moves in the highlights section below, along with this week’s Zacks Confidential and more.

Today's Portfolio Highlights:

Stocks Under $10: As the price of crude moves higher, Brian Bolan thinks a stock like Flotek (FTK) will jump on the bandwagon. The company sold off its drilling and production technology units last year, but it still develops and delivers prescriptive chemistry-based technology to the energy sector (as well as other spaces). Rising earnings estimates have helped FTK become a Zacks Rank #2 (Buy), and the editor is also impressed with its valuation. Learn more about this new addition in the complete commentary.

TAZR Trader: Today’s sharp market pullback in the wake of Friday’s rally has Kevin seeing a “W” bottom test in the S&P. Since he continues to appreciate the relative strength for technology and semiconductors, this provided the perfect opportunity to increase the portfolio’s “starter” position in NASDAQ 100 3X Bull ETF (TQQQ). Therefore, he added 5.5% to the fund, bringing the total allocation up to more than 10%. Read the full write up for more.

Black Box Trader: More than half of the portfolio was swapped out this week. The six names that were sold today include:

• Dynegy Inc. (DYN, +4.2%)
• Centene Corp (CNC, +1.1%)
• American Airlines (AAL)
• Conduent Inc. (CNDT)
• Fiat Chrysler (FCAU)
• Kapstone Paper (KS)

The new buys that replaced these stocks are:

• Archer Daniels (ADM)
• Dollar General (DG)
• Flowers Foods (FLO)
• HD Supply Holdings (HDS)
• Hewlett Packard Enterprise (HPE)
• Interpublic Group (IPG)

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: The more connected we become, the more we invite risk into our lives. Not too long ago, security breaches were headline news. These days, we regularly hear about companies getting hacked. Such intrusions mean there's a lot of potential in cyber security. Brian Bolan is a big believer in the space, which is why Kevin asked him to handle this week’s Zacks Confidential. Learn all about the importance of this industry and get a few recommendations by clicking: Innovations in Cyber Security.

Momentum Trader: "I had hoped that the long weekend would give the market enough time to heal some of the wounds of last week and take a new direction. Rather than breathing a sigh of relief, we’re staring into the abyss. That abyss is the south side of the 200-day moving average.

"On one hand, this presents a great buying opportunity. On the other hand, let’s not completely ignore the technical risks of the market. A break of the 200-day is a bad thing. A retrace to the 200-day where we can load up before going higher, is a good thing. Below the 200-day, staring up, is a bad thing.

"Keep your eyes on these levels tomorrow. A fierce down day on volume means the downside will extend. My prediction is the market bottoms out after the European close during the mid-morning then gives us a 'Turnaround Tuesday'." -- Dave Bartosiak, who also heads Surprise Trader and Blockchain Innovators.

Options Trader: "As for the market, it’s important to note that we are still trading above the correction lows seen in February. For the S&P, that’s 2,532.69 (the correction low of Feb. 9th, 2018).

"Where would the S&P have to go to hit that -20% bear market threshold? All the way down to 2,298.29. But I contend we are not going to see anything like that. The economy is too strong, inflation is not a problem, interest rates remain very accommodative, corporate profits continue to surge, and the entire world economy is expanding.

"Soon this correction/bottoming formation will be done and over with. Having to endure this period in time is definitely no fun. But I believe we are closer to the bottom than not and that the market will turn up shortly." -- Kevin Matras

Have a Good Evening,
Jim Giaquinto

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