No Black Friday for Stocks This Week

With the major indices already down several percentage points through Wednesday’s close and Black Friday being a super slow volume day, no one was expecting the market to get into the black for the week today. A rally would have been nice though, but instead we got more losses.

It was all red this week (which was only three-and-a-half days), as the NASDAQ and Dow each plunged about 4.5%. The S&P was off by nearly 4%.

Coming back from the Thanksgiving break, oil got crushed and was down almost 8% to a little under $50.50 a barrel. It is now on a 7-week losing streak.

And tech wasn’t helping out on Friday either, as the former market leader also continued its downtrend. All of the FANGs were lower with Facebook and Apple both off by more than 2%. The iPhone maker has plunged 11% this week.

The losses today were actually rather mild compared to what we saw on Monday and Tuesday, but it’s still disappointing because Black Friday is usually positive for the market. The Dow declined 0.73% (or about 178 points) to 24,285.95 and the S&P slipped 0.66% to 2632.56. Despite the weakness from the FANGs, the NASDAQ was the only major index that saw some green on Friday but it ultimately declined by 0.48% to 6938.98.

So, hopefully Santa is planning to make an appearance before the end of the year. Next week could help make up his mind. The beginning of the G-20 in Argentina is now just one week away. We’ll probably get a lot of headlines the closer we get to the President Trump/President Xi meeting. Optimism is not high for any type of trade resolution or deal… but who knows what will happen? The market will be paying close attention.

We’ll also get a speech from Fed Chair Jerome Powell on Wednesday and the FOMC Minutes from the November 7-8 meeting on Thursday. While a December rate hike is still widely expected, the Fed is getting increased pressure from Wall Street to pull back on plans for more increases in 2019 given this sharp correction. 

Today's Portfolio Highlights: 

Surprise Trader: With a nearly 15% surge on Wednesday after a strong quarterly report, the portfolio’s position in Foot Locker (FL) has worked really well. So Dave had the same idea for his latest addition. The editor added Dick’s Sporting Goods (DKS) today with a 12.5% allocation. The company has beaten the Zacks Consensus Estimate for four quarters in a row with an average surprise of about 18.2%. And now there’s a positive Earnings ESP of 7.35% for the quarter coming before the bell next Wednesday. Dave is expecting another beat and another solid holiday shopping season. Read the complete commentary for more. 

Value Investor: Crude won’t drop forever, and when it does bounce back the E&Ps will see the biggest rebound. The portfolio already owns a couple of these names with Pioneer (PXD) and Occidental (OXY), but Tracey wants more moving forward since a decline to $40 a barrel would only be temporary. Therefore, she added BP (BP) on Friday, which is one of the world’s largest integrated oil companies and a conservative play on the energy sector. It’s also a solid, well-managed name that has a nice 6% dividend yield; a yield that was protected by the company even during the 2015-2016 plunge. Shares are down 14% in the past 6 months, but that’s a much tamer loss than the smaller E&Ps. In addition to attractive value characteristics, BP is also showing growth with earnings expected to improve 91% this year. Read the full write-up for a lot more on this new buy. 

Have a Great Weekend, 
Jim Giaquinto 

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