Stocks Go Into Earnings Season at All-Time Highs

The rate cut isn’t here yet, but the new records certainly are.

Each of the major indices closed Friday’s session at their highs of the day... and their highs of all time!

We also got a second straight week of gains to begin July.

What a way to start earnings season!

After two failed attempts, the S&P finally managed to close above 3,000 for the first time. It advanced 0.46% to 3013.77 and was up about 0.8% this week.

The Dow first breached 27,000 yesterday and continued moving higher on Friday. It was up 0.90% (or about 243 points) to 27,332.03 and had the best weekly performance with a surge of 1.5%.

The S&P and Dow have now hit new records for the past two days.

The NASDAQ reached a new high for the second time in the past three sessions with a rise of 0.59% (or about 48 points) to 8244.14. It was up about 1% for the week.

Well, it’s obvious that the Fed told the market exactly what it wanted to hear. Fed Chair Jerome Powell testified on two straight days in D.C. this week and the message was the same both times: a rate cut seems warranted since ‘crosscurrents’ are pressuring an otherwise solid economy.

It looks like last week’s better-than-expected jobs report didn’t have the hawkish impact that investors were fearing.  

As much fun as the Fed has been lately, it’s time to turn the page and get ready for earnings season. It gets kicked off next week when some of the biggest banks report, including JP Morgan, Citigroup and Bank of America, among others.

The season will be challenged by tough comparisons from last year and the slowdown in global economic growth. Investors are fearful that the reports will put an end to this rally and spark a selloff.

However, as all investors know, low expectations were made to be beaten...

Today's Portfolio Highlights:

Options Trader: It was only about two weeks ago when the portfolio sold its calls in Tetra (TTEK) for a 127% profit, and then immediately reinvested with a couple December 80.00 Calls. Well, the stock has already moved past Kevin's price target, which means the ‘easy’ money has been made. Therefore, the editor sold to close those options and banked another 86% from the company. But that wasn’t all… 

Kevin thinks that Oshkosh (OSK) is ready to break out. He added a couple bull call spreads in this leading manufacturer of access equipment, specialty vehicles and truck bodies. The portfolio bought to open 3 December 85.00 Calls AND sold to open 3 December 95.00 Calls. If OSK gets to $95 by mid-December, the position will bring a 159% return. Read the full write-up for more on today’s moves.  

Surprise Trader: Closing out a busy week of buying in front of earnings season, Dave added iron ore mining company Cleveland Cliffs (CLF) on Friday. This Zacks Rank #2 (Buy) is coming off its first earnings surprise in the last three quarters and has a positive Earnings ESP of 6.77% for the upcoming report on July 19th before the bell. The editor feels another beat is on its way, so he added CLF with a 12.5% allocation.

Dave also sold Simply Good Foods (SMPL) today to make room for future moves. This food company -- which is focused on nutrition bars, ready-to-drink shakes, snacks and confectionary products – beat earnings a little over a week ago. This seemed like a great time to sell SMPL for an 11.9% return in less than three weeks. Learn more about these moves in the complete commentary. 

Value Investor: "Have you stayed the course with your investing?

"Have you remained in stocks over the last 10 years?

"This week ended with yet another record high in the major big cap indexes. The S&P 500 now has an average 10-year annual return of 14.7% as of the end of June.

"That's pretty impressive. If you double your money every 10 years with 7% return, that means people have been doubling their money every 5 years in this market." -- Tracey Ryniec

Have a Great Weekend!
Jim Giaquinto

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