Stocks Not in a Bouncy Mood Yet

We were all hoping for a good-sized rebound after yesterday’s sharp selloff, but it never materialized as morning gains gave way to more losses for two of the major indices.

The beleaguered NASDAQ outperformed its counterparts with a breakeven session. Technically, it was up by 0.01 of a point, or 0%. That kind of “gain” is usually not worth mentioning, but this index needs all the good news it can get these days since tech hit the wall.

Speaking of ‘hitting the wall’, Apple was down another 1% on Tuesday, adding to yesterday’s 5% plunge on news of a supplier cutting its outlook. However, Facebook and Netflix managed meager gains in the session.

The Dow dropped 0.40% (or about 100 points) to 25,286.49, while the S&P slipped 0.15% to 2722.18. All of the indices started the day in the green, but couldn’t hold on. In addition to the plethora of uncertainties out there right now, stocks are also paying close attention to oil. Crude has slipped for a record 12 straight days, and Tuesday’s drop was more than 7%.

A potential bright spot for the market (and you should take this with several grains of salt) is that the U.S. and China appear to be talking trade once again. Apparently, Treasury Secretary Mnuchin and China’s Vice Premier Liu He had a conversion, which comes a little more than two weeks away from President Trump’s meeting with Chinese President Xi Jinping at the G-20 in Argentina.

The market would probably consider a resolution on trade to be just about the best news possible. It would put an end to the biggest uncertainty facing the economy right now and give stocks the shot in the arm it needs to leave October's correction in the dust. The big problem, of course, is that talks do not guarantee a deal… and optimism that this issue can be resolved sooner rather than later is not very high at the moment.

But such meetings are good first steps. Fingers crossed!

Today's Portfolio Highlights:

Momentum Trader: Eleven names made it through the portfolio’s screen on Tuesday morning, which Dave takes as a good sign for the market. These stocks have positive estimate revisions and are nearing their 52-week highs. One of those names was hotel company Belmond (BEL), which the editor added today. As part of the hotel industry, it is in the top 35% of the Zacks Industry Rank. Read more about this new addition in the full write-up.

Stocks Under $10: Whenever you get a second chance in investing… you should take it! That’s what Brian Bolan did today with On Deck Capital (ONDK), a Zacks Rank #1 (Strong Buy) that uses a big data, analytic model to source, underwrite and fund loans to small businesses. The editor thought about buying it before its strong quarterly report, but he didn’t... and had to watch it take off. But now it has pulled back about 10%. Brian isn’t letting this opportunity pass by again, especially since this space appears to be heating up right now. ONDK gives the portfolio a chance to get some exposure to the financial sector without buying the beleaguered banks. Read more about this new buy in the full write-up.

Surprise Trader: With earnings season coming to a close, Dave added another retailer to the mix on Tuesday. And this one needs no introduction! The new buy is Target (TGT), which has a positive Earnings ESP for the quarter coming before the bell next Tuesday. Analysts are expecting year-over-year EPS growth of 20.8% and sales growth of 6.75%. The editor added this Zacks Rank #2 (Buy) with a 12.5% allocation. Read the complete commentary for more.

Zacks Short List: The portfolio replaced three names in this week's adjustment and cashed in a double digit winner. The stocks that were short-covered include:

• Ctrip.com Int'l (CTRP, +16.4%)
• Teradata (TDC)
• Ionis Pharmaceuticals (IONS)

The new buys that replaced these names are:

• Agnico Eagle Mines (AEM)
• GoDaddy (GDDY)
• Schlumberger (SLB)

Learn more about this emotion-free portfolio that takes advantage of falling and volatile markets by reading the Short List Trader Guide.

Have a Good Evening,
Jim Giaquinto

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