SPECIAL ALERT: The latest episode of the Zacks Ultimate Strategy Session will be available for viewing no later than this Wednesday, October 7. Kevin Matras, Jeremy Mullin, Tracey Ryniec, Neena Mishra, CFA, FRM, Dan Laboe and Sheraz Mian will cover the investment landscape from several angles in this informative event.
Don’t miss your chance to hear:
▪ Tracey and Neena Agree to Disagree on whether the S&P 500 will retest its March lows
▪ Kevin Matras answers your questions in Zacks Mailbag
▪ Sheraz and Dan choose one portfolio to give feedback for improvement
▪ And much more
So be sure to mark your calendar then log on to Zacks.com and bookmark this page.
We had a great start to the week on Monday as the market breathed a sigh of relief that President Trump appears to be improving in his fight with the coronavirus.
In fact, POTUS might be back at home in the White House by the time you’re reading this commentary. He was admitted to the Walter Reed Medical Center after the close on Friday as a precautionary measure.
The President getting infected with covid is one of the biggest stories in a year FULL of big stories. It would be a real blessing if this headline could be cleared up quickly. The market has enough uncertainties to deal with right now, so it rallied hard today on the possibility that something on its laundry list of question marks could be resolved.
The NASDAQ advanced 2.32% (or around 257 points) to 11,332.49. All of the FAANGs jumped 1.8% or more on Monday, led by Netflix (NFLX, +3.5%) and Apple (AAPL, +3.08).
The S&P rose 1.8% to 3408.60, while the Dow increased 1.68% (or around 465 points) to 28,148.64. These indices finally broke their four-week losing streaks on Friday by rising 1.5% and 1.9%, respectively, over the five days.
The NASDAQ has back-to-back weekly advances of 1.5% and 1.1%.
Now the market is hoping that perhaps the President’s sickness could jump start a stimulus compromise that seems to be going nowhere. Speaker Pelosi and Treasury Secretary Mnuchin are still talking… but have nothing to show for it yet.
You’d think that millions of Americans losing their financial lifeline amid an unprecedented pandemic would be enough to get Washington to act. But that was weeks ago… and they didn’t. But hope springs eternal. Maybe they’ll get something done this time.
One of the reasons they’re taking their time with new stimulus is that the economy is doing rather well… all things considered.
For example, the ISM Services index reached 57.8 for September, which was almost a full percentage point better than August and ahead of expectations. It was also the fourth straight month of expansion (over 50).
Last week, the ISM’s manufacturing index had its fifth straight month of growth.
Today’s Portfolio Highlights:
Surprise Trader: It’s about to get a whole lot busier in this portfolio with earnings season right around the corner! Dave got things started on Monday by adding Sleep Number (SNBR), a mattress company and part of the highly-ranked Furniture space (Top 10% of Zacks Industry Rank). This Zacks Rank #2 (Buy) has beaten earnings estimates for seven straight quarters now and topped by 25% last time. Looking forward, it has a positive Earnings ESP of 31.16% for the report coming after the bell on Wednesday, October 14. The editor added SNBR on Monday with a 12.5% allocation. Meanwhile, in order to free up some space for the deluge of buys to come, Dave also sold D.R. Horton (DHI) today and banked a nice 19.8% return in less than three months. Read the full write-up for more on today’s moves.
Commodity Innovators: You can’t keep coffee down! Prices slumped more than 20% from recent highs due to a supply glut and coronavirus shutdowns. But Jeremy notes that this commodity usually bounces off these levels. Therefore, he bought IPath Series B Bloomberg Coffee Subindex Total Return ETN (JO) on Monday. You may remember that this fund was recently in the portfolio and brought a nearly 10% return when sold in August. Well, JO is now cheaper than when the editor first picked it up in February, and he expects an even bigger return this time. Meanwhile, the service sold Aberdeen Standard Physical Palladium Shares ETF (PALL) for an impressive 27.2% return in about seven months, as well as Invesco CurrencyShares Euro Trust (FXE) for a 4% profit. Read the complete commentary for more on today’s action.
Black Box Trader: The four stocks that exited the portfolio this week were all positive, including a double-digit winner. Those positions that were sold today included:
▪ DICK’S Sporting Goods (DKS, +15.3%)
▪ Sealed Air Corp. (SEE, +7.8%)
▪ Lennar Corp. (LEN, +5.5%)
▪ BMC Stock Holdings (BMCH, +2.8%)
The new buys that replaced these names were:
▪ Jabil (JBL)
▪ LKQ Corp. (LKQ)
▪ Mattel (MAT)
▪ Sportsman’s Warehouse (SPWH)
Read the Black Box Trader’s Guide to learn more about this computer-driven service designed to take the emotion out of investing.
Technology Innovators: “This is not a political statement, but politics is getting too intertwined into everything. Too many people are interpreting the market moves as a sign that their political party is destined to win in a month. The simple fact is that no one knows who will win, not the experts, not the market, not you or me. We just have to position ourselves as best we can with the information we have.
“There is tons of talk about the next stimulus package. Airlines demand it, hotels need it as well and those are the businesses that have survived so far. The American people that are not allowed to work should be first in line and should get fully compensated. If there was ever a reason to hate politics, that would be it.
“Things have really turned around and they have done so quickly. The first word of Trump with COVID saw a huge downturn. Now he is leaving the hospital after a few days and the market loves it. All the major indices ran all day and a solid performance at the close made it look that much better.” — Brian Bolan
Have a Good Evening,
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.