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Comeback Gives S&P an 8-Session Winning Streak

Jim Giaquinto

Remember, the latest episode of the Zacks Ultimate Strategy Session will be available for viewing no later than this Wednesday, April 10. Kevin Matras, Kevin Cook, Dr. John Blank and Sheraz Mian will cover the investment landscape from several angles in this informative event.

Don’t miss your chance to hear:

• Sheraz and John Agree to Disagree on whether the end of the U.S. – China trade war will spark a new leg in the bull market
• Kevin Matras answers your questions in Zacks Mailbag
• Sheraz and Kevin Cook 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.

After gaining approximately 2% or more last week, it’s no surprise that the major indices would be a bit groggy returning from the weekend. But despite a negative open, two of them fought all the way back throughout the session and finished slightly in the green.

The S&P’s advance of 0.10% (or a little over 3 points) to 2895.77 may not seem very impressive… because it’s not. But the index's 8-day winning streak is extremely impressive. Furthermore, it continues to tip-toe its way to 2900, which would be about 30 points away from a new all-time high.

The NASDAQ had the best performance of the day with a rise of 0.19% to 7953.88. This index was easily the big winner last week with a rise of 2.7% due in large part to the semiconductor space getting hot amid positive trade news.

But the Dow was again hurt by Boeing, which saw its rating cut to Neutral at a major brokerage. The airplane maker dropped 4.4% on the day, which took a big chunk out of the price-weighted index given BA’s huge influence. As a result, the Dow’s three-day winning run came to an end as it slipped 0.32% (or nearly 84 points) to 26,341.02. However, it came well off its lows by the close.

Last week’s strong performance was all about positive sentiment from the trade talks with China… plus a lot of help on Friday from a strong jobs report. Despite all the good vibes, we’re still waiting on an agreement, and could be waiting for weeks longer according to President Trump (who said on Friday that we should know whether or not there’s a deal sometime “over the next four weeks”).

But we won’t have to wait that long for some potentially market-moving news. Earnings season is just about ready to begin! Unfortunately, we’re expecting a pretty rough time for the market, especially when compared to last year. However, the best thing about low bars is that they’re a whole lot easier to overcome, so let’s just wait and see what happens.

Today's Portfolio Highlights:

Insider Trader:
It’s always a good sign when insiders buy shares at or near new highs. Such was the case at Costco (COST), where a director bought 3,000 shares earlier this month. It was the first open market purchase in the membership warehouse since records began in 2003. Tracey considers this to be a very bullish sign, especially since insider buying at these big, older retailers is rare. The editor is looking for big cap exposure in the portfolio, so it was a no-brainer to add COST on Monday with a 10% allocation despite the stock hitting a new all-time high today. The portfolio still has some cash on the sidelines if another good opportunity comes up. Read the full write-up for a lot more on COST.

Technology Innovators: The earnings history for MondoDB (MDB) is “a thing of beauty”, according to Brian Bolan. Why? Because not only did this business intelligence software company beat the Zacks Consensus Estimate in the past four straight quarters, but each of those surprises were better than the one before. The editor calls that “the definition of building earnings momentum”. Most recently, it reported a beat-and-raise quarter in mid-March, which helped earnings estimates rise enough to make MDB a Zacks Rank #1 (Strong Buy). With margins improving, Brian thinks this stock could be profitable by year’s end and be a long-term holding in the portfolio. Read the complete commentary for a lot more on this new addition.

Black Box Trader: More than half of the portfolio was replaced in this week’s adjustment and most of the departing stocks were positive. The positions that were sold today include:

• Mallinckrodt plc (MNK, +10%)
• Target (TGT, +5.4%)
• WellCare Health (WCG, +4.9%)
• Tenet Healthcare (THC, +3.8%)
• Anthem (ANTM, +0.3%)
• Rent-A-Center (RCII)

The new buys that replaced these names are:

• Devon Energy (DVN)
• Diebold (DBD)
• Live Nation Entertainment (LYV)
• Principal Financial Group (PFG)
• ProPetro Holding Corp. (PUMP)
• Voya Financial (VOYA)

Read the Black Box Trader's Guide to learn more about this computer-driven service designed to take the emotion out of investing.

All the Best,
Jim Giaquinto

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