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Dow Closes at Another New High

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Jim Giaquinto
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Remember, we need your input to make next week’s new Zacks Ultimate Strategy Session episode the best it can be. There are two ways you can participate:

1) Zacks Mailbag: In this regular segment, Sheraz Mian will answer your questions ranging from current market conditions, general investing wisdom, usage of the Zacks Rank or any resources of Zacks.com and more. Pretty much anything goes.

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Neena Mishra, CFA, FRM, and Ryan McQueeney will review a customer portfolio to give feedback for improvement. No need to send us personal information such as dollar value of holdings. Simply email us with all of the tickers you own.

Just make sure to email your submissions for either one, or both, by Thursday morning, October 4. Email now to mailbag@zacks.com.

A strong afternoon rally faded late in Wednesday’s session, but all of the major indices still finished with advances. And since the Dow was already at a new high when the session began, it made even more history when the closing bell rang.

The Dow finished with a gain of 0.20% (or about 54 points) to another record of 26,828.39. At its best point in the day though, the index was up well over 100 points and hit a new intraday high of 26,951.81. So that makes 5 straight days in the green with the last 2 days making headlines.

The S&P looked like it would join its counterpart at the top of the mountain over 2930.75, but it saw the steepest decline and could only muster an advance of 0.07% to 2925.51. The NASDAQ is back over 8000 with a jump of 0.32% to 8025.08.

The small caps bounced back on Wednesday after a few rough sessions that had some folks worried. But for today, the Russell 2000 had the biggest percentage advance of 0.92% to 1671.29.

The economy was showing off again as the ADP report said employers added 230,000 jobs in September, which crushed expectations and bounced back from last month’s soft report. ISM Services also outperformed with a reading of 61.6 (remember that 50 or more is considered positive).

Ironically but not surprisingly, these strong readings were likely a big factor in why the market lost steam in the session.

“The worry is inflation will come with a hot economy, which will lead to more rate hikes. The market is pricing in the possibility the Fed acts quickly to raise rates to calm the economy,” said Jeremy in Counterstrike.

The big Employment Situation Report from the BLS is scheduled for Friday. It will be interesting to see how the market reacts to that number.

Today's Portfolio Highlights:

Momentum Trader: It’s too bad we can’t legally just print up some money...or can we? In a way, Dave thinks he can do just that by adding ExOne (XONE) to the portfolio. This Zacks Rank #2 (Buy) provides 3D printing machines and printed products to industrial customers, which means its part of a space (Manufacturing – Print) in the top 2% of the Zacks Industry Rank. The editor liked to see shares rally after its last earnings report, but he was especially impressed that an intraday dip near the 50-day MA yesterday was met with buying. He thinks a breakout is in the making and added XONE with a 12.2% allocation. Read the full write-up for more on today’s moves.

Home Run Investor: Our houses are getting smarter and smarter these days, which means Control4 Corp. (CTRL) is in a hot space where demand will likely be strong for years to come. This Zacks Rank #1 (Strong Buy) provides automation and control solutions for the connected home. The company has an enviable history of beating the Zacks Consensus Estimate, but Brian Bolan was most attracted to the size of those surprises. The past four quarters averaged a beat of 33%! The editor also likes CTRL’s metrics, including its valuation, growth potential and margins. He added the stock on Wednesday and believes it could be a long-term performer for the portfolio. See the full write-up for a lot more on this new addition.

ETF Investor: The top performing sector in the recently-completed third quarter was NOT technology or consumer discretionary. It was healthcare! Neena says this space still looks attractive when it comes to valuation and earnings momentum, which prompted the editor to added Vanguard Health Care ETF (VHT) on Wednesday. This popular and inexpensive fund counts pharmaceuticals, biotech and healthcare equipment as its top 3 industry allocations, while Johnson & Johnson, UnitedHealth and Pfizer are the top three holdings. Read more about this new buy in the full write-up.

All the Best,
Jim Giaquinto

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