Dow, S&P Now in the Red for 2018
It’s not over yet. Yesterday’s sharp intraday bounceback did NOT signal a bottom in this correction as many were hoping. Instead, stocks seemed to find another gear in their descent on Wednesday, leaving two of the major indices in the red for 2018.
The major indices accelerated their losses into the close, which was almost a complete opposite of Tuesday. When the closing bell had finally rung, the Dow plunged 2.41% (or 608 points) to 24,583.42. It started the year at 24,719.2. Ironically, the index began the day in the green due mainly to a strong report from Boeing.
The S&P was even worse with a drop of 3.09% to 2656.1, compared to where it started the year at 2673.6. The Dow and S&P were up more than 25% and 19%, respectively, in 2017.
But the absolute worst performer of the day among the major indices was the NASDAQ, which was off 4.43% (or about 329 points) to 7,108.4. Tech’s fall from grace is one of the market’s many issues right now. The FANGs had a horrible session. The best performance was a 3.43% drop from Apple, while the worst was a 9.4% plunge from Netflix. That makes tomorrow’s reports from Amazon and Alphabet all the more important.
Earnings season is having no impact on the market right now…at least not a good one. The concern seems to be that the global malaise has finally come home to the U.S. economy. And when you mix that with nail-biting over rising rates, trade, the ongoing Saudi Arabia situation and the tech wreck; it leaves a fearful market that’s jumping at its own shadow.
The funny thing about fear, though, is that it can sometimes be the precursor of a rebound…and this rebound should be a big one whenever it comes. Several of the editors are putting together watchlists to pick up quality stocks at oversold levels. But it would be great to see the market reach a bottom here soon. Let’s hope it arrives before this horrible month of October comes to an end.
"Try not to get too low on the lows here. It felt like the flush out that the market needed. As painful as this is, this is what healthy markets do. We need to see an equally large positive move to call this move lower over," said Dave Bartosiak, editor of Surprise Trader, Momentum Trader and Blockchain Innovators.
Today's Portfolio Highlights:
Surprise Trader: You may think that adding public utility Ameren (AEE) is a defensive move. And it is! But it’s also a lot more. The company has a very solid Earnings ESP of 8.6% for the quarter coming a week from today. This Zacks Rank #1 (Strong Buy) has beaten the Zacks Consensus Estimate for three straight quarters, and Dave expects that AEE will do it again. And yes, the stock will help insulate the portfolio if the market continues to move lower. It was added today with a 12.5% allocation. Read the full write-up for more.
TAZR Trader: Kevin was certainly on point this Monday when he picked up ProShares UltraPro Short QQQ ETF (SQQQ). The editor felt that another downturn was coming for the NASDAQ 100…and that’s exactly what we got today. As a result, this portfolio had the only position that gained in the double digits on an otherwise brutal day. SQQQ was up 13.8%.
Short List: It’s times like these when this portfolio really shines. As stated during every weekly adjustment, the Short List is an emotion-free service that “takes advantage of falling and volatile markets”. Sound familiar? That’s what happened today, which is why the portfolio had four positions on the top movers list. The profits included BioMarin Pharmaceuticals (BMRN, +7.34%), Ionis Pharmaceuticals (IONS, +5.79%), Tencent (TCEHY, +5.68%) and QUALCOMM (QCOM, +5.66%).
Counterstrike: "We just hit our Fib targets I have been looking for at the 2660 area. It's time to start buying some of these crazy oversold names. I have my list ready and our patience should pay off this week.
"Tomorrow is the day I'll be ready to buy, especially if the S&P can get to the flush below the 2660 area and bounce back aggressively. I will be dipping into my list and buying a handful of stocks, for both Counterstrike and myself. Patience has allowed us to sit on cash and take minimal losers over the last month. We are now positioned to pounce when this market finally capitulates, which I believe could come tomorrow or Friday.
"There are a lot of oversold stocks, the key is picking the right ones that don’t have too much technical damage. If this sell off continues into the end of the year, we will likely close the year down over 10%. However, I believe that we will have a dead cat bounce at the very least and tomorrow might be the day to dip the toes in the water." -- Jeremy Mullin
All the Best,
Jim Giaquinto
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