The Dow fought hard for its 5-point gain on Thursday. The major indices each began the session by plunging amid pessimistic expectations for trade talks between the U.S. and China. At its worst point of the day, the Dow was near a 400-point selloff.
However, once the index dipped below its 200-day moving average, the market circled its wagons and started a comeback. In the end, the Dow came all the way back to post a scant 0.02% (or 5.17-point) advance to 23930.2, which was enough to end a four-day losing streak.
The other two major indices took similar paths but couldn't finish on the positive side. The S&P also fell beneath its 200-day and then rebounded, but it still lost 0.23% to 2629.7. The NASDAQ was off 0.18% to 7088.2 after its own comeback.
“It’s a really tough environment out there. This market is acting like a crazy person in a padded cell bouncing off the walls. Its back and forth, back and forth, bouncing off the walls and not going anywhere. Today’s low will be important to hold or I fear stocks could take a tumble,” said Jeremy in Counterstrike (more from this portfolio in the highlights section).
In addition to everything the market has to deal with right now (trade, rising rates, Iran, earnings season, etc.), tomorrow also brings the big Employment Situation Report. You probably remember that last month’s reading was surprisingly soft with only 103,000 jobs being added, which was well below expectations and the smallest increase since the fall of last year.
Today's Portfolio Highlights:
ETF Investor: Investors are so concerned with rising rates that they are ignoring strong housing data. Therefore, Neena thought it was prudent to reduce the portfolio’s exposure to housing by selling PowerShares Dynamic Building & Construction ETF (PKB). The fund was originally bought as a play on President Trump’s infrastructure plan, but there hasn’t been much news about that lately. The editor would be open to revisiting PKB when we get more details. For now, she’ll enjoy a nice 13.4% return. Read more in the full write-up.
Technology Innovators: As you’ve probably heard in his other portfolios, Brian Bolan is feeling better about the market these days and looking to get more aggressive. On Thursday, he decided to pick up Zayo Group (ZAYO) just hours before its earnings announcement after the bell. The company is a provider of bandwidth infrastructure services, which means the portfolio already has one of its competitors in Bandwidth (BAND). The editor sees a lot of potential in this area. Read the full write-up for more on this new addition.
Counterstrike: "Yesterday’s selling continued into the morning hours as the S&P once again tested the 200-day. Price actually fell below the indicator and it looked like today was going to be big trouble. But the late morning found buying that changed the tone. Before you knew it, we were 30 handles off the lows. I thought to myself, there has to be some China trade news coming out. Sure enough, the following headline hit the wires:
"'White House economist Calabria: First day of talks with China have been pretty positive.'
"This changed the tone of the day. Stocks continued higher and the wild back and forth action looks to continue. In my eyes the bears failed once again and the bulls could really turn things higher from here. This market has been very confusing, but this failed sell off was pretty positive." -- Jeremy Mullin
All the Best,
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