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Earnings Season Has Finally Arrived

Jim Giaquinto

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Those Syrian/Russian fears that hurt the market yesterday sure didn’t last long! The major indices enjoyed a very respectable rally on Thursday due, in part, to another tweet from President Trump stating that bombs may not be falling as soon as previously expected. It was a different message than yesterday's tweet that missiles “will be coming” to Syria in response to that government’s alleged chemical-weapons attack on citizens over the weekend.

The Dow jumped by 1.21% on Thursday to 24,483.1, while the NASDAQ added 1.01% to 7140.3. The S&P is almost breakeven for the year after today’s advance of 0.83% to 2664. Heading into the final day of the week, stocks have been up in three of the past four sessions.

But not all of today’s rally can be attributed to the President’s twitter account. The editors and the market in general are like kids at Christmas in anticipation of earnings season. Some big banks will be kicking things off tomorrow; as a result, the financials were one of the best-performing spaces on Thursday. The quarter is expected to be a good one. But after the past few weeks, the biggest hope for earnings season is that it will put the market’s focus back on this strong economy and away from the day’s headlines.

"We’ll see earnings from JPMorgan Chase, Wells Fargo and Citigroup before the bell. The reports will likely set the stage for the trading day. If we can finally get some momentum, the market could be ready to break out of this trading range during next week’s flurry of earnings reports," said Dave Bartosiak in Surprise Trader.

In the portfolios, Blockchain Innovators picked up a company that you wouldn’t think is a blockchain play, while Options Trader bought a call in a logistics company that’s nearing its quarterly report. TAZR Trader thinks the S&P could rally in the short-term, so Kevin made a trio of moves in the session. Insider Trader and Technology Innovators also bought today in what turned out to be a busy session for the editors. Learn more below:

Today's Portfolio Highlights:

Blockchain Innovators: You probably don’t think of insurance giant UnitedHealth (UNH) as a blockchain play. But with so many companies experimenting with the technology, you’d be surprised how many fit Dave’s criteria for this portfolio. Case in point, UNH teamed up with several other health-related companies to launch a pilot program that uses blockchain to maintain data. It will study how this technology can be used to cut costs related to data management. This is just the kind of thing the editor is looking for, so he added UNH on Thursday. Learn more in the complete commentary.

Options Trader: We are less than two weeks away from the next earnings report for C.H. Robinson (CHRW), a third-party logistics company that beat the Zacks Consensus Estimate in the previous two quarters. Kevin is feeling pretty good about the report. He likes the look of the company’s chart and finds its fundamentals to be compelling, including a projected EPS growth rate that’s nearly 10% better than its highly-ranked industry. The editor bought to open an August 97.50 Call in CHRW on Thursday. See the full write-up for more specifics on this trade.

TAZR Trader: It’s all about being nimble in this market until earnings season delivers the verdict, according to Kevin. The editor believes the market could still move lower in the coming months, but in the short-term the S&P should rally up to 2710. Therefore, he gained more long exposure with the following three moves:

• Added another 5% to Micron (MU)
• Added a 10% position in Applied Materials (AMAT)
• Added a 10% position in the S&P 3X Bull ETF (SPXL)

Read the full write-up for more on these moves and Kevin’s agile ideas for this market full of opportunities.

Insider Trader: Shares of Cloudera (CLDR) fell by more than 30% last month after this data management vendor announced a reorganization of its sales force. Given this company’s subscription business model, investors didn’t like the news despite revenue jumping by 42% year-over-year. However, Tracey noticed that a director bought shares in CLDR earlier this week. The editor decided to take a chance on this Zacks Rank #2 (Buy) and added it today with a 10% allocation. She also sold Ethan Allen (ETH). Read the full write-up for more.

Technology Innovators: With the VIX moving lower, Brian Bolan thinks this is a great time to get fully leveraged. He bought today…he’ll buy tomorrow…and probably again on Monday. Today’s addition was Okta (OKTA), a software name that beat earnings expectations by 5 cents when it reported in early March. The company also raised its guidance for the next quarter, which moved the revenue outlook to between $78 million and $79 million from the earlier consensus of $75 million. Check out the full write-up for more on this buy and get ready for another addition tomorrow.

All the Best,
Jim Giaquinto

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