Finally, a Positive Week for December!

This shortened week saw the worst Christmas Eve session in history followed by the best post-Christmas Day performance ever. Add in one of the biggest intraday turnarounds in years, and we’re left with the first positive week in the month of December.

Who would’ve thought that on Monday!

The NASDAQ jumped approximately 4% over these three-and-a-half days, while the S&P and Dow each gained more than 2.5%. These performances didn’t make up for last week’s sharp declines of more than 7% across the major indices, but perhaps more importantly it provided a break from the dreary sentiment that has permeated the month.

Speaking of December, it’s still going to be horrible with the major indices each off by approximately 10% with one more day to go on New Year’s Eve.

This week centered on the Wednesday rally that had the Dow surge more than 1000 points. The following day’s epic, late-day rebound added another 200 points and increased hopes that the bottom of this sharp correction was finally reached. It’ll be a while before we can say that for certain, but fortunately there were no humongous selloffs on Friday to deter our newfound yet cautious optimism.

It was another crazy session today as the Dow dipped more than 150 points at its worst and rose over 200 at its best. The index settled with a loss of 0.33% (or about 76 points) to 23,062.4. The S&P took the same bumpy ride and finished with a slide of 0.12% to 2485.74. The NASDAQ actually finished with a slight gain of 0.08% to 6584.52.

Phew! The indices held onto most of the gains from Wednesday and Thursday, which feels like it would have been an impossible feat in the middle of the month given the market’s unbelievably sour mood.

Fortunately, we’re quickly coming to the end of this month and year. December was just a catastrophe, but 2018 will prove to be more interesting yet ultimately disappointing. We started with more new highs for stocks and seemed to be on track for a decent performance after an amazing 2017. But these last three months were more difficult than anyone could imagine.

As you can see, the editors were very busy on Friday with a heavy degree of tax loss harvesting in this penultimate session of 2018. A New Year means new strategies for the portfolios, so be prepared for a lot of fresh positions as we move past the correction and onto new opportunities.

What’s in store for 2019? If economic data continues to be strong and we can resolve at least a few of the market’s uncertainties, then stocks should be able to get back on track in the New Year.

Today's Portfolio Highlights:

Value Investor: Despite this positive week, stocks are still super cheap after the correction and provide fertile ground for value investors. On Friday, Tracey picked up truck manufacturer PACCAR (PCAR), which now enjoys all the classic value fundamentals after sliding 21% year-to-date. The company has beaten the Zacks Consensus Estimate for seven straight quarters and earnings are expected to rise 44% this year. Therefore, PCAR is one of those companies with the desirable combination of growth AND value. It also has a history of returning money to shareholders. The great cash flow and experienced management team has the editor thinking that PCAR will be a great position in the current environment. Read the full write-up for a lot more on this new pick.

Healthcare Innovators: The portfolio is getting back into a couple of names that got wrecked during the correction, and are now even more attractive. Shares of AxoGen (AXGN) plunged 45% after Kevin sold this nerve repair solutions developer in October for a tax-loss. Analysts expect growth of more than 40% in Q4 and 35% in 2019, and one bank just reiterated their $55 price target. A recent short-seller attack has pulled this innovative name under $20… and the editor pounced.

Longer-term subscribers know how much Kevin appreciates Align Technology (ALGN), the maker of Invisalign teeth straighteners. He was certainly disappointed when having to sell the name this month for a 35% loss – after a 148% gain earlier in the year -- but several positive catalysts have lined up now, including a potential double-bottom on the chart. Plus, it is no longer a Zacks Rank #4 (Sell) and is still expected to grow sales by 25%-30% in 2019 and EPS by 20-25%. Time to get back in! Read a lot more about these moves in the full write-up.

Technology Innovators: Has the market reached bottom or not? No one knows for sure, but Brian Bolan is making a bet that it has. The editor added a lot of leverage on Friday by picking up FANG+ Index 3X Leveraged ETN (FNGU). This note gives the portfolio exposure to some of the biggest names in technology. How big? It holds positions in all FAANGs (for course), as well as Baidu, NVIDIA, Alibaba, Tesla and Twitter. Each have a 10% position. If the bottom is in, then Brian sees this as being a huge winner for the service. However, he suggests starting with a smaller position since it will plummet if there’s more downside. You could always add more later. Read the full write-up for more.

Momentum Trader: Cloud-based Attunity (ATTU) jumped to nearly $24 earlier this month from $9 in April, but has since dipped under its 50-day moving average. Last time this company moved below that MA, it jumped sharply higher afterward. Dave thinks it’s worth a shot to see if history repeats itself. It’s also worth noting that ATTU is part of a space in the top 12% of the Zacks Industry Rank. The editor put the portfolio’s remaining cash position into the name. Read the full write-up for more.

Have a Great Weekend,
Jim Giaquinto

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