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Good Feelings for Good Dealings

Jim Giaquinto

Deals are sprouting up all over the place! More specifically, it’s the hope for deals. Nevertheless, the major indices each soared by more than 1% on Tuesday after what’s being called a “tentative” agreement in Congress that would avert another government shutdown.

The Dow, understandably, gained the most with a jump of nearly 1.5% (or about 372 points) to 25,425.76. The NASDAQ was right behind with an advance of 1.46% (or around 106 points) to 7414.62. The S&P rose 1.29% to 2744.73, closing above its 200-day moving average for the first time since early December right before that month moved us into a correction.

President Trump has already let us know that he’s not exactly happy about the agreement between the aisles, which puts less money toward a border wall than desired. However, he didn’t say he would oppose it.

The market doesn’t really care what’s in the deal; it just wants to keep the government from shutting down again only a few weeks after the longest shutdown in history. The market wasn’t hurt the last time the government closed its doors, but no one knows how long that would last if it happened again.

And since we’re feeling better about this issue… why not take an optimistic tone toward trade as well? The next round of negotiations between the U.S. and China kicked off today. Treasury Secretary Steven Mnuchin and U.S. Trade Representative Robert Lighthizer are expected to participate later in the week. President Trump has reluctantly said the early March deadline could be extended if necessary.

Now we just need these good feelings to result in signatures on real deals.

Today's Portfolio Highlights:

Counterstrike: In its last quarterly release, CyberArk Software (CYBR) reported strong results, but it didn’t help the stock at all. Nevertheless, Jeremy had faith in this provider of IT security solutions, so he added it in late November and has since watched it jump double digits. However, it’s time for CYBR to report again later this week, and the editor feels that the downside risk is now greater than the upside reward. Therefore, he sold the stock on Tuesday for a 25.3% return in less than 3 months.

On the other hand, Plantronics (PLT) has already reported earnings, which included an impressive earnings beat of 119% and a guide higher. This global leader in audio communications looks to be in the midst of a long-term turnaround, as evidenced by earnings estimates rising enough to make the stock a Zacks Rank #1 (Strong Buy). PLT has recovered after getting cut in half last year, and Jeremy thinks it can grind into the high $50s… though his shorter-term target is just under $50. The editor added PLT today with an 8% allocation. Read the full write-up for all the specifics on this new buy, including a look at its chart.

Surprise Trader: Today’s addition was GasLog (GLOG), a Zacks Rank #2 (Buy) that owns and manages liquefied natural gas carriers. The stock has a robust Earnings ESP of 17.7% for the quarter coming in less than 48 hours (before the bell on Thursday). Dave is also feeling pretty good about a beat because of the divergence between the rising earnings estimates and slumping stock price. He put the portfolio's remaining cash into GLOG. Read the full write-up for more.

Large-Cap Trader: Shares of Ubiquiti Networks (UBNT) had a nice run after a strong earnings report. However, this telecom company is not participating in today’s sharp rally higher. John decided this was a great time to sell UBNT and take a gain of 24.6% in just a little over a month. “There is nothing wrong with a nice profit that shows up early,” said the editor. He also sold TE Connectivity (TEL) for a 1.2% return. The plan is to hold off on replacing these stocks until we get a negative session.

Stocks Under $10: Shares of Internap Corporation (INAP) are having a good year so far, rising north of $5.50 from around $4 in just a few weeks. Brian Bolan thinks this data center/IT services play has bottomed out and could be poised for more improvement from here. The editor thinks INAP could be a stock that the portfolio holds for a long time. Read the complete commentary for more on this new buy.

Zacks Short List:
This week's adjustment switched up half of the portfolio. The stocks that were short-covered include:

• Whiting Petroleum (WLL, +4.6%)
• National Oilwell Varco (NOV, +3.8%)
• Apache Corp. (APA, +2.5%)
• Ctrip.com Int'l (CTRP)
• Cheniere Energy (LNG)

The new buys that replaced these names are:

• New York Times (NYT)
• Shutterfly (SFLY)
• Weibo Corp. (WB)
• ConocoPhillips (COP)
• Occidental Petroleum (OXY)

Learn more about this emotion-free portfolio that takes advantage of falling and volatile markets by reading the Short List Trader Guide.

All the Best,
Jim Giaquinto

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