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Knocking on the Door of New Highs

Jim Giaquinto

The rally on Thursday ran out of steam approaching the finish line, but it wasn’t enough to derail the Dow’s winning streak or the indices’ march to new highs.  

Tech had a nice turnaround after getting beaten up earlier in the week. As a result, the NASDAQ enjoyed the best performance today with an advance of 0.30% (or almost 25 points) to 8194.47.

The S&P rose 0.29% to 3009.57, while the Dow was up 0.17% (or about 45 points) to 27,182.45.

These indices are both a little more than 0.5% from new highs, while the NASDAQ remains over 1.5% away.

The Dow was up approximately 150 points at its best on Thursday, but was still able to stretch its impressive winning run to 7 days.

Last Thursday, the U.S. and China agreed to restart high-level trade negotiations in early October. Since then, the market has been cautiously positive that we might be getting back on the road to a deal.

Yesterday, President Trump said he would delay an increase in tariffs for a couple weeks as a gesture of good will heading into those talks.

Early rumors of an interim deal proved to be false, which led to some sharp volatility this morning before resuming the uptrend.  

But on the other hand, the President said he would be open to an interim agreement after the market closed, though he would prefer a comprehensive one. So who knows?

The session also saw the ECB cut interest rates and initiate a bond-buying program. The move didn’t have much of an impact on our market except to whet investors’ appetites for our own central bank’s meeting next week, which is widely expected to include another rate cut.

So, a couple of the indices came pretty close to reaching new highs today. Will they get there tomorrow or wait and see what the Fed has to say next week?

Today's Portfolio Highlights:

Insider Trader: The portfolio gained some small-cap exposure on Thursday by adding specialty retailer Vera Bradley (VRA) and enterprise software company Domo (DOMO). VRA fell victim to the “overdone” selloff in small-cap retail of late, but its shares are still attractive. The CEO and CFO both added shares in recent days. DOMO has experienced some “growing pains” that forced it to cut its full-year guidance, but the CEO recently bought shares in what Tracey considers to be a “confidence” buy. The editor added VRA with a 5% allocation, while Domo enters with 7% to 9%. The portfolio also cashed in a couple double-digit winners today by selling Mosaic (MOS, +22.9%) and Tanger (SKT, +15.6%). Both stocks were added less than a month ago! Read the full write-up for more on all of today’s moves.   

Technology Innovators: If Xperi (XPER) could just stage a breakout, then Brian sees enough of a short position (8.3%) that would squeeze the stock past $23. The editor is willing to take that chance with this Zacks Rank #1 (Strong Buy) technology services company that enjoys Zacks Style Scores of ‘A’ for Value AND Growth. The stock has also beaten the Zacks Consensus Estimate by double digits in three of the last four quarters with an average beat of nearly 15%. Read the complete commentary for a lot more on this new addition.

All the Best,
Jim Giaquinto

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