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The Market is All Packed for Buenos Aires

It’s no surprise that the market would take a break after such a sharp rally as yesterday’s, but for a while it looked like stocks would finish another session in the green. Instead, the major indices lost steam in the final hour and finished with slight losses.

The NASDAQ slipped 0.25% to 7273.08 and the S&P was off 0.22% to 2737.76. The Dow declined 0.11% to 25,338.84. Unfortunately, these performances broke several winning streaks, which have been in short supply the last couple of months. However, the indices still go into Friday’s session with hefty gains for the week and in a good position to end a couple bad weeks for stocks.

The Fed minutes released this afternoon didn’t carry the same punch as did Fed Chair Powell’s speech on Wednesday. Basically, the officials agree that a rate hike in December is warranted, but will let the data determine any further increases in 2019. It was basically news that the market had already rallied on.

So that leaves the G-20 in Argentina as the next big event that we will be watching. President Trump lifted off this morning to attend the summit, which means the long-awaited meeting with China’s President Xi is finally about to take place. Trump wants everyone to know that he would like to do “something” with China, but is perfectly fine staying the current course if they’re not cooperative.

The market is not expecting a comprehensive deal that puts an end to all the trade issues between the two countries. (That would be great, though!) However, they are hoping for something positive to come from this meeting. An agreement to delay any additional tariffs and plans for further negotiations would suit everyone just fine. And it would put the market in a good position to rally out 2018 and recover a decent amount of the losses from the recent correction.

Today's Portfolio Highlights:

Surprise Trader:
It may not feel like earnings season, but there are still companies scheduled to report. One of them is a mainstay of Dave’s screen for this portfolio: Restoration Hardware (RH). The luxury furniture company has a positive Earnings ESP of 1.76% for the report coming after the bell on Tuesday. Analysts are looking for 22% earnings growth. The company has beaten for nine straight quarters and has an average surprise of more than 14% over the past four. The editor added RH on Thursday with a 12.5% allocation. Read the full write-up for more.

Counterstrike: A positive outcome at this weekend’s G-20 could mean BIG things for the market. Jeremy is actually optimistic that something worthwhile will happen, so he got out of his cash heavy position on Thursday with these three buys:

• CyberArk Software (CYBR): This provider of IT security solutions didn’t benefit much from a strong quarter, but tonight’s report from Palo Alto Networks (PANW) may do the trick now that the market has stopped its freefall.

• On Deck Capital (ONDK): This online platform operator for small business lending was recently upgraded by a major firm and reported a strong quarter earlier this month.

• Velocityshares 3X Long Crude Oil ETN (UWT): The editor believes that crude oil is nearing a short-term bottom, so he’s giving this fund another chance in the leadup to the G-20.

Jeremy allocated 10% each for CYBR and ONDK, while allocating 6% to UWT. Read the complete commentary for more details on each of these moves.

Healthcare Innovators: Mesa Labs (MLAB) moved past $216 today and Kevin thought this was high enough to sell the small-cap med-tech and take a gain of 18%. In calmer times, the editor wouldn’t hesitate to hold this name beyond his first target of $220. But he still considers this to be a difficult market right now that’s tough to call and is forcing large investors to play it safe in fear of a possible slowdown. Read the complete commentary for more, including important updates on three other positions in the sell alert: Align Tech (ALGN), Global Blood Therapeutics (GBT), and Intellia Therapeutics (NTLA).

Momentum Trader: Leisure & recreation retailers are doing very well this earnings season. In fact, the space is in the Top 10% of the Zacks Industry Rank. Dave hopes the trend continues with today’s addition of Clarus (CLAR), a Zacks Rank #2 (Buy) outdoor equipment business that makes apparel for activities like climbing, backpacking and skiing. The company beat by more than 40% in its most recent quarter and is coming off its 50-day moving average. The editor added it on Thursday with a 12.5% allocation. Read the complete commentary for more.

Options Trader: "The market remains optimistic on trade talks between the U.S. and China at this week’s G20 summit. President Trump and President Xi are expected to talk trade over dinner on Saturday. In the meantime, both governments have been working hard behind the scenes in preparation for this.

"The market is clearly getting more and more optimistic that something good will happen between the two at this week’s meeting. In fact, President Trump even remarked today that he is ‘close to doing something with China on trade’. Granted, he followed that up with ‘I don’t know that I want to’, but many dismissed that latter comment as negotiating rhetoric.

"Nonetheless, expectations are running high going into their meeting. So we definitely need to hear some good news this weekend to keep this rally going."
-- Kevin Matras

All the Best,
Jim Giaquinto

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