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Market Takes a Well-Deserved Rest

Jim Giaquinto
·6 min read
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After jumping double-digits so far in November and setting new all-time records; it was a good time for the market to take a little rest on Tuesday.

The Dow slipped 0.56% (or about 167 points) today to 29,783. 35, while the S&P was off 0.48% to 3609.53.

Both of these indices reached new all-time highs in yesterday’s session, while soaring by more than 12% and over 10%, respectively, thus far this month.

The NASDAQ had the narrowest loss of the day with a dip of only 0.21% (or under 25 points) to 11,899.34.

The FAANGs didn’t do much in the session, though Netflix (NFLX) and Amazon (AMZN) advanced slightly by 0.32% and 0.15%, respectively.

However, the big star on Tuesday was Tesla (TSLA), which soared 8.2% on an otherwise down day after news that it was finally joining the S&P. The doors are opening for this pioneering electric car company on December 21.

The past two Mondays have seen encouraging vaccine data that has facilitated this month’s strong gains. Yesterday, Moderna (MRNA) said its treatment was over 94% effective in preventing the virus.

A week earlier, Pfizer (PFE) and its partner announced a vaccine candidate that was 90% effective.

The market probably would have jumped on anything over 50% effective, so these vaccines were both surprising and very welcomed.

However, they are NOT available right now. Instead, we’re having to deal with another wave of the coronavirus with no vaccine and no stimulus package. So investors may be a bit nervous about the near-term and the market getting too overheated.

“We are stuck in a strange situation were the short-term news is just terrible, but the long-term things look great,” said Jeremy Mullin in Counterstrike.

“That is creating confusion amongst traders and investors as the short-term action fights the long-term optimism.”

Which side will come out on top tomorrow?

Today's Portfolio Highlights:

Stocks Under $10: You may not think a staffing firm would be a good investment in the middle of a pandemic with so many businesses closed down. However, Cross Country Healthcare (CCRN) focuses on the healthcare workforce (as its name says), which may need more staff as coronavirus cases rise and as we wait for these vaccines. CCRN has beaten the Zacks Consensus Estimate for four straight quarters now. The past two reports brought beats of 500% each. But Brian was most impressed that the company reported profits for those quarters when losses were expected. In addition, rising earnings estimates made the stock a Zacks Rank #2 (Buy). Make sure to read the complete commentary for more on today’s buy of CCRN. By the way, this portfolio had a top performer today as Maxar Technologies (MAXR) jumped 9.6%.

Surprise Trader:
Plants and pets need love too. And that’s what Central Garden and Pet (CENTA) is all about. As you can probably tell, the company is a leading innovator, marketer and producer of quality-branded products for the lawn & garden and pet supplies markets. This Zacks Rank #2 (Buy) has beaten the Zacks Consensus Estimate for the past three quarters, and seems set to make it four with a positive Earnings ESP of 57.14% for the quarter coming after the bell on Monday, November 23. Dave added the ‘Class A’ shares of this company on Tuesday with an allocation of 11.3%, while also getting out of Energizer (ENR). Read the full write-up for more. This portfolio also enjoyed a top performer among all ZU names as Purple Innovation (PRPL) advanced 7.4%. 

Healthcare Innovators: Last week, Intellia Therapeutics (NTLA) received a grant to research in vivo sickle cell disease treatments using its CRISPR/Cas 9 genome editing technology. The stock took another leg higher on the news. However, Kevin wants you to remember that this is a volatile biotech stock and that meaningful data could be a ways off. Therefore, he took the opportunity to sell NTLA on Tuesday for an impressive return of approximately 160%.

Meanwhile, Kevin also sold Moderna (MRNA), just a day after some very encouraging vaccine data. The reality is there’s still plenty of uncertainties on the eventual approval and roll-out of the treatment. Throughout this process, the stock will stay volatile. He has also been wondering how much of this news is priced into MRNA’s valuation already. The editor sold MRNA and collected a nearly 40% return, but believes the portfolio will get a chance to add it again on any likely moves lower. Read the full write-up for more. 

Insider Trader: Earnings plunged 21% in the third quarter for Hanesbrands (HBI), the apparel company whose brands include Hanes (of course), Champion and Playtex, among others. But that performance was actually a lot better than the “awful” second quarter. Since that report, a director bought shares of his own company TWICE! He picked up 50,000 shares on Nov 9, which was four days after the report, and then another 30,000 shares on November 12. Tracey certainly felt this was a strong signal, especially since directors already get awards. The editor added HBI on Tuesday with a 10% allocation. See the full write-up for more.

Counterstrike: The portfolio took some quick profits on two names today. Jeremy sold National Beverage Corp. (FIZZ) for 21.6% in just over two weeks and Camping World Holdings (CWH) for a 14.1% return in one week. Both names have moved quickly and are close to their targets. FIZZ is knocking on the door of $100, but the editor doesn’t see much follow through after that. Meanwhile, CWH will likely see some resistance as it reaches $30, so this was a good time to get out.

TAZR Trader: Autonomous Driving (AD) was a big reason why Kevin added Baidu (BIDU) back in July, and now it looks like it may be bearing fruit. An analyst recently noted that a strategic investment with leading OEMs may unlock the AD value and send the stock screaming higher. The editor decided to add more to the portfolio’s position in this AI-focused player in Chinese big data. By the way, that analyst also noted that BIDU achieved positive growth in its core revenue earlier than expected, while an acquisition will help the company diversify its revenue stream into ecommerce and subscriptions. Read the full write-up for more.

Zacks Short Sell List: Due to covering a position outside the normal schedule last Thursday, this week’s adjustment removed four positions and added five. The stocks that were short-covered include:

• Sysco (SYY)
• Marriott Int’l (MAR)
• Alcon (ALC)
• Sociedad Quimica y Minera (SQM)

The new buys that replaced these positions were:

• Alteryx (AYX)
• Ceridian HCM (CDAY)
• GDS Holdings (GDS)
• Hexcel (HXL)
• Las Vegas Sands (LVS)

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

Until Tomorrow,
Jim Giaquinto

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