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Maybe There Won't Be a Trade War After All

Jim Giaquinto

This is surely a time for extremes in the market. The major indices are coming off their worst weekly performance since the disastrous start to 2016, but today they put together their best single session since 2015.

“The stock market had zero interest in easing into the week with a slow Monday. Rather, it was pedal to the metal all day across global markets as risk-on was en vogue and domestic equities surged,” said Dave Bartosiak, editor of Blockchain Innovators, Momentum Trader and Surprise Trader. “Talk of easing tensions between the US and China over a potential trade war helped us forget last week’s transgressions.”

The epic comeback included a 3.26% (or approximately 228-point) surge for the NASDAQ to 7,220.5. The Dow jumped 2.84% (or 669 points) to 24,202.6, while the S&P advanced 2.72% to 2,658.6. Now that’s a great start to the week…and the market really needed it.

Investors applauded news that the U.S. and China were open to figuring out a way to resolve their trade problems without resorting to a trade war. Plus, the market was primed to get back some ground lost during last week’s sharp pullback.

“The reason for the positive tone today was because there was no new tariff shouting and the trade war idea was talked back a bit by the White House. Trump doesn’t want to screw up the stock market, so it makes sense to pull back a bit,” said Jeremy Mullin in Counterstrike. “The thought today is Trump is just negotiating and when China gives us a little, the Tariffs will go away. Hopefully that’s the case.”

In the portfolios, TAZR Trader added more to an existing position that’s facing a lot of public scrutiny right now, but should eventually be able to weather the storm and move higher. Black Box Trader replaced three names in its weekly adjustment and one of them brought a double-digit gain to the portfolio. Read the highlights section below for more on these moves.

Today's Portfolio Highlights:

TAZR Trader: The FTC has opened a formal investigation into the privacy practices of Facebook (FB)…but Kevin isn’t overly concerned. The social media platform is already taking steps to improve its user safety features. Plus, the company should be able to weather any punitive actions, including a billion dollar fine. Therefore, the editor added 5% to the portfolio’s FB position while its still at a bargain price. Learn a lot more about this move in the complete commentary.

Black Box Trader:
The portfolio sold three positions in this week’s adjustment, and one of them was a double digit winner. The stocks that left the portfolio include:

• Delek US Holdings (DK, +15.3%)
• Flour Corp. (FLR)
• Allegheny Tech (ATI)

The new buys that replaced these names are:

• Nordstrom Inc. (JWN)
• Guess Inc. (GES)
• Kapstone Paper (KS)

Read the Black Box Trader’s Guide to learn more about this computer-driven service designed to take the emotion out of investing.

Zacks Confidential: The twists and turns of the market in 2018 are enough to make any investor head for the hills. But that would be a mistake. With a little technical analysis, you can make sense of the market and learn when to buy a dip, when to sell a rally and when to prepare for a breakout. In this week’s Zacks Confidential, Kevin has asked Dave Bartosiak to explain how he reads this market. Learn about a specific type of technical analysis that can help you quickly identify the market trend, along with three top stocks to consider: One Trick to Huge Profits in Any Market.

Options Trader: “According to the news, the market plunged last week ‘supposedly’ on renewed fears of a trade war. But they rallied today ‘supposedly’ on ideas that trade concerns were easing. Let me be clear, the same trade concerns that existed on Friday existed on Monday.

“I point this out because the tariff-talk in the media doesn’t match the actual news on the ground. And too many people are getting spooked out of the market due to the knee-jerk, over-sensationalized ‘reporting’ on this topic and others in a desperate attempt to explain the market’s pullback. But they keep getting it wrong.

“So yes, the market has a right to be concerned about the impact of tariffs. But the word ‘trade-war’ was being bandied about recklessly and only served to create unnecessary panic. We will have to see how the tariffs play out. But I contend the correction taking place is normal market behavior.

“But make no mistake, the current correction will make the market stronger and create a brand new base from which the market can begin its new leg up.”
– Kevin Matras

All the Best,
Jim Giaquinto

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