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What Monday Selloff?

Jim Giaquinto

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Believe it or not, the NASDAQ and S&P are actually up for the week heading into Friday, having completely rebounded from Monday’s sharp selloff. (By the way, you should really believe it because it’s true.)

The major indices all made good on yesterday’s epic comeback by following through with a Thursday rally.

The NASDAQ again had the best performance with an advance of 2.24% (or more than 176 points) to 8,039.16, while the S&P increased 1.88% to 2938.09.

Those indices plunged by 3.47% and 2.98%, respectively, on Monday, but are now slightly positive for the week.

And thanks to yesterday’s rebound, these indices also have three-day winning streaks after snapping a 6-day skid on Tuesday.

The Dow isn’t exactly sitting this dance out. The index took part in Wednesday’s rebound but couldn’t get back into the green. That was no problem today as it soared 1.43% (or 371 points) to 26,378.19. It’s a little shy of being positive for the week.

So will we rally out this week?

The editors are a bit skeptical. Nothing fundamentally has changed, except that global bond yields and the yuan have stabilized from earlier in the week. We still don’t have any encouraging news on trade.

Stocks are now right about where they were at the start of the week, so the rebound from an overly-severe selloff is complete. This might be a good place to pause unless there’s another catalyst one way or the other.

However, this market has surprised us before. Despite all the recent volatility, the economy continues to be strong while the nearly-complete earnings season has been better than expected.

So whatever happens tomorrow is anybody’s guess right now…

Today's Portfolio Highlights:

ETF Investor: Gold loves market uncertainty! It’s status as a safe haven means it thrives in an environment with trade tensions and slowing global growth. The metal jumped above $1500 recently and the outlook remains positive moving forward. Neena is capitalizing by adding SPDR Gold MiniShares ETF (GLDM), which is among the cheapest gold funds and has decent liquidity as well. Read the full write-up for more on today’s move.

TAZR Trader: The market has bounced back quickly from Monday’s sharp selloff, so Kevin is taking some risk off the table while he can. The editor sold Smartsheet (SMAR) on Thursday and collected a 22.5% return in just about 4 months for this enterprise software solutions provider. He also sold NASDAQ 100 3X Bull ETF (TQQQ) for a 12% profit in less than a week because this bounce is "guilty until proven innocent."

Insider Trader: Those “hot” high-growth companies usually don’t see a lot of insider buying. Therefore, when a director at Twilio (TWLO) made a million dollar buy earlier this week, it really caught Tracey’s attention. The editor noticed that this cloud communications platform provider has slipped about 10% this month, but revised its full year guidance higher as recently as July 31. The insider must believe that the guidance is conservative, as do a few analysts. Tracey decided to add TWLO on Thursday with a 10% allocation, though warns that this one could be volatile. The complete commentary has more on this addition.  

Surprise Trader: Despite some recent volatility, the market has been doing quite well for a while. That means bigger fees for asset management firms like Victory Capital Holdings (VCTR). In fact, its space (Financial – Investment Management) is in the Top 31% of the Zacks Industry Rank. The company has a positive Earnings ESP of 2.29% for the quarter scheduled after the market close on Monday, August 12. Dave was especially impressed with its growth expectations, including revenue and EPS growth of 49.82% and 54.8%, respectively, for the current year. Double-digit growth is also expected for next year. The editor added VCTR on Thursday with a 12.5% allocation. He also sold Glatfelter (GLT). Read the full write-up for more. 

Technology Innovators: Shares of Altair Engineering (ALTR) have rallied right into its report tonight. However, Brian doesn’t want to get greedy with this simulation technology company. A bad report threatens the gains it made this week, which the editor doesn’t want to risk. Therefore, he sold ALTR on Thursday for a 14.1% return in less than two months. Brian replaced it by adding Cirrus Logic (CRUS), a Zacks Rank #1 (Strong Buy) chip name that recently reported a beat and raise quarter. Over the past four quarters, the company has put together an average surprise of 108%. Learn a lot more about today’s moves in the complete commentary.

Blockchain Innovators: Shares of Advanced Micro Devices (AMD) soared 16.2% on Thursday after news that Google and Twitter would using the second generation of its EPYC chips. Therefore, this portfolio had the best performing stock of the day among all ZU names. Dave added the stock back in July 2018 because the chipmaker gets a big chunk of their business from mining crypto. It was a good move as AMD is now at the top of the portfolio by soaring more than 108% since being added.

All the Best,
Jim Giaquinto

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