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NASDAQ Back Above 8,000

Jim Giaquinto

The NASDAQ became the latest index to reclaim a lost milestone on Tuesday, as stocks continued their slow but steady advance to new highs in the opening days of earnings season.

The good news is that the vast majority of stocks are beating lowered earnings expectations, while most are also topping on the revenue side. The bad news is we’ve just begun the season… and we all know how unpredictable it can be.

For today though, the major indices had enough to finish the session on the positive side. However, stocks came well off their lows as they still haven’t been able to pick a direction with trade and the bulk of earnings season still up in the air.

The NASDAQ is back above 8000 by a tiny bit. It gained 0.30% on Tuesday to 8000.23 with Netflix jumping 3% ahead of its quarterly report after the bell. Also helpful was Qualcomm and Apple settling a long-standing royalty dispute. Shares of QCOM soared 23% as the two sides ended all litigation, while AAPL broke even on the day.

The index is still about 1.5% away from reaching its all-time high set back in late August. It hasn’t been above 8,000 since early October.

Meanwhile, the Dow was up 0.26% (or nearly 68 points) and the S&P spent its third straight day above 2900 with a rise of 0.05% to 2907.06.

By the way, shares of Netflix are down about 0.7% afterhours as of this writing. The streaming giant reported solid numbers, but it issued a softer-than-expected guidance for subscriber growth and revenue in the second quarter.

Netflix also mentioned the new competition it will be facing from Apple and Disney since they both announced streaming services in the past several weeks. Disney+ has already been priced at approximately half of NFLX per month. We’ll see how much this report impacts the market on Wednesday.

Today's Portfolio Highlights:


Stocks Under $10: Basic materials isn’t Brian Bolan’s favorite industry, but he can’t deny how strong the space has been performing of late. So he decided to “ride that wave” by adding Century Aluminum (CENX) on Tuesday. This Zacks Rank #2 (Buy) is a primary aluminum producer that has beaten the Zacks Consensus Estimate by an average of 59% over the past four quarters. The portfolio’s other ventures into materials -- Lithium Americas (LAC) and Israel Chemicals (ICL) -- have worked out pretty well so far. Read the full write-up for more on today’s addition of CENX.

Surprise Trader: The early days of earnings season are dominated by banks… so Dave is going where the action is with today’s addition of Flagstar Bancorp (FBC). This Zacks Rank #2 (Buy) has 160 full-service branches and offers home loans in 24 states. It has a positive Earnings ESP of 2.49% for the quarter coming before the bell on Tuesday, April 23. The editor added FBC on Tuesday with an allocation of 12.5%. Read the complete commentary for more.

Healthcare Innovators: Analysts were impressed with Demira’s (DERM) Phase 2 data for lebrikizumab, a treatment for atopic dermatitis. Basically, they found it safer, and potentially more effective, than its competitors. As a result, several brokerages raised their price targets on DERM to a Street consensus of $20. Furthermore, DERM made a $130 million stock offering to finance a Phase III program and it was well received. Kevin had been waiting after the data, and stock jump from $7, to see how the dilution settled out and the past week's 25% drop from above $15 gave him the entry he was looking for on Tuesday. Read a lot more about this new buy in the full write-up.

Large-Cap Trader: Two of the biggest international stories that interest American investors right now are the potential trade deal with China and the ongoing drama with Brexit. And that’s exactly where John went for his two newest buys in the portfolio. The editor added mobile communications services giant China Mobile (CHL) and U.K.-based financial services company Lloyds (LYG). Both of these stocks are Zacks Rank #1s (Strong Buys) and have a lot to offer income investors with dividends of 4.1% and 6.6%, respectively. These stocks are up so far this year and should continue to advance as the aforementioned headwinds get resolved (hopefully). The editor believes that CHL could make it between $55 and $60 by the middle of the year, while LYG could reach $4 to $5. Hitachi (HTHIY) and Archer Daniels Midland (ADM) were sold to make room. Read the full write-up for more.

TAZR Trader: Shares of enterprise "data magician" Domo (DOMO) have been trading in a pivotal area above $37 this month after a big jump out of their strong earnings report last month. Kevin took a demo of the business intelligence software before their IPO last summer and found it to be like a "little Tableau" (DATA). So after the big surge to new highs, he dug into the recent volume surge and found confirmation of at least one large investor adding to their position. Morgan Stanley reported a greater than 5% stake on April 1 and this bodes well for the stock finding more buyers with only a 17-million share float for this sub-$1 billion company. Plus, it's trading at only 5X sales with topline growth of over 22% as it finds more and bigger customers who want greater critical insights and data visualizations. Read the complete commentary for a lot more on this new addition.


Zacks Short List:
The portfolio swapped out four positions in this week's adjustment. The stocks that were short-covered and left the service today include:

• Halliburton (HAL)
• Schlumberger (SLB)
• Continental Resources (CLR)
• Anadarko Petroleum (APC)

The new buys that replaced these names are:

• Ionis Pharma (IONS)
• Tesla (TSLA)
• Teradata Corp. (TDC)
• Atlassian Corp. (TEAM)

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

All the Best,
Jim Giaquinto

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