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NASDAQ Makes It Four Days of Gains as Stocks Resume Rally

Jim Giaquinto

The beginning of this tough earnings season didn’t scare the market on Tuesday, as the major indices got back to rallying on cautious optimism that the coronavirus is finally running out of steam.  

The NASDAQ now has a FOUR-DAY winning streak as tech is getting a lot of love from investors. Amazon (AMZN) soared nearly 5.3% today and has completely recovered from the March selloff.

Other tech leaders had 5% gains as well, including Apple (AAPL, +5.05%) and Microsoft (MSFT, +4.95%). Also, Netflix (NFLX) improved another 4.2%.

As a result, the NASDAQ soared 3.95% (or about 323 points) to 8515.74.

The other major indices dropped yesterday after soaring by more than 12% in the previous week, but they got back to the plus column in a big way on Tuesday.

The S&P jumped 3.06% to 2846.06 and the Dow advanced 2.39% (or 559 points) to 23,949.76.

The spread of the coronavirus in the U.S. is stabilizing. All eyes are on New York, as new cases and hospitalizations in the hardest-hit section of the country looks to be leveling off. Just yesterday, the Governor said that the worst appears to be over.

Such news outshined difficult reports from JPMorgan (JPM, -2.7%) and Wells Fargo (WFC, -4%), which drove the banks lower and provides the first glimpse at just how bad this shutdown will be on corporate results and, especially, their outlooks for the future.

And the big financial names are just getting started, as Goldman Sachs (GS), Morgan Stanley (MS), Bank of America (BAC) and Citigroup (C) are scheduled for tomorrow.

Johnson and Johnson (JNJ) reported today as well, and beat on both the top and bottom lines though offered a soft outlook. Nevertheless, shares climbed 4.5% as this health care leader is working on a coronavirus vaccine.

Look, this earnings season is going to be bad. Nothing can be done about that. Fortunately, it won’t be a surprise.

And now with the coronavirus spread slowing, the market can look toward the future and the inevitable recovery once everything opens up again.

Let’s not get too cocky though, because we’ll be seeing a lot of rough numbers in the days ahead….

Today's Portfolio Highlights:

Stocks Under $10: The goal is to get to 15 names by May 1. Brian understands that might be difficult for this portfolio, but he’s ‘up for the task’. Today’s addition is Sharps Compliance Corp. (SMED), a leading provider of cost-effective disposal solutions for small quantity generators of medical waste. Basically, it helps people dispose of things like needles, lancets or anything used to puncture or lacerate the skin. SMED is a Zacks Rank #1 (Strong Buy) due to rising earnings estimates and it has beaten the Zacks Consensus Estimate in three of the last four quarters. Furthermore, its margins are improving. Read the full write-up for more on today’s addition and Brian’s plans for the portfolio, which now has ten names with today’s move.

Counterstrike: The market moved higher again this morning, but Jeremy notes that the financials sold off after their reports to begin this challenging earnings season. Therefore, the editor picked up a 7% allocation in ProShares UltraShort Financials (SKF), which is a double inverse play. He also added 6% to the ProShares UltraPro Short QQQ (SQQQ), which was first bought just yesterday. Tech may be leading the market now, but Jeremy is skeptical that it can continue through their earnings. Read the full write-up for more.  

TAZR Trader: So far, it looks like the big investors are still putting their money into big tech, while the rest of the market gets “clobbered by the shutdown-induced recession”. Therefore, Kevin saw an opportunity to add more to his Dow30 3X Bear (SDOW) position, which was first added just yesterday with a “starter” allocation. Meanwhile, the editor also sold Square (SQ) after an analyst downgraded the stock. It brought a return of 40.9% in just a little under a month. Read the complete commentary for a lot more details on today’s moves. 

Zacks Short List: Half of the portfolio was replaced in this week’s adjustment, and one of the stocks brought a double-digit return. The positions that were short-covered today included:

• iRobot (IRBT, +11.1%)
• Sina (SINA)
• Live Nation Entertainment (LYV)
• Wynn Resorts (WYNN)
• Agnico Eagle Mines (AEM)

The new buys that filled these open spots were:

• Bright Horizons Family Solutions (BFAM)
• Burlington Stores (BURL)
• Expedia Group (EXPE)
• Las Vegas Sands (LVS)
• Ryder System (R)

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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