The NASDAQ is having a horrible month of October, but it was the only major index to finish in the green on Monday in front of a few big tech reports scheduled for this week. Meanwhile, the Dow saw another wild swing that wasted a positive, triple-digit open as it continues searching for solid footing.
We’re dealing with a lot of uncertainty right now, and one of the biggest problems is that tech seems to have come down to earth after leading the market for years. Is this really something to worry about or not? We’ll get a good indication this week when some big names report, including Microsoft (10-24), Amazon (10-25) and Alphabet (10-25), among others.
All in all, it was a pretty good day for tech (especially when compared to recent sessions). The NASDAQ chopped around but managed to stay in the green for most of the session and finish with a gain of 0.26% to 7468.63, breaking a three-day losing skid. The index is still down almost 8% in October.
The other major indices squandered another positive open. The S&P was off for the 11th time in 13 sessions with a dip of 0.43% to 2755.88. The Dow declined 0.50% to 25,317.41.
Thus far, earnings season has been as solid as was expected, but you wouldn’t know it by the way the market has reacted. The Dow is coming off a small weekly gain thanks entirely to a rally last Tuesday. Meanwhile, the S&P was breakeven for the week while the NASDAQ continued its paltry performance this month with a loss of 0.6%.
The season really kicks into gear this week though, so we’ll see how much longer the market can shrug off positive reports.
Today's Portfolio Highlights:
Counterstrike: The portfolio put some money to work today, but not in the way you may think. Jeremy doesn’t like the current price action, so he decided to short a couple of names in expectation of further downside. The editor short sold PepsiCo (PEP) and PPG Industries (PPG) with 5% allocations each. Both of these companies beat expectations in recent reports, but that’s not enough in the current market environment. Their surprises were not blowouts and there are headwinds in their businesses that have Jeremy thinking that a move lower is in the making. PEP is a Zacks Rank #4 (Sell) that needs no introduction, while PPG is a Zacks Rank #5 (Strong Sell) that makes paints and coatings. Despite these bearish moves, the editor thinks there will be plenty of opportunities to go long in the days and weeks ahead. Read the complete commentary for a lot more about these trades, including a look at their charts.
Surprise Trader: It’s a busy week for earnings and Dave is kicking things off with two new buys! He added Callaway Golf (ELY) and United Therapeutics (UTHR) with 12.5% allocations each. They both report on Wednesday. ELY has an impressive Earnings ESP of 71% for the upcoming quarter as this strong economy has golfers buying new clubs and equipment. UTHR is a biotech with a positive Earnings ESP of 10% with earnings estimates on the rise over the past 90 days. Read the full write-up for more on these new picks.
TAZR Trader: If you want to get aggressive in the short-term, Kevin has an idea for you. The editor is watching the NASDAQ 100 and believes that another downturn is in the near future before the eventual rebound. In order to take advantage in this window, he picked up a 10% allocation in ProShares UltraPro Short QQQ ETF (SQQQ). Read the full write-up for more on this riskier play and read about Kevin's outlook moving forward, including his worst-case scenario for this hectic market.
Black Box Trader: Half of the portfolio was replaced in this week's adjustment. The stocks that were sold include:
• Herbalife Nutrition (HLF)
• Unum Group (UNM)
• Callaway Golf (ELY)
• Ingersoll-Rand (IR)
• Principal Financial Group (PFG)
The new buys that replaced these names are:
• Kohl's (KSS)
• UnitedHealth (UNH)
• Hewlett Packard Enterprise Co. (HPE)
• United Continental Holdings (UAL)
• C.H. Robinson Worldwide (CHRW)
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: As if rising rates, trade tensions and the upcoming mid-term elections weren’t enough of a challenge, the market also has to deal with the bizarre story of Jamal Khashoggi. The market waits to hear what kind of action the U.S. will be taking against Saudi Arabia for their possible involvement in the journalist’s death. In this week’s Zacks Confidential, Kevin has cleared the way for David Borun to break down this issue and contemplate what kind of impact it could have on our already jittery market. Read this article by clicking: The Saudi Situation is Not All Bad News for U.S. Companies.
All the Best,
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