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No Christmas Break for the Correction

Jim Giaquinto

The session right before Christmas is supposed to be pretty calm, but that wasn’t the case on Monday. Even with a half-day of trading, there were still plenty of hours to continue this correction. In the end, it was the worst Christmas Eve for the market on record.

Each of the major indices were down by well over 2%. The Dow plunged 2.91% to 21,792.2 and the S&P slipped 2.71% to 2351.1. The NASDAQ dipped 2.21% to 6192.92. This action is all the more disheartening since its coming off a horrible week that saw each of the indices drop by 7% or more.

Stocks are still reeling from the not-as-dovish-as-hoped Fed decision from last Wednesday. However, the market has really been under pressure for the past three months with slowing global growth and the trade conflict with China contributing to the poor sentiment.

And now we can add this partial government shutdown to the list, along with news reports that President Trump was looking into firing Fed Chair Jerome Powell (which have been denied by the White House). The market also looked askew at a statement from the Treasury Secretary that there was ample liquidity in the system, which was actually one of the few things that investors weren’t worried about before the announcement.

All in all, the market is in a horrible mood and cannot be consoled at the moment. Apparently, not even Christmas can help. The first day of what has historically been the Santa Claus rally was wasted on Monday.

It may seem a bit Pollyannish to say, but there’s still a chance we could see some improvement in the last days of 2018. December is shaping up to be even worse than October, so a bounce is way overdue. Let’s hope good old St. Nick has enough room in his bag for a nice rebound.

"I have hope that we find buyers into the New Year. I can’t stress enough some of the long-term buying opportunities that I'm seeing. Keep a cool head and be patient," said Jeremy in Counterstrike.

Today's Portfolio Highlights:

Black Box Trader: There’s no break for the holidays with a computer-driven service like this one. So it was a busy Christmas Eve session as six names were swapped. The stocks that were sold from the portfolio included:

• Darden Restaurants (DRI)
• Delta Air Lines (DAL)
• Abercrombie & Fitch (ANF)
• American Express Co. (AXP)
• Advance Auto Parts (AAP)
• Cigna (CI)

The new buys that replaced these positions are:

• Crocs (CROX)
• Rent-A-Center (RCII)
• Walmart (WMT)
• Tractor Supply Co. (TSCO)
• HD Supply Holdings (HDS)
• Spirit Airlines (SAVE)

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

Zacks Short List: This service is usually run on Tuesdays, but we're doing it a day early since the market is closed tomorrow for Christmas. There was only one change this week as Schlumberger (SLB) was short-covered for a return of 7.2%. It was replaced by adding SCANA Corp. (SCG). Learn more about this emotion-free portfolio that takes advantage of falling and volatile markets by reading the Short List Trader Guide.

Zacks Confidential: Investors can make up naughty and nice lists too. In fact, Jeremy Mullin has done just that for this week’s Zacks Confidential. This has been a crazy year with new all-time highs along with steep corrections, so Kevin liked the idea of the Counterstrike editor trying to make some sense of all the volatility. Read about three naughty stocks and three nice stocks from this year… and get a couple of recommendations for 2019: The 2018 Naughty and Nice List of Stocks.

Have a Merry Christmas!
Jim Giaquinto

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