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Not So Fast on that Trade Deal

Jim Giaquinto

Remember, the February episode of the Zacks Ultimate Strategy Session is now available for viewing! Don’t miss your chance to hear:

• Sheraz Mian and Kevin Cook Agree to Disagree on what will be the single most important metric investors should watch in the first half of this year
• Kevin Matras answers your questions in Zacks Mailbag
• Sheraz and Neena Mishra, CFA, FRM, choose one portfolio to give feedback for improvement
• Market conditions from both fundamental and technical views
• The full list of top-performing stocks over the past 30 days
• New stocks added to the ZU portfolio
• And much more

Simply log on to Zacks.com and view the February episode here. And please let us know what you think of these monthly episodes. Email all feedback to mailbag@zacks.com.

The market expects a trade deal sooner rather than later, so it didn’t take kindly to some negative headlines on that issue today.

Basically, it looks like a meeting between President Trump and President Xi of China won’t take place before the early March trade deadline, when tariffs are scheduled to increase. At the same time, White House economic advisor Larry Kudlow said there was still “a pretty sizable distance” between the two countries when it comes to making a deal.

The major indices responded on Thursday with a rather significant selloff, which has thankfully been a rare occurrence so far in 2019. Stocks still came off their lows by the closing bell.

The NASDAQ has enjoyed a good week as the FAANGs have all now reported respectable quarterly results, culminating with Alphabet earlier this week. However, it was off 1.18% (or nearly 87 points) today to 7,288.35.

The S&P slipped 0.94% to 2706.05. The Dow was nearing a 400-point loss at its worst point today, but recovered enough to decline by only 0.87% (or around 220 points) to 25,169.53.

Now, the six-week winning streak for the Dow and NASDAQ is in jeopardy as we head into Friday. Both indices are up for the week, but they can’t afford another setback like today if they want to keep the good times going. The S&P is right at breakeven over the past 4 days.

The market has been truly impressive since Christmas Eve and has managed to stay quite positive when it comes to trade. Today’s news didn’t carry any real setbacks for the trade impasse, but just served to remind us that this is a complex issue. What does it mean for Friday? Stocks have been good closers during this weekly winning streak, so maybe that will continue tomorrow.

Today's Portfolio Highlights:

Surprise Trader:
Today's selloff didn't deter Dave's buying spree during this earnings season. In fact, the editor loves to add exposure on pullbacks. On Thursday, he put the portfolio's remaining cash into Cornerstone OnDemand (CSOD), a Zacks Rank #2 (Buy) that provides comprehensive learning and talent management solutions delivered as software-as-a-service (SaaS). CSOD has a positive Earnings ESP of 2.5% for the quarter coming next Tuesday. Last time, it beat by more than 41%. Read the full write-up for more on this pick.

Technology Innovators: Brian Bolan wasn’t kidding when he set a goal to fill up this portfolio. On Thursday, the editor added for the third day in a row and might do so again tomorrow. The most recent addition is Cree (CREE), which is from the higher end of the hot chip market and has a chart that is “just awesome” over the last 6 months or so. However, Brian’s attention was really piqued when an institutional investor took a big position in the stock. Learn more in the complete commentary.

TAZR Trader: Consistent with his ideas that the market is underestimating the earnings and economic slowdown that is unfolding, Kevin followed his plan to begin building new short positions in the resistance zone around S&P 2710-40. The portfolio started 5% allocations in Direxion Daily Financial Bear 3X ETF (FAZ) and Direxion Daily Small Cap Bear 3X ETF (TZA). Both are 3X Bear ETFs. Read the full write-up for more.

Until Tomorrow,
Jim Giaquinto

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