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S&P Closes Above 3200 as Stocks Return to New Highs

Jim Giaquinto

SPECIAL ALERT: The December episode of the Zacks Ultimate Strategy Session is now available for viewing! Tune in to this “must-see” event when Kevin Matras, Sheraz Mian, Kevin Cook, David Bartosiak and Dr. John Blank discuss the investment landscape from several angles.

Don’t miss your chance to hear:

▪ Sheraz and John Agree to Disagree on the underlying drivers of the 2020 stock market actions and overall tone of the trading in “Next Year, I am Bullish”
▪ Kevin Matras answers questions covering what stocks will do in 2020 (and a look back at 2019) in Zacks Mailbag
▪ John and Kevin Cook choose one portfolio to give feedback for improvement
▪ And much more

Simply log on to Zacks.com and view the December episode here. And please let us know what you think of this format. Email all feedback to mailbag@zacks.com.

That break yesterday didn’t last very long!

The major indices were each back to new all-time highs on Thursday, including a milestone for the S&P.

The index closed above 3200 for the first time by gaining 0.45% to 3205.37. Meanwhile, the Dow jumped 0.49% (or more than 137 points) to 28,376.96.

The NASDAQ now has a 7-day winning streak after an advance of 0.67% (or almost 60 points) to 8887.22.

The S&P and Dow both snapped 5-day winning streaks on Wednesday with their first negative sessions since the Phase 1 agreement was announced last week.

The indices could have stayed lazy now that we’re less than a week away from Christmas with a Santa Claus rally likely to begin soon after.

But the bulls didn’t need any more R&R! They got back to making new highs on Thursday and totally ignored President Trump getting impeached in the House last night on a strictly partisan basis.

POTUS is widely expected to be acquitted by the Republican-controlled Senate sometime next month.

However, Congress was doing other things today that might actually have an impact on the market.

First of all, the House finally approved the USMCA trade deal after holding it in limbo for over a year. Secondly, the Senate approved a couple spending bills that will prevent a government shutdown if the President signs them by Friday.

The major indices each head into tomorrow’s session with gains for the week. The S&P will be going for a four-week winning streak, while the other two major indices will be trying for back-to-back weekly advances. 

Today's Portfolio Highlights:

Surprise Trader: Earnings season may be over, but a huge footwear company that everybody knows will report after the bell today. It’s Nike (NKE)! And this Zacks Rank #2 (Buy) has a 1.56% positive Earnings ESP heading into the print. The company beat by more than 21% last time. Dave couldn’t resist during this slow period for reports; he added NKE on Thursday with a 12.5% allocation. The editor also decided to sell the remaining half of Tactile Systems (TCMD) for a more than 51% return in less than two months. The first half of this medical technology company was sold on November 21 for a double-digit return. Read the full write-up for more on today’s moves.

Insider Trader: It’s no big deal for the CEO of Occidental Petroleum (OXY) to buy shares, but Tracey was surprised to see THREE directors buying shares of their own company in the past few weeks. She thinks this sends a “powerful message” since these insiders use their own cash and already get a lot of awards. Shares of OXY are at 5-year lows and are down 38% this year, which means its oversold along with the whole E&P space. Fortunately, the editor thinks that Wall Street is starting to “poke around” this area once again, which makes the recent insider buying all the more attractive. The portfolio had less than 6% available in cash, so that’s the allocation Tracey used to buy OXY. The portfolio is now fully invested heading into the next earnings season, which will begin before you know it! Read the full write-up for a lot more on this new addition. 

TAZR Trader: The portfolio has shown a lot of patience with Proofpoint (PFPT). This network and cyber-security stock has been on the buy list since October, but it has just now confirmed a higher low against August’s $110 level. Kevin finally sees an opportunity to add the stock, which should make new highs above $135 next year. The editor added PFPT on Thursday with a 7% allocation. In addition to its price movement, the company is expected to grow sales by 23% this year and grow profits by 17%... with more improvement coming next year. Read the full write-up for more on this new addition.

Technology Innovators: The portfolio is looking for names “on the bigger side of things”, and on Thursday it found Zendesk (ZEN). This Zacks Rank #1 (Strong Buy) is a software development company that provides a software-as-a-service platform. The stock has an excellent record of beating the Zacks Consensus Estimate, amassing an average earnings surprise of 100% over the past four quarters despite only matching in one of the reports. In addition to beating earnings expectations by 100% in the most recent quarter, it also posted 34% topline growth. Brian decided to add the stock after it slipped below $77 with expectations that it will get back over $80 before the year is out. Read the full write-up for more on this new addition.

Until Tomorrow,
Jim Giaquinto

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