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S&P Closes at New Record High

Jim Giaquinto

The S&P finally returned to record territory on Thursday as the market had a delayed reaction to yesterday’s dovish Fed statement.

The last time the index was at an all-time high was on the final day of April, right before things took a turn for the worse in the following month.

But today the S&P jumped by 0.95% to a history-making close of 2954.18.

The other major indices came along for the ride as we enjoyed a broad-based rally on Thursday. The Dow jumped 0.94% (or nearly 250 points) to 26,753.17 and is within 1% of its own high, while the NASDAQ advanced 0.80% to 8051.34.

Stocks jumped higher right at the open, but it looked like we might lose it all as they came tumbling down at mid-day. Investors apparently got nervous that we were running higher too quickly after three straight days of gains.

And it certainly didn’t help that Iran shot down a U.S. drone, which promises to further irritate an already acrimonious relationship between the two countries.

But stocks got over all of that to complete a fourth straight day in the green.

The market is all excited about a rate cut in July… and maybe even another one before the year is out. The Fed kept rates unchanged in this month’s meeting, but investors believe that the language in the statement and from the Fed Chair are setting up a cut moving forward.

So now the market heads into Friday’s session with a great chance of extending its winning streak to three weeks and keeping this June rally going.

It would also be fun to see the major indices go through an entire week in the green, which is a feat we haven’t seen yet in this impressive month

Today's Portfolio Highlights:

Large-Cap Trader: Shares of Fortinet (FTNT) have enjoyed “a nice technical retracement” in recent weeks to $78 from $70. John thinks this leading computer network security company is worth spending some of the portfolio’s set-aside cash. Thanks to rising demand for its cloud security franchise, FTNT has an excellent history of beating the Zacks Consensus Estimate that stretches back for years. It has an average surprise of 14.7% in the past four quarters. Looking forward, the company’s “beautiful” Price and Consensus chart tells the editor that its 12-month fair value is at least $95. John added FTNT on Thursday with a 5% allocation because it has a lot more room to run. Read the full write-up for more.   

Income Investor: Shares of PepsiCo (PEP) are up more than 20% this year, which isn’t usual for a beverage and snack foods powerhouse with numerous iconic brands. In fact, Maddy was a bit hesitant to add this name to the portfolio, but its yield of 2.9% and annualized dividend growth of 15.2% changed her mind. The editor also appreciates its acquisition of SodaStream and the potential of its international business. Read the complete commentary for a lot more on this new addition.

Options Trader:
The high, tight, bull pennant pattern for Banco Macro (BMA) is telling Kevin that this Argentinian bank could be poised for a big upside breakout. The editor decided to add a couple bull call spreads to capitalize on this potential upturn by buying to open 2 July 65.00 Calls AND selling to open 2 July 75.00 Calls. If it gets to $75 or higher by its mid-July expiration, then it will bring a gain of 173%. But Kevin sees a move all the way to $83. Read the complete commentary for more specifics.

Insider Trader: Gaming headsets company Turtle Beach (HEAR) was all the rage last year, but the company warned that such huge sales were not sustainable. They were right. Shares have slipped 22.1% over the past year. However, earlier this month it closed on the acquisition of gaming accessory brand ROCCAT, which gives HEAR entry into the e-sports and PC markets. Four insiders bought shares right after the deal, including the CEO, the CFO and a couple directors. HEAR is a small-cap that the editor believes will be VERY volatile, but she decided to take the chance by adding the stock on Thursday. Read the complete commentary for more on this new buy.  

Surprise Trader: The turnaround at global foods company General Mills (GIS) has been impressive. The chart is telling Dave that earnings expectations bottomed last year, leading to a positive trajectory ever since. The company beat by 20% in its last quarterly report and has a positive Earnings ESP of 1.18% for the quarter coming after the bell on Wednesday, June 26. The editor decided to add this Zacks Rank #1 (Strong Buy) today with an allocation of 12.5%. The portfolio also sold Five Below (FIVE) for a gain of 2.7% in less than a month as its post-earnings drift has been unremarkable. See the full write-up for more on today’s moves.

All the Best,
Jim Giaquinto

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