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S&P Rises for Fourth Straight Week

Jim Giaquinto

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

▪ Sheraz Mian and Dr. John Blank 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
▪ 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 Zacks Ultimate portfolio
▪ And much more

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

The final full week of 2019 was a positive one for stocks that finished on Friday with another round of all-time highs amid positive sentiment on trade.

The S&P continued blowing past 3200, which it first eclipsed just yesterday, by adding another 0.49% to 3221.22.

The NASDAQ rose 0.42% (or more than 37 points) to 8924.96 and the Dow advanced 0.28% (or more than 78 points) to 28,455.09.

That marks new highs all around… the fourth day this week that all three major indices made history.

The S&P now has a four-week winning streak after advancing 1.7%, which was about a full percentage point better than last week.

The NASDAQ had the best weekly performance with a surge of 2.2%, which is what you can expect when an index goes on an 8-day winning streak. Last but not least, the Dow advanced 1.1% over the past five days.

Stocks seemingly had a great weight lifted off their shoulders last week when the U.S. and China agreed to a Phase 1 trade deal in principle.

Earlier today, President Trump tweeted that he had a good talk with President Xi of China and that they have already started agricultural purchases. He also said that a formal signing is being arranged.

In the absence of any more specifics on the trade deal, the market appreciated the tweet.

It was also nice to see the House finally pass USMCA yesterday, a trade relationship that seems to take a backseat to the one with China but is also extremely important to the U.S.

At this time last December, the end-of-the-year plunge had already begun after the Fed again hiked interest rates.

Well…it doesn’t look like that’s going to happen again! The next two weeks will probably be pretty quiet, as it should be. But that doesn’t mean the bulls can’t keep charging (or at least walking) higher.

Today's Portfolio Highlights:

Options Trader: On this quadruple witching day, the portfolio cashed in some impressive returns on expiring December options. In fact, three of the four signals today brought triple-digit returns:

1) Neurocine Bioscience (NBIX): sell to close the 2 Dec. 100.00 calls and let the rest expire for a 143% return

2) Oshkosh (OSK): sell to close the 3 Dec. 85.00 Calls and let the rest expire for a 134% return

3) Burlington (BURL): don’t do anything and collect a 132% return

4) Rent-A-Center (RCII): sell to close the 7 Dec 27.00 Calls and let the rest expire for a 9.3% return

Read the full write-up for more on all of today’s moves.

Value Investor: It’s about time for money to flow back into the energy trade. Tracey thinks this industry should see a cyclical rotation heading into 2020 after getting beaten down so low and for so long. The editor decided to add a stock with stable management and a reputation for being first class. Pioneer Natural Resources (PXD) is a large-cap E&P that’s considered “one of the gems of the Permian Basin”. In addition to the value characteristics, PXD also has a share buyback, a dividend and one of the best balance sheets in the space. As Tracey said: “If we’re going to dive back into energy, we’re only going to get in with the best.” Read the full write-up for more.

Counterstrike: Shares of specialty apparel retailer Express (EXPR) soared 50% after its solid earnings report recently, but has since given about 20% back. Jeremy thinks the stock is now at a buyable level. He added EXPR on Friday with an 8% allocation. The company has 447 locations across the country and beat the Zacks Consensus Estimate by 67% in the recent report. The chart is telling the editor that this stock is poised to bounce and could soar by more than 40% from here. Read the full write-up for more specifics on this buy.

Technology Innovators: A solid beat and raise quarter late last month sent shares of Ooma (OOMA) sharply higher. The stock has come back in a bit, and Brian used this small pullback to add this telecom components provider to the portfolio. This Zacks Rank #2 (Buy) also expects fourth-quarter earnings of $0.00 to two cents, which is a “huge swing in the right direction” from expectations for a 7-cent loss. Read the complete commentary for more on this new addition.

Have a Great Weekend!
Jim Giaquinto

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