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Are We "Pretty Close" to Breaking Out?

Jim Giaquinto

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Tax reform is “pretty close” and it’s NOT tied to getting something done with healthcare. That message from Treasury Secretary Steven Mnuchin was exactly what the market wanted (or needed) to hear. Sprinkle in a few solid earnings reports, and stocks had a solid session of gains.

The S&P increased by 0.76% to 2355.8, while the Dow advanced 0.85% to 20,578.7 and the NASDAQ jumped 0.92% to 5916.8. Hopes for President Trump’s pro-growth agenda have been dwindling since Congress failed to pass the healthcare bill. Needless to say, stocks would take off if the administration could reignite those expectations and, eventually, get the legislation passed.

It really felt like earnings season on Thursday as several portfolios made moves based on recent data. Stocks Under $10 and Reitmeister Trading Alert each sold a position for double-digit returns to lock down profits amid possible challenges. John “fine-tuned” the Large-Cap Trader by adding to three positions, while Tracey bought a stock for Insider Trader that enjoyed three insider buys earlier this month. Learn about all this activity in the highlights section below:

Today's Portfolio Highlights:

Stocks Under $10:
Despite higher Baltic Dry rates, Brian feels that it’s getting harder for shippers to make money these days. So he thought it was best to get out of Golden Ocean (GOGL) today, while he could still bank a 28.9% return. Read the full write-up for more on all of today’s moves and be ready for a new buy tomorrow afternoon.

Reitmeister Trading Alert: Shares of Foot Locker (FL) jumped more than 5% today on a negative earnings pre-announcement. No, that’s not a typo. Shockingly, shares of the footwear giant brushed off this bad news...but a couple of analyst reports did not. With earnings estimates under pressure, Steve has no plans to look a gift horse in the mouth. He sold FL on Thursday for a nice 13.4% return.

Large-Cap Trader: The portfolio got some fine-tuning on Thursday as John used sideline cash to add 2% each to the allocations of Chemours (CC) and Tyson Foods (TSN). The editor wants a more concentrated position in CC ahead of an expected swing trade higher. Meanwhile, he’s expecting an earnings surprise for TSN when it reports on May 8th, so he wants a larger position to capitalize on the momentum.

But that wasn’t all. John also sold the rest of BCS and swapped it with more shares of Deutsche Bank (DB). He thinks the portfolio will benefit more from DB if the centrist candidate (Macron) is successful in the French primary over the weekend. Read the complete commentary for more on all these moves.

Insider Trader: Winnebago (WGO) has a “Grand Design”, but we’re not talking about a new business strategy. It’s the name of a popular new “towable” that dealers are finding hard to keep in stock. As a result, earnings are expected to soar 35.4% in fiscal 2017. Earlier this month, the VP & GM of Motor Homes and 2 directors bought shares of their own company. Given strong industry and company trends, Tracey thinks this is a good sign for the future and picked up WGO with a 10% allocation. By the way, the editor also sold MUSA on Thursday for an approximately 5.5% return. Read more about these moves in the full write-up.

Surprise Trader: "U.S. Treasury Secretary Steve Mnuchin gave markets a boost today when he said that the Trump administration was ‘pretty close’ to bringing forward ‘major tax reform’. More importantly, Mnuchin said that ‘whether health care gets done or health care doesn’t get done, we’re going to get tax reform done.’

"I think the second statement is the real key, as people are growing concerned that the focus on health care reform as of late is bogging down the rest of the Trump agenda. Mnuchin’s comments today have signaled that the administration hasn’t forgotten about taxes, and will still be looking to make changes in this key area this year.

"This might be a bit of the market being too hopeful, but the fact that this is still on the radar for the White House is definitely helpful. Let’s see what they propose in the near term before getting too excited though."
-- Eric Dutram

Don't forget to read our new special report: Making Money on Marijuana

Have a Good Evening,
Jim Giaquinto


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