Renewed Tariff Fears End Four-Day Rally
It’s been a rather topsy-turvy week where trade news actually helped two of the major indices hit new highs. But it was back to reality on Thursday as the possibility of more tariffs on China provided investors with a reason to bank some profits after a four-day winning ride.
According to news reports, President Trump is willing to go ahead with an additional $200 billion in tariffs on Chinese goods, perhaps as soon as next week. It didn’t help that Canada still hasn’t joined the U.S.-Mexico agreement from earlier this week, though there’s a good amount of optimism that something can get done tomorrow.
The end result was the first down day of the week for the major indices. As you’d expect, the Dow took the brunt of the tariff news and declined 0.53% to 25,986.9.
The S&P was off 0.44% to 2901.1 and the NASDAQ declined 0.26% to 8088.4. Not only did today’s slide end a four-day winning streak for these two indices, but it also snuffed out four straight days of new all-time highs. Even in this rough session though, it was still a good day for tech with most of the FANGs moving higher, especially Amazon staying above $2000 per share on its trek toward $1 trillion.
The major indices head into the final day of the week and the month on Friday with gains for both periods. Hopefully, we’ll get a thumbs up from Canada tomorrow to complete the trade triumvirate in North America and close out on a good headline. Plus, pullbacks from trade have been buying opportunities in the past. However, let’s remember that the market is closed on Monday for Labor Day, which means tomorrow is the last hurrah for summer and could lead to a very boring session. We’ll see what happens...
Today's Portfolio Highlights:
Counterstrike: This afternoon’s trade news and the subsequent selloff convinced Jeremy to take profits on a couple names that may be sensitive to such things. The editor sold “trucking broker” Echo Logistics (ECHO) for a nice 19.2% return in four months exactly. He’s also getting out of luxury home furnishings company Restoration Hardware (RH) before its next report, securing a profit of 19.2% as well in just a little over 6 weeks.
Insider Trader: Energy insiders obviously think that their shares are cheap because they keep buying...and so will Tracey. On Thursday, the editor bought two new small-cap E&Ps and sold another energy name for a double-digit return.
Shares of HighPoint Resources (HPR) are under pressure due to a few ballot initiatives for November that would reduce drilling opportunities in Colorado. However, the stock recently saw a cluster buy, so the insiders must think the selling is overdone. This month, the General Counsel and the COO both bought shares for their IRAs, while three directors also made moves.
The other buy today was Lilis Energy (LLEX). Don’t feel bad if you’ve never heard of this name, because neither did Tracey until recently. The company’s move to Texas and its investment in the Permian has really paid off, which convinced the CFO, the Chairman of the Board and a director to all buy shares in the past few weeks. The editor is putting about 8% into each position.
Energy stocks can be very unpredictable, so Tracey also sold Centennial (CDEV) today to secure a nice 13.2% return in less than three months. Read the full write-up for a lot more on all of today’s moves.
Technology Innovators: When a company drops to $24 from $34, you’d think its earnings estimates are moving lower. But that’s not the case with TechTarget (TTGT), a Zacks Rank #2 (TTGT) online IT media company. Basically, Brian Bolan sees this stock as a bargain with good growth potential and a little value too. The reason for its pullback was the sales guidance of $30 million to $31 million for next quarter, which was a little off the consensus of $31.5 million. Needless to say, the editor thinks this stock is primed to move higher rather soon. Learn a lot more about this new buy in the full write-up.
Surprise Trader: The portfolio pulled a more than 40% profit out of upscale furniture retailer Restoration Hardware (RH) back in June…and now Dave is hoping for a repeat. The company has a slightly positive Earnings ESP for its quarterly report coming after the bell next Tuesday. RH has put together eight straight quarters of positive surprises with an average beat of nearly 20% in the past four. As you may remember, the editor is a big fan of the company’s Chairman & CEO Gary Friedman. Read the full write-up for more.
All the Best,
Jim Giaquinto
Recommendations from Zacks' Private Portfolios:
Believe it or not, this article is not available on the Zacks.com website. The commentary is a partial overview of the daily activity from Zacks' private recommendation services. If you would like to follow our Buy and Sell signals in real time, we've made a special arrangement for readers of this website. Starting today you can see all the recommendations from all of Zacks' portfolios absolutely free for 7 days. Our services cover everything from value stocks and momentum trades to insider buying and positive earnings surprises (which we've predicted with an astonishing 80%+ accuracy). Click here to "test drive" Zacks Ultimate for FREE >>
Zacks Investment Research
