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Sluggish Start to September

Jim Giaquinto

With trade concerns continuing to pressure the market, the major indices started September in the red. However, stocks came well off their lows of the session and, therefore, remain just a few steps behind all-time highs that were set just last week.

The NASDAQ was off 0.23% on Tuesday to 8091.3, while the S&P slipped 0.17% to 2896.7. The Dow dropped by well over 100 points at its worst of the day, but finished lower by only 0.05% (or about 12 points) to 25,952.5.

The market remains frustrated by last week’s failure to bring Canada into the trade agreement between the U.S. and Mexico. Discussions will resume in Washington tomorrow, but without as much optimism as before. On the China front, $200 billion worth of new tariffs are set to be imposed on Chinese goods this week.

While the market continues to sweat about trade issues, it’s important to remember that such worries have not impacted the economy just yet. For example, the ISM Manufacturing Index reached 61.3 in August, which not only beat expectations and July’s 58.1, but was also the best reading since 2004.

Move over Apple! Another big piece of news to start September was that Amazon briefly became the second American company to reach $1 trillion. It was over the threshold of 2050.27 this afternoon, but couldn’t hold it into the close and finished at 2039.51. It was still up more than 1.3% in the session. Apple hit the $1 Trillion mark just a little over a month ago (August 2).

Today's Portfolio Highlights:

Blockchain Innovators: Payment services company Square (SQ) has been a great performer for the portfolio. In fact, it’s been the BEST performer with a gain of more than 77% since inception in March. So it's no wonder Dave wants more exposure to that space with today’s addition of MoneyGram (MGI), which handles money transfers, money orders and payment processing solutions for financial institutions and retail customers. This Zacks Rank #2 (Buy) was as high as $17 a year ago, but has since pulled back to about $6. The editor thinks it has found a bottom and should begin working its way higher from here.

The other buy today was Salesforce.com (CRM), which is a leader in on-demand business services that allow customers to manage and share their sales, support, marketing and partner info on-demand. The company is working on a blockchain product to decentralize its data from its existing cloud structure in order to enhance security and efficiency. Read the full write-up for more on today’s buys.

Stocks Under $10: When looking for a new portfolio pick, Brian Bolan doesn’t usually gravitate toward stocks that have fallen short of earnings expectations in three of the last four quarters. But he’s making an exception for Avid Tech (AVID), which is in the business of video and multimedia delivery. Basically, the stock missed big in its most recent report, but has a solid outlook, an attractive chart and continues to hold a Zacks Rank #2 (Buy). The editor thinks this stock is headed to new highs as all the profit will be coming in the next two quarters, so he added AVID on Tuesday before this seasonal swing. The editor wouldn’t be surprised if this stock was testing the $9 range by early next year. Read the complete commentary for a lot more.

Counterstrike: As anyone who watches HGTV or the DIY Network knows, modular carpeting is a big deal these days. It’s basically laying down carpet in small tiles rather than the whole room at once. As the largest manufacturer of modular carpet, Jeremy is hoping that Interface (TILE) will be a big deal for the portfolio. The stock dipped 10% after its recent quarterly report, but has shown a lot of resilience by grinding back near pre-earnings levels. The editor thinks TILE, which raised its 2018 guidance, is set to end its sideways pattern…and his Fibonacci analysis supports a great risk/reward setup.

The other buy today is a mirror image of TILE. Keysight Technologies (KEYS) has been a great performer with shares jumping 50% this year, but the stock recently pulled back despite a strong quarter. This provider of electronic design and test solutions jumped 15% after beating earnings and revenue in its most recent report and hiking its Q4 guidance. It has since pulled back to pre-earnings levels, which gives Jeremy a great chance to pick it up at a bargain before the next leg up. TILE and KEYS were each added with 12% allocations. Get more specifics in the full write-up.

Zacks Short List:
There were only a couple changes in this week’s adjustment. The portfolio short-covered BioMarin Pharmaceutical (BMRN, +7%) and Teradata (TDC). These positions were replaced with the additions of Ctrip.com Int’l (CTRP) and Thomson Reuters (TRI). Learn more about this emotion-free portfolio that takes advantage of falling and volatile markets by reading the Short List Trader Guide.,

ETF Investor: The emerging financial technology industry is one of the hottest spaces in the market with tremendous growth potential. However, the big names in this area like Square, PayPal and Wirecard don’t get significant representation in the broader tech or financial ETFs. But Neena has found a name that focuses on this innovative space. On Tuesday, the editor picked up Global X FinTech ETF (FINX). This fund gives the portfolio diversified exposure to the rise in e-commerce, digital payments, blockchain and cryptocurrencies. Read the full write-up for more.

Black Box Trader: There were lots of changes in this week’s realignment as seven names were swapped. The stocks that left the portfolio today include:

• HCA Healthcare (HCA, +8.8%)
• Molina Healthcare (MOH, +4.2%)
• PACCAR Inc (PCAR)
• DR Horton (DHI)
• Cigna Corp. (CI)
• Old Republic Inernational (ORI)
• Jacobs Engineering (JEC)

The new buys that replaced these names are:

• Angie’s List (ANGI)
• Guess? Inc (GES)
• SeaWorld Entertainment (SEAS)
• The Progressive Co. (PGR)
• The TJX Companies (TJX)
• Tractor Supply Co. (TSCO)
• Turtle Beach Corp. (HEAR)

Read the Black Box Trader's Guide to learn more about this computer-driven service designed to take the emotion out of investing.

Zacks Confidential: We are truly living in the most impressive (and some would say longest) bull market in history...and there's plenty of proof to back that up. Most investors look at surging GDP, historic unemployment and record corporate profits. But David Borun doesn't want you to forget about consumer confidence. And neither does Kevin, who gave Dave the keys to this week's Zacks Confidential to explain the importance of this factor that makes up 70% of our GDP. Read his article and get three top stock picks by clicking: For a Preview of Where Stocks are Headed, Look at Rising Consumer Confidence.

Have a Good Evening,
Jim Giaquinto

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