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Starting a Short Week with New Highs

Jim Giaquinto

It didn’t take long for the major indices to get back to all-time highs, as they began this shortened, holiday week with a solid rally on hopes for a trade deal.

The NASDAQ jumped 1.32% (or about 112 points) to 8632.49 as technology had a fantastic performance. Meanwhile the S&P rose 0.75% to 3133.64 and the Dow advanced 0.68% (or nearly 191 points) to 28,066.47.

The last time all three indices reached record highs in the same session was one week ago today.

As mentioned here before, the market is reacting to whatever the current trade headline is. One day it will be snags or potential delays, and then the next day everybody is feeling great.

Fortunately, Monday was more about the latter scenario, as the U.S. National Security Advisor, Richard O’ Brien, said a deal could happen before the year is over.

But perhaps more importantly, China showed a willingness to give a little when it came to intellectual property (IP) rights by calling for more protection and increasing penalties for violations.

IP has been one of the major sticking points for a Phase 1 agreement thus far.

The market also liked to hear about Charles Schwab acquiring TD Ameritrade in an approximately $26 billion all-stock transaction that creates a new company with over $5 trillion in assets.

All of this news and the rally comes in the wake of the market’s first negative week in well over a month. The NASDAQ’s seven-week winning streak came to an end, as did the S&P’s 6-week ride and the Dow’s four-week run.

The big question coming into today was whether or not the market would take a step back after its record-setting run, especially since earnings season is largely over and a Phase 1 trade deal remains elusive. Would it be a while before seeing new highs again?

The answer is….nope!

And it’s a good thing we had a nice rally today, because this is likely to be the busiest session of this Thanksgiving week. Activity will decline in the coming days, and of course the market is closed on Thursday and closes early on Friday.

But that doesn’t mean that stocks won’t grind higher amid the low volume, which means we might not be done making new highs!

Today's Portfolio Highlights:

Stocks Under $10: The portfolio made more than 40% with The Rubicon Project (RUBI) a few months ago, but it has been bothering Brian ever since that he got out too soon. Well, now he has a second chance as this Zacks Rank #2 (Buy) slipped below where it was sold in late September. The global technology company, which focuses on automating the buying and selling of advertising, has beaten the Zacks Consensus Estimate for six straight quarters with double-digit surprises nearly every time. In fact, it has an average beat of 86% over the past four quarters. Looking forward, the editor is especially excited that RUBI should be flipping to profitability sometime next year. Read the complete commentary for more on this new buy. 

Insider Trader: You’ve probably heard that the mall is apparently dead, which explains why shares of Macerich (MAC) are down more than 38% year-to-date and nearly 59% over the past two years. This REIT specializes in upscale regional malls with 47 properties in major metro markets in the U.S. But one director at the company begs to differ with the conventional wisdom. He bought 10,000 shares last week, which marked his second buy in approximately 3 months. Tracey can’t be sure that shares have bottomed here, but she appreciated this action because it suggests that the insider thinks the stock is ‘on sale’. The portfolio only has 3% remaining in cash, so that was all the editor could put into MAC on Monday. Make sure to read the full write-up for a lot more on this new buy. 

Black Box Trader: The portfolio swapped two positions this week, which included selling Brinker Int’l (EAT) and MasTec (MTZ). The new buys that replaced these names are Arconic (ARNC) and Target (TGT). Read the Black Box Trader’s Guide to learn more about this computer-driven service designed to take the emotion out of investing.

Have a Good Evening,
Jim Giaquinto

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