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Still Stuck to Start New Week

Jim Giaquinto

The market remained in a rut to begin the last full week of September, as we’re still waiting around for a catalyst to spark the next upward move to new highs.  

This month isn’t known for being very hospitable to stocks, but each of the major indices are up solidly thus far. We enjoyed a three-week winning streak that began in late August and, unfortunately, ended last week. 

Therefore, we remain just a few steps behind new all-time highs… which is pretty much where we’ve been for a while now. 

And Monday was no help! 

The Dow managed to close on positive ground, but only by 0.06% (or 15 points) to 26,494.99. Meanwhile, the S&P slipped 0.01% to 2991.78 and the NASDAQ was off 0.06% (or a little more than 5 points) to 8112.46. 

Each of the indices started the session in the red and then moved into positive territory before a late-day dip. 

The market digested dueling manufacturing reports on Monday. Activity in the Eurozone is down sharply, but activity in the U.S. was at a five-month high according to IHS Markit.

The market may be much more interested in what’s happening here at home, but there’s still concern about other areas of the globe slipping into recession and impacting the U.S. economy.   

The stocks are going to need a reason to break out of this rut. It's too bad the Chinese delegation left Washington early last week in a huff, which was obviously a negative sign for next month's high-level meetings. Right? 

Actually though, the market may have overreacted to that news on Friday. Believe it or not! 

Both sides say the talks went well. And, apparently, the cancellation of trips to see U.S. farmers was at the request of the U.S. and not a sign of dissatisfaction with the meeting. 

While a complete trade deal could still be a long way off, a few good headlines on this issue could help the market finish this month strong and maybe even make some history. 

Today's Portfolio Highlights:

Surprise Trader: This Thursday’s quarterly report from Micron (MU) will “set the tone for next quarter’s semiconductor action”. The company makes RAM chips that are used in a countless number of devices. It’s also one of the big players in the space that everyone will be watching later this week. Fortunately, MU has a positive Earnings ESP of 7.64% for this week’s report. The editor added the stock on Monday with a 12.5% allocation. The portfolio also sold Barrick Gold (GOLD) today for a 2.8% return. Read the full write-up for more on today’s moves. 

Black Box Trader: The portfolio cashed in a double-digit winner in this week’s adjustment as part of four overall swaps. The stocks that were sold today included:

• Skechers U.S.A. (SKX, +13.7%)
• Walmart (WMT, +1.1%)
• GMS Inc. (GMS, +0.1%)
• National Oilwell Varco (NOV)

The new buys that replaced these names are:

• Crocs (CROX)
• Restoration Hardware (RH)
• T-Mobile US (TMUS)

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

Technology Innovators: "The markets opened softer this morning but with no real conviction from either side, they drifted back above the break even line only to see an ugly close. We also saw a rough close on Friday, so one has to think that traders are avoiding any and all overnight risk here.

"Volumes were very low today and trading was widely mixed. I see Consumer goods names were stronger, but most sectors were divided almost 50/50 in terms of winners are losers. When we talk about no conviction, this is the definition of that!

"The quarter is coming to an end, and while some traders have locked in gains, others are just trying not to get caught with their pants down. There is a lot of talk out there about how the market has a seasonal pattern of trading lower in the end of September and throughout October. Does this happen all the time? No. Is it a reason to buy? Maybe."
-- Brian Bolan

Have a Great Evening,
Jim Giaquinto

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