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Stocks Take Another Bumpy Ride

The December episode of the Zacks Ultimate Strategy Session is now available for viewing! Tune in to this “must-see” event when Sheraz Mian, Brian Bolan and Jeremy Mullin discuss the investment landscape from several angles. Don’t miss your chance to hear:

• Brian and Jeremy Agree to Disagree on whether it’s time to buy FANG stocks again
• Sheraz answers your questions in Zacks Mailbag
• Sheraz and Brian choose one portfolio to give feedback for improvement
• And much more

Simply log on to Zacks.com and view the December episode here. And please let us know what you think of this format. Email all feedback to mailbag@zacks.com.

Yesterday was certainly volatile in the market, but today was something else altogether. Stocks moved higher at the start and then tumbled into midday before paring those losses significantly by the close. The major indices went on a wild ride, though finished in the same neighborhood where they began.

The Dow provides the best example of today’s craziness. The index jumped by more than 350 points early in the session and then plunged to a more than 200-point loss at its worst. It recovered enough to finish lower by only 0.22% (or about 53 points) to 24,370.24.

Meanwhile, the S&P took a similar trajectory, but never threatened to break below 2600 again as it momentarily did yesterday. The decline was a slight 0.04% on Tuesday to 2636.78.

The NASDAQ again outperformed its counterparts and was the only major index to finish in the green by advancing 0.16% to 7031.83. On Monday, these indices moved sharply lower right off the open, but staged an epic recovery with a lot of help from tech. The space did not have as strong a performance today, though it didn’t selloff either.

Much of the market’s swings can be traced to the trade war’s indecisiveness. President Trump tweets about “very productive conversations”, while China is considering cutting tariffs on cars made in the U.S. At the same time, the U.S. plans to condemn China over hacking and espionage, while the Huawei CFO story remains in the headlines.

On top of everything, the President and Democratic leaders have an argument on immigration and a possible government shutdown right in front of the press, which is actually one of the least surprising things to happen today when you consider the times we live in. However, it was another reminder of just how cantankerous things will be in Washington when the Dems assume control of the House next month.

Who knows what’s going to happen tomorrow? Hopefully, this volatility is a sign that the market is finding that elusive bottom… but we’ve been waiting on that for a while. Either way, we’d better buckle up because it might be another bumpy ride.

Today's Portfolio Highlights:

Counterstrike: The S&P momentarily broke below 2600 on Monday, but bulls quickly pulled it back over the mark and have been defending it. Jeremy felt it was finally time to put some cash to work, so he bought a 12% allocation in yoga-inspired apparel company Lululemon (LULU). The company recently reported a strong quarter with a positive surprise of 9%, along with a higher guidance for this year’s earnings and same-store sales. And yet, shares moved lower and opened up a classic Counterstrike play. Meanwhile, Jeremy also picked up LendingTree (TREE) with a 6% allocation. Read the complete commentary for more on today’s moves.

Home Run Investor: If a stock can keep from plunging during a market selloff, then it is worth your while to check it out. Such resilience is what led Brian Bolan to the online travel research company TripAdvisor (TRIP). This stock has stood up to the selling in the tech space, while rising earnings estimates have made it a Zacks Rank #1 (Strong Buy). Furthermore, it beat by more than 50% in its most recent report, which was its third straight positive surprise in a row. Read the full write-up for more on today’s addition of TRIP.

Momentum Trader: Since reporting a positive surprise of more than 23% late last week, shares of cloud-based enterprise software company Domo (DOMO) have been “rocking and rolling”. That’s just what Dave wants for this portfolio! Estimates have also been rising for the company, which is part of a space in the top 10% of the Zacks Industry Rank. The editor added DOMO on Tuesday with a 12.5% allocation. See the complete commentary for more.

Zacks Short List:
The portfolio pocketed a big profit this week as it short-covered National Oilwell Varco (NOV) for a 22.5% return. It also got out of Ctrip.com Int'l (CTRP) with a profit of 4.63%. The new buys that replaced these names are Baidu (BIDU) and Cheniere Energy (LNG). Learn more about this emotion-free portfolio that takes advantage of falling and volatile markets by reading the Short List Trader Guide.

All the Best,
Jim Giaquinto

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