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Stocks End Losing Skid with Best Week of 2019

Jim Giaquinto

Now that’s how you end a losing streak!

The major indices gained another 1% to finish this impressive week, which added onto a three-day rally that already had the Dow up 900 points before Friday’s session even began.

In other words, that index ended its six-week losing streak by surging more than 1100 points amid five straight sessions in the green!

The big news on Friday was the jobs report, which was disappointing on its face but actually fits in very nicely with the theme of the whole week.

The economy added only 75K jobs last month, missing expectations by more than 100K. While that’s a terribly disheartening number for a market that’s concerned about slowing growth, it does appear to give the Fed an additional reason to cut rates in the near future.

Let’s not forget that the biggest reason for this week’s performance was Fed Chair Jerome Powell’s promise on Tuesday to take “appropriate” actions to keep this expansion going. After this jobs report, a cut may look even more appropriate today than when he made the speech.

The NASDAQ had the best day on a percentage basis as it jumped 1.66% (or more than 126 points) to 7742.10. The index had a nice bounce back from Monday’s ‘tech wreck’ and ends the week with an advance of 3.9%.

The S&P started this week well below 2800, but ended higher by 1.05% to 2873.34. The Dow enjoyed its fourth straight session with a triple-digit advance by climbing 1.02% (or around 263 points) to 25,983.94.

These indices were up 4.4% and 4.7%, respectively, for the week.

The Dow broke its six-week losing streak, while its counterparts ended four-week slides. However, the indices still didn’t make up for last week’s plunges.

Maybe some good news on the trade front(s) can recover more lost ground from the recent pullback. The negotiations with Mexico seem to be going pretty well (though we’ve all heard that before). Still, President Trump tweeted that there’s a “good chance” for a deal.

The market would love to see something happen that either delays or ends the 5% tariffs on Mexico that are still scheduled to take effect on Monday.

An accommodative Fed and progress on trade is the recipe for stocks to get back to all-time highs. Let's see what happens…

Today's Portfolio Highlights:

Insider Trader: It’s rare to see insider activity at companies that just went IPO or are hitting new highs. Well, Tracey found a company that’s breaking both of these norms. Anaplan (PLAN) is a Zacks Rank #2 (Buy) subscription-based cloud platform for business users that went public in October 2018. Shares are on the rise after the company put together three quarters of “outstanding” subscription growth. But most importantly, that growth is accelerating and repeatable. Therefore, when a director made a huge purchase worth more than $1.5 million earlier this week, Tracey took it as an exceptionally bullish signal that this stock has further to rise despite already being at new highs. The editor added PLAN on Friday with a 10% allocation. Read the complete commentary for more.

Home Run Investor: The portfolio took full advantage of this strong market week to bulk up its holdings. Today’s addition of burger-centric Habit Restaurants (HABT) marks the fourth buy in the past five days. Brian Bolan considers this a classic ‘buy low, sell high’ move, as the fast-casual restaurant company has returned to earth after a 75% earnings surprise sent shares sharply higher. Furthermore, earnings estimates for this year are up 40% over the past two months, which explains why HABT is a Zacks Rank #2 (Buy). The portfolio now has 10 names after this week’s buying spree, but there’s still room for a couple more. Read the full write-up for more on today’s addition.

Value Investor: Uncertainty is swirling around Dell Technologies (DELL) at the moment, so Tracey decided to sell it now while she could still bank a double-digit return. The editor added the stock in January shortly after it went public again because she appreciated its reputation as an innovative tech name. It was the right move! More recently though, the threat of tariffs on Mexico is problematic since Dell makes a lot of laptops in the country. Also, its partner Pivotal Software plunged after a soft earnings report. Tracey thought this was a good time to say goodbye to Dell and secure a 25.1% profit.

Have a Great Weekend!
Jim Giaquinto

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