December kicked off on Monday with a nice 1%+ rally across the major indices after President Trump and China’s President Xi agreed to postpone further tariffs for 90 days at the G-20 this past weekend.
The NASDAQ saw the best performance by rising 1.51% (or nearly 111 points) to 7441.51. The FANGs all took part in this relief rally, especially Amazon (+4.86%) and Apple (+3.49%).
Meanwhile, the Dow advanced 1.13% (or almost 288 points) to 25,826.43, while the S&P increased 1.09% to 2790.37. The indices are coming off a strong final week of November that saw each of the Big 3 jump by approximately 5%.
It’s not like the U.S. and China are best friends now, but the meeting in Argentina didn’t require any major breakthroughs as far as the market was concerned. All we really needed was some sort of agreement between the two countries that would cool the escalating trade tensions of the past several months. It looks like that’s just what we got…temporarily at least.
Tariffs on over $200 billion in Chinese goods will stay at 10% for now, instead of rising to 25% as President Trump threatened if nothing productive came out of the meeting. It may still move up to 25% if nothing can be worked out in the 90 days, but that gives the two sides an opening to negotiate. That’s pretty much what the market was expecting, which may have been why the morning rally faded a bit into the close.
What a great few days this has been for the market! We got good news on two of the major uncertainties that fueled the correction: rising rates and trade. Of course, neither of these issues have been resolved for the long-term, but positive movement on both is a good first step. Most importantly, these recent developments suggest that stocks could end this frustrating year with a rally as we begin the historically strong month of December.
Today's Portfolio Highlights:
Healthcare Innovators: Last week, Kevin mentioned that he was holding onto Global Blood Therapeutics (GBT) ahead of the American Society of Hematology (ASH) conference. And it’s a good thing he did! The biotech revealed positive results for its trial of Voxelotor as a treatment for children with sickle cell disease. The reaction on Monday was a 47.8% surge in GBT. You don’t get to see that every day! Needless to say, it was the best performer among all portfolios. However, the editor warns that the stock will remain volatile since it still doesn’t have the final approval of the FDA.
Black Box Trader: All seven of the stocks sold this week were positive. Here are the names that left the portfolio:
• CDW Corp. (CDW, +11.4%)
• Oshkosh Corp. (OSK, +8.3%)
• Molina Healthcare (MOH, +7.8%)
• HCA Healthcare (HCA, +6.1%)
• Old Republic Int'l (ORI, +3.6%)
• Unum Group (UNM, +2.3%)
• Express Scripts (ESRX, +1.7%)
The new buys that replaced these names in this busy weekly adjustment include:
• Advance Auto Parts (AAP)
• Booz Allen Hamilton (BAH)
• Cigna Corp. (CI)
• Crocs, Inc. (CROX)
• Expeditors Int'l of Washington (EXPD)
• Spirit Airlines (SAVE)
• TEGNA Inc. (TGNA)
Read the Black Box Trader's Guide to learn more about this computer-driven service designed to take the emotion out of investing.
Counterstrike: "The reason for the move higher was of course the truce that was agreed up by President Trump and Xi. The US will no longer impose a 25% tariff on Jan 1st and will hold the 10% level for 90 days. China will also purchase more from the US to work on imbalances in trade. China will also reduce and remove tariffs on car imports, while the countries will work on a final agreement over the next 90-days.
"The excitement is well deserved, but considering the market move last week, traders had good reason to sell into the strength. Market closed well off their highs, with the S&P up 1.09% and the Nasdaq up 1.63%.
"I now expect the realization of a deal to be accepted by markets over a period of time. There will be some doubt at first, but as trade talks come along, I think the market will grind higher into the end of the year." -- Jeremy Mullin
By the way, this portfolio also had a double-digit winner on Monday as Velocityshares 3X Long Crude Oil ETN (UWT) climbed 14.9%. The editor bought this name on Thursday as he figured that oil was near a short-term bottom. Nice timing!
Zacks Confidential: Of all the editors, Dave seems most encouraged by the recent good news on rates and trade. In fact, he’s completely comfortable in declaring that the correction is over and its time to get back into the market. Kevin Matras shares his bullishness, so it makes sense that he would hand over the keys to this week’s Zacks Confidential to Dave. Find out why he is so optimistic moving forward and get three beaten down names that should improve as tensions ease: Stocks Set to Rocket Higher After Risks Retreat.
Have a Great Evening,
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