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Stocks Jump on Delayed Reaction to Fed News

Jim Giaquinto

Now that’s more like it!  Sometimes it takes a day or so for the market to digest moves by the Fed, and today we saw the kind of positive reaction you’d expect after hearing that rates won’t be hiked this year.

The NASDAQ was out front again with a gain of 1.42% (or about 110 points) to 7838.96. Tech continues to heat up the market with strong performances from the likes of memory chip maker Micron Technology, which soared 9.6% on Thursday after a solid second quarter report. Meanwhile, Apple advanced nearly 3.7% on a brokerage firm upgrade.

The S&P is now closer to 2900 than 2800… though we shouldn’t get ahead our ourselves even on a rally day. Nevertheless, the index jumped 1.09% to 2854.88.

The only space that had a rough session on Thursday was the financials, which wasn’t too excited with the Fed’s announcement yesterday. As a result, the Dow had more pressure than its counterparts, but still managed a great session with an advance of 0.84% (or nearly 217 points) to 25,962.51.

Well, that makes a lot more sense than yesterday’s market action. On Wednesday, stocks momentarily rallied after the Fed’s news, but then quickly sold off to end mostly lower (except for a slight gain from the NASDAQ).

Each of the major indices now head into Friday’s session on positive ground and with a chance for a second straight week of gains. However, it’s unlikely that they’ll be able to repeat last week’s impressive performances.

Today's Portfolio Highlights:

Insider Trader: It’s been a while since Tracey has seen a big cluster buy in a bank, but that’s exactly what happened this month at Cadence BanCorporation (CADE). This mid-cap bank saw its CEO, COO, CFO and five directors all buy shares in recent weeks. The interesting thing is that CADE is well above its 52-week lows. The editor thinks this cluster buy is signaling good news for the bank, either with the recent acquisition of State Bank or its legacy business or maybe even both. To make room, she sold half of Diebold (DBD) for a return of 17%. Since there’s no cash on the sidelines, the position in CADE will be smaller than usual with an allocation of about 5.5%. See the full write-up for more.  

Options Trader: The premium for the portfolio’s August 100.00 Calls in Genuine Parts (GPC) have doubled in less than two months, so Kevin decided to pull the profits and bank a 106% return. But the editor thinks this automotive replacement parts company has more upside and could surpass $130. Therefore, he reinvested the original money by buying to open 3 August 110.00 Calls to capture the anticipated upside. Read the full write-up for more specifics on this trade.

TAZR Trader: The payments industry saw another big merger this week as Fidelity National Information Services agreed to buy Worldpay in a $43 billion deal. Kevin had been looking for an entry back into Square (SQ) and further scanning revealed another behind-the-scenes payments player, Total System Services (TSS). The industry consolidation should give these stocks a boost with SQ possibly reaching $90 and TSS hitting new highs near $100 and beyond. Read the full write-up for more on these buys.

Stocks Under $10: Earnings estimates for Vitamin Shoppe (VSI) have jumped in the past month, making this nutritional products retailer a Zacks Rank #1 (Strong Buy) and capturing the attention of Brian Bolan. The company has easily beaten the Zacks Consensus Estimate for the past three quarters, including a 38% surprise in the most recent report. The editor also likes that “margins have been improving in a big way”. With a good valuation and earnings estimates moving in the right direction, Brian decided to add VSI on Thursday. See the complete commentary for more.

All the Best,
Jim Giaquinto

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