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Stocks Little Changed...Except for the New Highs

Jim Giaquinto

This would’ve been a good day for a market pullback after reaching new highs and new milestones last week, but the bulls are just too strong right now.

Instead, the major indices managed minor gains on Monday, which means they set another round of record closes.

The Dow stayed above 28,000 (which it first reached on Friday) with an advance of 0.11% (or about 31 points) to 28,036.22.

The NASDAQ also rose 0.11% (or a little more than 9 points) to 8549.94, while the S&P advanced 0.05% to 3122.03. These indices stayed above their own recently-achieved psychological barriers of 8500 and 3100, respectively.

Those gains aren’t much to write home about by themselves, but they still made history since the indices were at all-time highs to begin the session. ANY advance right now means a new high!

The market is coming off of another positive week, which extending winning streaks for the indices to SEVEN weeks for the NASDAQ, SIX weeks for the S&P and FOUR weeks for the Dow.

In addition to being a bit tired after its recent runup, the market also had to deal with some negative news on the trade issue. A report stated that Chinese officials are pessimistic about a deal.

However, the market took the news well and decided not to go on one of its epic selloffs.

And why shouldn’t it take such trade news in stride? It’s similar to that old adage that goes something like: ‘if you don’t like the weather in (name your town), then just wait a few minutes and it will change’.  

In just the past few days, we’ve gone from concerning “snags” in the middle of last week to everything being hunky-dory this past Friday. And now China is pessimistic? Let’s see how they – or the U.S.  – feels tomorrow.

In the meantime, it looks like stocks feel comfortable inching higher as long as an agreement is still possible. But make no mistake about it: THE MARKET WANTS THAT DEAL!

Today's Portfolio Highlights:

Surprise Trader: Retail stocks take centerstage this week as earnings season draws to a close, and Dave plans to add a few names from that space in the coming days. On Monday though, he decided to buy a 12.5% allocation in Jacobs Engineering (JEC). This Zacks Rank #2 (Buy) provides professional, technical and construction services to industrial, commercial and governmental clients. The company has a positive Earnings ESP of 1.22% for the quarter coming before the bell next Monday, November 25. The editor also sold Activision (ATVI) because the stock hasn’t performed well since inception and he needs space for the upcoming retail buys. Read the full write-up for more on these moves. 

Stocks Under $10: The portfolio needs to free up some space for more buys in the coming days, so Brian decided to sell Diana Shipping (DSX) and I.D. Systems (PWFL) for sharply underperforming. In order to absorb the losses, the editor also sold Frontline (FRO) for a 27.9% return in 2 ½ months. By the way, this portfolio ruled the Zacks Top Movers list on Monday with three of the best performers among all ZIC names. Those winners included Vapotherm (VAPO, +6.2%), Maxar Technologies (MAXR, +5%) and Realogy (RLGY, +3.4%).

Black Box Trader: Three out of four companies that left the portfolio this week were positive, including a double-digit winner. Those stocks were:

• Xerox (XRX, +14.7%)
• Arconic (ARNC, +6.2%)
• Target (TGT, +1.5%)
• AECOM (ACM)

The new buys that replaced these names are:

• Builders FirstSource (BLDR)
• DaVita (DVA)
• KB Home (KBH)
• United Airlines (UAL)

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

Counterstrike: "So we still have this back and forth on China. However, the market isn’t responding like it used to. This is because market participants are simply exhausted from the headlines turning out to be not true. Basically, the market has priced in a Phase 1 deal gets done and until its clear that it isn’t going to happen there is no reason to sell off.

"The result is the chop we saw today in the indices on low volume. Overall, the market feels fairly bullish. But as I said last week, we are due for a technical pullback soon. The question is what will be the catalyst to motivate some selling, for now I don’t have the answer.

"Slow week shaping up as we continue to grind at all time highs. Volumes are low, but as we get to closer to Thanksgiving, I would expect very low activity. Reactionary traders like myself simply don’t want to spend the time and effort next week trading, when time can be better spent with family. So I would expect things to slow into the weekend, then be very slow next week."
-- Jeremy Mullin

Have a Great Evening,
Jim Giaquinto

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