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Stocks Rally Into 2020

Jim Giaquinto

The market has HUGE shoes to fill in 2020 after an epic 2019, but it took a good first step on Thursday with a strong, record-setting rally on the first trading day of the year.

The NASDAQ had the best performance due to a solid day for tech, especially the chips. It jumped 1.33% (or nearly 120 points) to 9092.19.

The index closed above 9,000 for the first time ever on the day after Christmas, and now it’s a stone’s throw away from 9100 on the day after New Year’s.

The Dow wasn’t far behind with a rise of 1.16% (or around 330 points) to 28,868.80. The S&P rose 0.84% to 3257.85.

There’s no better way to start a new year than with a fresh round of all-time highs for the major indices! Stocks even accelerated into the close.

The market appreciated news from China that the People’s Bank cut its reserve requirement ratio, which will release more than $100 billion into that economy.

In addition, President Trump said he plans to sign the Phase 1 trade deal on January 15, and then sometime afterward will head to China for discussions on Phase 2.

The NASDAQ skyrocketed by 35% in 2019, while the S&P nearly jumped by 29% and the Dow increased over 22%.

Nobody sees a repeat performance in 2020, but that doesn’t mean we can’t have another positive year. Hopefully, our relationship with China will continue to improve and we already know that the Fed isn't expecting to raise rates.

Of course, there are always blind spots and we should remember (as if we could forget) that this is an election year. But for now, let’s just enjoy the market’s run and see how long it can last before taking a break...

Today's Portfolio Highlights:

Zacks Top 10 Stocks: The portfolio has been refreshed for 2020 with 10 new names! Go to the complete commentary to learn all about the new picks and to find out what Sheraz expects for the upcoming year. One more thing, seven of the picks for 2019 were positive, including five double-digit winners and a triple-digit gainer! 

Counterstrike: We knew Jeremy was planning on making a few buys in the New Year, but he sure didn’t waste any time with a couple of new pickups on the first trading day of 2020. The editor added an 8% allocation in luxury home furnishings retailer RH (RH) and a 7% allocation in automated advertising company The Rubicon Project (RUBI). Both of these stocks are Zacks Rank #1s (Strong Buys) that have pulled back after strong quarterly reports, which included positive surprises of 25% for RH and 66% for RUBI. Jeremy likes the idea of getting long on these names now before their next leg upward. Read the full write-up for more on today’s moves.

Surprise Trader: Now that we’re past Christmas and done with 2019, it’s time to start thinking about earnings season again. Well, you don’t have to tell Dave twice! He’s always ready for an earnings report, which is why he added Simply Good Foods (SMPL) on Thursday. The company is a Zacks Rank #2 (Buy) that makes nutrition bars, ready-to-drink shakes, snacks and confectionary products. You are probably aware of their Atkins® brand. SMPL is scheduled to report next Thursday, January 9th before the bell. It has a positive Earnings ESP of 4.76% for the quarter. The editor is also encouraged by next quarter’s estimates of 20% EPS growth and 88% sales growth. He added SMPL today with a 12.5% allocation. See the full write-up for more.

Healthcare Innovators: This portfolio enjoyed three straight double-digit gains in CRISPR Therapeutics (CRSP) last year… and now Kevin wants back in to start 2020. The stock recently dipped on news out of China, but the editor doesn’t believe it will have a real, long-term impact on one of the most innovative names in an innovative field. Therefore, shares dropping 20% from resistance highs at $74 is a great entry point. However, Kevin warns that there is still “considerable risk” in the name due to limited data for a sickle cell drug, so make sure to read his complete commentary for more on the risk/reward profile.

TAZR Trader:
The uncertainty over the Affordable Care Act [ACA] is certainly an unending news driver for Centene (CNC), which has one of the largest exposures in managed care. While shares ticked higher recently after a “mixed-to-positive court ruling”, estimates for next year have dipped so far that the stock is now a Zacks Rank #4 (Sell). Kevin thought this was a good time to sell CNC and “be rewarded for our patience”. It brought a nice gain of 30.9% since its addition in mid-April.

Insider Trader:
Shares of Enphase Energy (ENPH) have been hot over the past couple of sessions. In fact, Tracey thinks this microinverters supplier to the solar industry has been a bit TOO hot, and could pull back sharply on any larger stock market weakness. Therefore, the editor sold half of ENPH on Thursday and secured a 52.3% return in a little over a month. By the way, ENPH was easily the best performer of the day among all ZU names with a rise of 12.3%.

Have a Great Evening,
Jim Giaquinto

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