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Stocks Rebound and Finally Snap Week-Long Skid

Jim Giaquinto

SPECIAL ALERT: The latest episode of the Zacks Ultimate Strategy Session will be available for viewing tomorrow morning, Wednesday, August 7. Kevin Matras, Kevin Cook, Brian Bolan, David Bartosiak and Sheraz Mian will cover the investment landscape from several angles in this informative event.

Don’t miss your chance to hear:

• Sheraz and Brian Agree to Disagree on whether oil gushes higher or drills lower
• Kevin Matras answers questions covering why stocks went down after the interest rate cut and what happens if we don’t get any more, and whether additional tariffs on China will result in a recession and bear market
• Kevin Cook and Sheraz choose one portfolio to give feedback for improvement
• And much more

So be sure to mark your calendar then log on to Zacks.com and bookmark this page.

The market recovered a good chunk of yesterday’s losses on Tuesday as fears of a currency war with China subsided.

Specifically, China’s central bank moved to stabilize the yuan by setting its reference point a bit higher than everyone feared.

This comes just one day after the U.S. Treasury Department accused the country of being a currency manipulator for allowing the yuan to drop to its lowest level against the dollar in 10 years.  

The NASDAQ responded on Tuesday with an advance of 1.39% (or about 107 points) to 7833.27, while the S&P increased 1.3% to 2881.77. The Dow is back above 26,000 after jumping 1.21% (or about 311 points) to 26,029.52.

Under normal circumstances, this would be a great session. Unfortunately, it pales in comparison to yesterday’s selloff, which was the worst day of 2019 for stocks.

On Monday, the NASDAQ plunged 3.47%. the S&P dropped 2.98% and the Dow dipped 2.9%. Therefore, today’s rally didn’t even make up for half of the slide.

But that’s a glass-half-empty perspective! It certainly was a relief to get any kind of bounce back on Tuesday, especially since the futures last night made it look like we were primed for another rough session.  

Instead, the NASDAQ and S&P finally ended their 6-day losing streak, while the Dow put an end to its 5-day slide.

Maybe we’ll get even closer to making up for Monday’s losses tomorrow. The problem is that nothing has changed from last week as we’re still at the mercy of trade news. So let’s hope for some good headlines (or none at all)…

Today's Portfolio Highlights:

Surprise Trader: The shipping industry was in rough shape throughout 2018 and early this year, but now it’s in the top 30% of the Zacks Industry Rank. Dave decided this was a good place for today’s addition. He added Seaspan (SSW), which is a Zacks Rank #2 (Buy) that owns containerships and charters them. The company has beaten for three straight quarters and its positive Earnings ESP of 12.68% suggests another surprise is on its way before the bell tomorrow. The editor added SSW on Tuesday with a 12.5% allocation and also sold Rudolph Tech (RTEC). Read the full write-up for more.   

Stocks Under $10: The portfolio is sticking with a winning sector for today’s addition of Casa Systems (CASA). This Zacks Rank #1 (Strong Buy) is in the same space as Harmonic (HLIT), which is up more than 21% since being added a month ago. CASA reported a solid quarter recently, which included a strong guidance and its third positive surprise in the past four quarters. Earnings estimates for 2019 are up 9 cents in the past week, while estimates for 2020 are up as well. Read the complete commentary for more on the addition of CASA and look out for another move on Thursday.

Marijuana Innovators: In its most recent quarter, Aphria (APHA) more than doubled the amount of marijuana it sold in the previous quarter. And it charged more for it while reducing the cost of production. Dave is very impressed with this “remarkable progress” from the Canadian grower, which also reported a “blowout” quarter. APHA is also acquiring distribution companies to make it easier for customers to get their product. The editor sold Cronos (CRON) on Tuesday because APHA provides “much more bang for our buck”. Read the complete commentary for more on today’s moves.

Zacks Short List: The portfolio only swapped out one name in this week's adjustment. It short-covered iRobot Corp. (IRBT) for a return of 7.4% in a week, and replaced it by adding Alteryx, Inc. (AYX). Learn more about this emotion-free portfolio that takes advantage of falling and volatile markets by reading the Short List Trader Guide.

Have a Great Evening,
Jim Giaquinto

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