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Summer Rally Reaches 4 Days as Dow Continues to Lead

Jim Giaquinto

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• Sheraz and John Agree to Disagree on whether investors should buy Tesla or Ford for U.S. electric and autonomous vehicle exposure
• Sheraz answers your questions in Zacks Mailbag
• Sheraz and David choose one portfolio to give feedback for improvement
• And much more 

Simply log on to Zacks.com and view the July episode here. And please let us know what you think of this format. Email all feedback to mailbag@zacks.com. 

The market’s got itself a nice little summer rally here. The major indices are each enjoying four-session winning streaks since coming back from the Fourth of July. 

The Dow seems to be making up for lost points during the trade turmoil of the last few weeks, as it again led the market higher. The index crossed back into positive territory for the year yesterday, and on Tuesday it managed a second straight day with a triple digit gain. It was up 0.58% (or about 143 points) to 24919.7. 

Will the S&P surpass 2800 sometime this week? The editors are wondering about it along with other market watchers. The index is inching its way toward the mark, but seems a bit hesitant to actually get over the hump. It still gained 0.35% today to 2793.8.  

The NASDAQ had the hardest time today of the Big 3; it slipped onto negative ground momentarily. But it recovered enough to advance 0.04% by the closing bell to 7759.2. The Russell 2000, however, didn’t come along for the ride at all and slipped 0.53% to 1695.6. 

The market is segueing from another strong jobs report on Friday right into earnings season. The big news today was an encouraging report from Pepsi, but we’ll really get rolling when the big banks start announcing later this week. Finally! The market has other things to concentrate on than trade. A strong earnings season is just what the doctor ordered. 

“The main event (earnings season) kicks off next week. We are looking for over 19% earnings growth on the S&P 500 with revenue growth over 8%. If the market can deliver that then I think the rally can continue,” said Dave Bartosiak, editor of Surprise Trader, Momentum Trader and Blockchain Innovators. 

Dave was one of the active editors on Tuesday as he added a stock in Surprise Trader that is reporting next week. But Brian Bolan was even busier, cashing in a double-digit winner in Technology Innovators and picking up a new name for Stocks Under $10. Read the highlights section below for all the news on these trades and more... 

Today's Portfolio Highlights: 

Technology Innovators: The market has really hit the ground running to start this week, but Bandwidth (BAND) has not come along for the ride higher. Brian Bolan’s patience in this cloud-based communications platform has run out, so he sold the name on Tuesday. Fortunately, BAND enjoyed a good run in the portfolio and leaves with a more than 32% profit in less than five months. 

Surprise Trader: Two buys in two days for the portfolio…yep, you can tell that earnings season is near! On Tuesday, Dave went to the highly-ranked computer services industry (top 17% of the Zacks Industry Rank) and picked up Syntel (SYNT). The company has beaten the Zacks Consensus Estimate for eight straight quarters, amassing an average surprise of nearly 30% over the past four. It topped by 25% most recently. The editor is feeling confident that SYNT can continue this streak when it reports again on Thursday, July 19th, especially since the company has an Earnings ESP of 11.73%. Read the full write-up for more. 

Stocks Under $10: If you’re a golfer, then you’ve probably heard of Drive Shack (DS). The company owns and operates golf-related leisure and entertainment businesses. Brian Bolan likes to hit the links every now and then, and he prefers DS to competitor Top Golf. The editor also thinks the company looks like a great long-term play. The stock may be a Zacks Rank #3 (Hold) right now, but it has an excellent history of surpassing the Zacks Consensus Estimate and has a four-quarter average beat of nearly 200%! Learn a lot more about this new addition in the full write-up.

Zacks Short List: This week's adjustment included three swaps. The portfolio short-covered these positions:

• Tencent Holding (TCEHY, +2.8%)
• Ionis Pharmaceuticals (IONS)
• Thomson Reuters (TRI)

The new buys replacing these names include:

• NetScout Systems (NTCT)
• Schlumberger Ltd (SLB)
• 58.com Inc. (WUBA)

Learn more about this emotion-free portfolio that takes advantage of falling and volatile markets by reading the Short List Trader Guide. 

Counterstrike: "I expect that before the week is out, the bulls do get a close over 2800. We might get some more low volume trading before that happens, but the atmosphere to drift higher is there. As market sentiment improves, the negative headlines seem to have less impact. 

"Summer trading was abundant today. Low volume and small trading ranges makes for a boring day. However, this market usually wakes up quickly, so let’s not fall asleep." -- Jeremy Mullin 

Have a Good Evening,
Jim Giaquinto

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