Remember, the latest episode of the Zacks Ultimate Strategy Session will be available for viewing no later than this Wednesday, December 12. Kevin Matras, Sheraz Mian, Brian Bolan and Jeremy Mullin will cover the investment landscape from several angles in this informative event.
Don’t miss your chance to hear:
• Brian and Jeremy Agree to Disagree on whether it’s time to buy FANG stocks again
• Kevin answers your questions in Zacks Mailbag
• Sheraz and Brian 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.
We had another volatile session on Monday, but at least the swing into the close was to the positive side this time.
Stocks started the session solidly in the red after news broke that the Brexit vote in the UK would be delayed. The Dow slumped by more than 500 points at its worst, while the S&P dipped under its October low.
Mercifully, the market finally calmed down and started its long recovery due, in part, to good old technology. The NASDAQ was the first major index to cross back over to the positive side and ended with the biggest gain. It was up 0.74% to 7020.52.
The FAANGs were all higher, especially Facebook (+3.22%). Perhaps most importantly, Apple advanced 0.66%, which is pretty impressive when you consider it had been down by more than 2% in the session.
The S&P slipped below 2600 momentarily, but then the bulls started charging. The index ended with an improvement of 0.18% to 2637.72. (Counterstrike editor Jeremy Mullin has more on this in the highlights section below.) The Dow recovered from the 500-point deficit to gain 0.14% (or about 34 points) to 24,423.26.
"The day ended up being a lot better than I thought it would after this morning. I was searching for support levels and finally the market broke higher. It would be great to see the market shaking off some of the bearishness it saw last week. As long as the trade war rhetoric dies down I should get my wish," said Dave Bartosiak, editor of Surprise Trader, Momentum Trader and Blockchain Innovators.
That recovery sure felt great after last week’s more than 4% losses across the board. However, the crazy volatility shows that this market is still in a nervous state and susceptible to the headlines. We could use some actual good news right now.
The Fed meets on December 18 -19 and is still expected to hike rates for the fourth time this year. More importantly, what will Fed Chair Jerome Powell have to say about future hikes? He helped maintain a market rally late last month with a dovish speech, and since then the odds for increases in 2019 have moved lower. Another light touch on his part could be enough to cue Santa.
But that’s next week. We’ve just begun this week. If there’s any real progress on the trade front, the next few days would be a great time to announce it. But that’s a big "if"...
Today's Portfolio Highlights:
ETF Investor: The market is dealing with fears of a slowing economy, which actually has the Fed considering fewer rate hikes in 2019. Just a few months ago, we were expecting 3 increases next year, but that is down to only one increase since Fed Chair Powell’s dovish speech two weeks ago. This new environment is bad news for banks, but good news for REITs.
Therefore, Neena made a couple of changes on Monday. The editor sold SPDR S&P Regional Banking ETF (KRE) and replaced it with the addition of Vanguard REIT ETF (VNQ). The new fund is the most popular ETF for REITs since its cheap and has $32 billion in AUM. VNQ also has a dividend yield of 4.7%. Read Neena’s full write-up for more on today’s changes.
TAZR Trader: The portfolio has been so cautious during this market volatility that Kevin has a cash position of 90%. But after another sharp plunge this morning, the editor now is using fundamental-technical-behavioral (FTB) analysis to capitalize on those “buy buckets” filled by panicked investors. He bought the following four names today:
• Square (SQ) – 7% allocation
• Apple (AAPL) – 7% allocation
• Finance 3X Bull (FAS) – 10% allocation
• 3X Small-Cap ETF (TNA) – 10% allocation
Kevin always planned to buy SQ below $60 and now it’s close enough, while consensus estimates for AAPL have barely moved during all the downgrades and selloffs. FAS and TNA are both the editor’s bets that plenty of worry is priced-in and we are headed into a relief rally before or after the Fed meeting. Read the complete commentary for specifics on all of today’s moves.
Black Box Trader: This week's adjustment included three swaps. The stocks sold today included:
• Booz Allen Hamilton (BAH)
• MetLife (MET)
• Hertz Global Holdings (HTZ)
The new buys that replaced these names are:
• Abercrombie & Fitch (ANF)
• RH (RH)
• Exelon Corp. (EXC)
Read the Black Box Trader's Guide to learn more about this computer-driven service designed to take the emotion out of investing.
Zacks Confidential: Even in this frustrating correction, there are plenty of standout stocks. But you need to stay calm and know where to look. Brian Bolan knows where you should focus in 2019, which is why Kevin put him at the helm for this week's Zacks Confidential. Learn about the obstacles investors will have to overcome and the ingredients for finding the best stocks by clicking: Three Growth Stocks for 2019.
Counterstrike: "Huge day for the nervous bulls as they defended the 2600 level and trapped some short sellers in the process. Early selling looked bad and the break under 2600 likely cause some weak hands to get stopped out. However, after Europe closed the bulls were able to push price higher for a big bull win.
"If the market wants some legs, it needs to continue higher tomorrow. We don’t have to go straight up, but we need to rebuild our way back to 2700. Going forward that can be your line in the sand. Over 2700 you can start getting bullish. Under 2700 we will remain cautious.
"The bulls won the battle today, but this week has four more days left and a lot of headlines are sure to come. There has been a lot of damage done over the last two months and if Santa Claus is going to show up this year, we need a positive week." -- Jeremy Mullin
Have a Good Evening,
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