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Working and Rallying

We needed a STRONG Friday rally to feel better about the first week of December… and that’s exactly what the jobs report gave us!

The Dow and NASDAQ were each down by more than 1% coming into the session, but finished with losses of only 0.1% for the week.

And the S&P recovered from a deficit of 0.7% through the first four days to end the week with a gain of nearly 0.2%.

The spark for this upsurge was the Government Employment Situation report, which showed that the U.S. economy added 266,000 jobs in November. The result crushed expectations of around 185,000.

It was a nice end to a week that saw a lot of trade deal uncertainty and soft economic data, resulting in back-to-back losses to start things off on Monday and Tuesday.  

But now stocks are on a three-day winning streak and investors are talking about getting back to all-time highs.

But let’s not get ahead of ourselves!

Instead, let’s appreciate that the Dow soared 1.22% (or about 337 points) on Friday to 28,015.06. The NASDAQ jumped 1% (or around 85 points) to 8,656.53.

The S&P advanced 0.91% to 3145.91 and now has back-to-back weekly gains.

Investors with flashbacks to December 2018 should be able to breathe a sigh of relief after the solid end to this week.

Of course, there’s a potentially huge roadblock to all this good stuff in the very near future. New tariffs are scheduled for Dec. 15, and recent news on the Phase 1 trade deal has been vague and mixed.

But for now, the bulls are in charge and seem rather optimistic for the most part. However, we’ll continue to be susceptible to whatever the trade news might be on a particular day.

So let’s hope we get some good headlines next week!

Today's Portfolio Highlights:

Home Run Investor: In a portfolio full of medical and tech stocks, Brian added some diversification on Friday with an industrial name. The editor picked up Gates Industrial Corp. (GTES), a Zacks Rank #1 (Strong Buy) manufacturer of engineered power transmission and fluid power solutions. The stock beat the Zacks Consensus Estimate by 22% in its most recent quarterly report, which brings its four-quarter average surprise to 12% despite a couple misses in that time. The valuation for GTES is pretty good too. By the way, Brian also sold Simulations Plus (SLP) for a 13.9% return as the software company looks priced for perfection. Read the full write-up for more on today’s moves. 

ETF Investor: With investors less concerned about recession these days, you can expect money to flow into the winning areas of the market as we close out 2019. That means it’s going to flow right to technology, which is the best performing sector this year. Neena plans to take advantage by adding Invesco DWA Technology Momentum ETF (PTF), a fund that holds US tech companies showing relative strength. It selects and weights stocks by price momentum, so it invests in those tech names that are most benefitting from the inflow of cash. Learn more about this new addition in the full write-up.

Insider Trader: Shares of Cubic (CUB) plunged after the defense and transportation company reported a lighter-than-expected revenue guidance for fiscal 2020. The stock has actually improved a bit from its recent lows, but is still down by 14% over the past month. Apparently, the CEO and a couple directors think the selling is overdone because they all bought shares of their own company earlier this week. Tracey considers this to be a small cluster buy, so she added CUB on Friday. The editor will be using the proceeds from her sale of enterprise software company Domo (DOMO), which has been a volatile stock for months but was sold today for a 35.6% return in less than three months after better-than-expected results. The allocation for CUB should be close to 10%. Read the full write-up for more.  

Options Trader: It looks like Syneos Health (SYNH) may have finally started breaking out. Therefore, Kevin added 4 bull call spreads in this Zacks Rank #2 (Buy) integrated biopharma solutions company by buying to open 4 March 55.00 Calls AND selling to open 4 March 60.00 Calls. The editor calls this a “compelling” pick based on projected EPS growth of 11.85%, sales growth of 6.09% and an attractive P/S at 1.22. If the stock gets to $60 by the mid-March expiration, then this move will make 138% for the portfolio. Read the full write-up for more specifics. 

Technology Innovators: It was a busy day for the portfolio as Brian decided to sell Comtech Telecom (CMTL) and bank a gain of approximately 25% in a little under six months. He also sold Tessera (XPER). But that wasn’t all. The editor also bought Macom Tech (MTSI), a provider of power analog semiconductor solutions to varied markets. The company is coming off a strong beat and Brian likes the look of its chart. Learn more about today’s moves in the full writeup.

Have a Great Weekend!
Jim Giaquinto

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