The market is feeling pretty good right now and it’s not going to let the upcoming Fed meeting spoil the fun…at least it didn’t on Monday. Though stumbling a bit in the final hour, the major indices started the week off right with another round of positive performances.
The S&P finally closed above 2500 on Friday after numerous attempts, and kept picking up new ground today with an increase of 0.15% to 2503.9. The index came well off of its highs in the last 90 minutes and threatened to go under, but managed one last boost into the closing bell. The Dow hit its fifth straight all-time high on Monday with a gain of 0.28% to 22,331.6. The index is coming off of its best weekly performance of the year (+2.2%). The NASDAQ actually did dip into negative territory toward the end of the session, though it ultimately managed a 0.10% rise to 6454.6.
Nobody expects the Fed to actually raise rates in the meeting that starts tomorrow. However, the Committee could still make market-moving news as it is expected to announce a plan to start reducing its approximately $4.5 trillion portfolio. We’ll see what happens on Wednesday.
On Monday, the editors were quite active. Surprise Trader and Black Box Trader each had double digit winners today, as the latter portfolio swapped out four names. TAZR Trader was also busy with two new buys and more shares for an existing position. Read about these moves and more below:
Today's Portfolio Highlights:
Surprise Trader: Netflix (NASDAQ:NFLX) was added to the portfolio back in July, and it has now reached its time limit. Plus, it has slipped to a Zacks Rank #3 (Hold). Eric saw this as a good time to sell the stock and secure a nice 13.7% profit.
TAZR Trader: Shares of NuVasive (NUVA) have dropped nearly 30% since its July highs, yet its earnings estimates have been barely impacted. This leader in spinal surgery technology is still expected to grow earnings by more than 20% this year and next…and that’s before the market really starts to focus on its LessRay software technology system. LessRay is designed to address over-exposure to radiation in operating rooms, and it will open a new avenue of products, salespeople and customers to NUVA. Kevin thought this was a great time to take a 7% allocation in this fundamentally sound medical company before it moves higher.
If the 10%, 2-day surge in NVIDIA (NASDAQ:NVDA) shares to over $110 billion market cap is too hot to handle, then Kevin thinks that Advanced Micro Devices (NASDAQ:AMD) is a great substitute. The company is the 2nd-leading player in GPUs, but has much less exposure than “King NVDA” to crypto-currencies so it will better weather any pullback in “crypto-mania”. Plus, its regular computer-building business is entering a seasonally-strong period. The editor bought a 5% allocation in AMD today and plans to pick up more on any pullback.
Finally, the editor expects Apple (NASDAQ:AAPL) to push past $170 over the next two to three months, so he added 50% to the portfolio’s current position. Read the full write-up for more on today’s moves.
Black Box Trader: The portfolio had a big double-digit winner this week as it cashed in Gap Inc. (NYSE:GPS) for a 20.8% return in just a little over one month. It also sold these three other names today:
• Lumber Liquidators (LL, +3.4%)
• Firstenergy Corp. (FE)
• PVH Corp (NYSE:PVH)
The four new buys that replaced these names are:
• Extreme Networks (EXTR)
• Accenture (ACN)
• Burlington Stores (BURL)
• Five Below (FIVE)
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: Healthcare has been one of the best performing sectors of the year so far…and biotech is the biggest reason for the success. But how long will this last and which stocks offer the best potential? Brian Bolan knows all about aggressive growth stocks like biotechs, which is why Kevin Matras put him in charge of this week’s Zacks Confidential. Read his detailed article on the prospects of this space moving forward and get three recommendations: Low-Priced Biotech Stocks Still Offer Big Upside.
Counterstrike: “The FOMC will be the focus this week as investors look for comments on the reduction of their massive balance sheet. Don’t expect rates to go higher, FedWatch has a 1.4% probability that we say a rate hike. Looks like December is the most likely time to see a hike, with a 60.7% probability. With the stock market and economy both performing, I think December is a good bet.
“In addition to the Fed, we will see Building Permits and Redbook Retail sales, Earnings will be slow, with only a couple companies reporting.
“Steady as she goes. The market continues to slowly grind higher and has achieved the 2500 level. Where we go from here will be determined by the reaction of the Fed this week. All signs point to the continued grind higher across the indices.” – Jeremy Mullin
Have a Good Evening,
Jim Giaquinto
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