Remember how it felt like the sky was falling in the weeks leading up to Christmas Eve? Well, each of the major indices just recorded their best January in years with the NASDAQ soaring nearly 10%, the S&P higher by almost 8% and the Dow up more than 7%.
The NASDAQ added another 1%+ to its more than 2% rally yesterday. The index has been enjoying earnings reports this week that range from “better than feared” to “pretty good”, including Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT) and Facebook (NASDAQ:FB) (which surged nearly 11% today). Now we can add Amazon (NASDAQ:AMZN) to the list, which beat on both the top and bottom lines in its after-the-bell report.
The index was up 1.37% to 7281.74 and has a good chance to put together a sixth straight positive week tomorrow.
The S&P rose by 0.86% to 2704.1. The Dow had slipped by more than 170 points at its worst, but recovered enough to see a little green momentarily before ending the session lower by 0.06% (or just about 15 points) to 24,999.67.
Earnings reports have been solid this week, but stocks really caught a second wind yesterday when Fed Chair Jerome Powell reiterated several times that the Fed would be patient in further rate hikes. Now if only we could get a trade deal, then maybe stocks can work on making up the rest of its deficit from the correction.
While we haven’t gotten much real news out of the meetings with China’s Vice Premier Liu He in Washington, we have received some good vibes. Both sides have said that the meetings were constructive. President Trump thinks something can get done with China and that it could be finished by March 1st. He’s also open to extending the deadline to finalize details. That all sounds great, but there are more meetings to come, including with President Xi.
So the market had a great start to 2019, but there’s still a lot of ground to recover to put the correction in the rear-view mirror. Let’s keep it going!
Today's Portfolio Highlights:
Surprise Trader: For pro wrestling fans, World Wrestling Entertainment (WWE) just started their “Road to WrestleMania”. But for investors like Dave, WWE is a media & entertainment company that has a positive Earnings ESP of 26.31% for the quarter coming before the bell on February 7th. Analysts are expecting year-over-year earnings growth of 52% and sales growth of 19.5%. Dave added WWE on Thursday with a 12.5% allocation. Read the full write-up for more on this new addition.
TAZR Trader: With software flexing its muscles this earnings season, investors are still paying up for richly-valued growth. And that means it's "risk-on" again in the market, so Kevin grabbed two stocks he's been eyeing this week to capitalize on that sentiment: Twitter (TWTR) and GrubHub (GRUB). Both of these companies report on February 7 and have impressive Earnings ESPs of 13% for TWTR and 21% for GRUB, which means that earnings estimates are moving higher right before their reports. TWTR goes into the service with a 10% allocation while GRUB gets 7%. Read the full write-up for more on these additions.
Options Trader: Burlington Stores (BURL) may only be a Zacks Rank #3 (Hold) right now, but it has a Zacks VGM Score of “A” and is part of a space in the top 36% of the Zacks Industry Rank. With expected EPS growth of more than 27% for the first quarter and 46% for the year, Kevin thinks this off-price apparel & home products retailer is headed higher. Therefore, he added a couple bull call spreads in BURL by buying to open 2 June 170.00 Calls AND selling to open 2 June 180.00 Calls. Overall, the editor has a price target of more than $197 for the stock. However, if it can gain just another 5.4% to $180 by the mid-June expiration, then these spreads will bring a 117% return to the portfolio. Get more specifics in the complete commentary.
Healthcare Innovators: It looks like this will be “an investment year” for Align Technology (ALGN), as the maker of Invisalign teeth straighteners restructures its international operations amid emerging competitors. Kevin has long been an admirer of this company and still believes its long-term prospects are solid. At the moment though, estimates and price targets are dropping and the editor feels it will soon be a Zack Rank #5 (Strong Sell). Therefore, he sold ALGN and collected a 17.6% return in just a little over a month.
All the Best,
Jim Giaquinto
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