The first two trading days of 2018 have seen two milestones taken out. On Tuesday, the NASDAQ surpassed 7,000 for the first time ever. And now on Wednesday, the S&P made history by closing above 2,700. With the Dow now less than 100 points from its own milestone of 25,000, could we go 3 for 3 tomorrow?
Well, let’s not get ahead of ourselves. There’s plenty of good news to talk about today, especially each of the major indices finishing at all-time highs. The S&P advanced 0.64% to 2,713.1, the NASDAQ increased 0.84% to 7,065.5 and the Dow rose 0.40% to 24,922.7.
Much of this strong start is a continuation of 2017, though it doesn’t hurt to see some encouraging economic data as well. The ISM Manufacturing Index rose to 59.7% in December, compared to 58.2% the month earlier. Meanwhile, Construction Spending rose 0.8% in November to a new record of $1.257 trillion. The ADP Employment Report will be released tomorrow, followed on Friday by the ISM Non-Manufacturing and the Employment Situation Report.
Large-Cap Trader made the biggest splash in the portfolios on Wednesday, as John sold one stock for a triple-digit profit and then bought three new ones. Meanwhile, Dave made moves in both of his services, cashing in two double-digit winners ahead of earnings season in Surprise Trader and adding a stock from the hot energy space in Momentum Trader. Read about all this in the highlights section below:
Today's Portfolio Highlights:
Large-Cap Trader: Sometimes you just take profits because you can. John doesn’t see anything that says YY Inc. (YY) is at a top, but what he does see is a big momentum winner with a triple-digit return. The editor decided this was as good a time as any to cash in this “Facebook (NASDAQ:FB) of Mainland China” for an impressive 107.4% profit.
The move frees up 12% of the portfolio, and John immediately put half of that allocation back to work in the following three stocks (the remaining 6% will stay in cash). Each of these names have strong Zacks Ranks and are high up on the Zacks Industry Rank:
• MKS Instruments (MKSI) makes instruments, subsystems and process control solutions for the semiconductor industry (among many other spaces), so it’s a good play in the wake of the latest chip stock pullback.
• Jones Lang LaSalle (JLL) is a full-service real estate firm that should be a big beneficiary of the corporate tax cut.
• Huntsman Chemical (HUN) is one of the largest global manufacturers of differentiated and commodity chemical products, and John considers it a no-brainer from a quantitative perspective.
Learn a lot more about each of these new buys in the complete commentary.
Surprise Trader: Earnings season is right around the corner, and Dave is getting ready to add a bunch of new names. In fact, he’ll be adding at least two stocks later this week. With all this activity on deck, the editor decided to clear the slate. He sold Home Depot (NYSE:HD) and American Eagle Outfitters (AEO) for gains of 15.6% and 11.6%, respectively. Both of these positions were added in November last year. The portfolio is now empty and all set for the new season. Stay tuned...
Momentum Trader: The energy sector is red hot right now…in part because so much of the country is ice cold. Dave found a company that’s uniquely positioned to benefit from this. The editor added Statoil (OL:STL) (STO) on Wednesday, which is an integrated oil and gas company. The stock has finally broken out of its $21 handle and Dave is “hoping to catch the elevator up a few floors ahead of its earnings report in early February”. Read the full write-up for more on this new addition.
Options Trader: "Another great day in the markets to kick off what looks to be another great year. And all of the major indexes notched new all-time highs in the process.
"A few months ago, I forecast the S&P closing at 2,717 by last year’s end. With the market closing at 2,713.06, we were pretty close. In fact, we were only off by two trading days and less than 4 points.
"But I believe 2,717 will be a distant memory by the time December 2018 rolls around. In fact, I expect 2,717 to be a distant memory in just a few months from now." -- Kevin Matras
All the Best,
Jim Giaquinto
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