This morning’s Government Employment Situation report was a kick to the gut, especially coming just a day after ADP’s jobs report beat expectations by more than 40%. Instead, only 138,000 jobs were created last month according to the BLS, instead of the 185,000 expected. The prior month was revised lower too.
But the market really didn’t care.
For the second consecutive session, each of the major indices closed at record highs. The S&P climbed 0.37% to 2439.1, while the Dow was up 0.29% to 21,206.3 and the NASDAQ advanced 0.94% to 6305.8. This was a short week due to the Memorial Day holiday on Monday, and the first two sessions were pretty somber. But the market really caught fire on the back half. For the full week, the S&P advanced 1%, the Dow increased 0.6% and the NASDAQ gained 1.5%.
The final two days also saw the portfolios wake up. On Friday, Insider Trader added three times, while Options Trader made two moves. Reitmeister Trading Alert, TAZR Trader and Value Investor also bought. The highlights are waiting for you below:
Today's Portfolio Highlights:
Insider Trader: It was a busy day for the portfolio as Tracey made five moves. The editor sold OXY and WSBC today, and used the proceeds and the cash on hand to buy three new positions with allocations between 7% and 9% each. The new buys are:
• AquaVenture (WAAS) is a small-cap water company that went public in October 2016 but is down 30% year-to-date. Analysts feel that the stock is undervalued, as do a couple insiders (including the CEO) who bought shares over the past two weeks as a show of confidence.
• CDK Global (CDK) is a dealer management system (DMS) company for the automotive sector that’s in a transformation period right now. The CEO bought shares last week, possibly as a sign of confidence after the CFO resigned. With earnings expected to grow about 40% this fiscal year, Tracey says that CDK has “a surprising growth story for a large mid-cap company”.
• Weight Watchers (WTW) had a strong first quarter report thanks in large part to the collaboration with Oprah. Earnings are expected to rise 31% this year. A director bought twice since the earnings report, which is a really bullish sign since shares of WTW are at its highs rather than pulling back.
The full commentary has A LOT more on all of today’s moves.
Reitmeister Trading Alert: Shares of Athene Holding Ltd. (ATH) have dipped 10% after getting up to $55 on a strong earnings announcement. Steve thinks this selloff is overdone and that fair value is about $60 for this financial services and insurance firm. Plus, it is a Zacks Rank #2 from a highly-ranked industry with a Zacks VGM Score of B. Therefore, he added ATH to the portfolio on Friday. If the company can put together another solid quarter, the editor wouldn’t be surprised to see this name get up to $70. Get more specifics in the write-up.
TAZR Trader: Tech is STILL leading this market higher, and Kevin is ready to get back into RISK-ON mode again. On Friday, the editor returned to Applied Optoelectronics (AAOI), a small-cap fiber optic networking products company that’s on its way to becoming a mid-cap. Kevin is willing to ride the volatile waves with AAOI since he expects the stock to reach $100 by December…and will be adding on any dips below $70. The portfolio will take a 7% allocation. Read the full write-up for a lot more on this pick.
Options Trader: The portfolio added two sets of bull call spreads on Friday. First up, homebuilder Lennar (NYSE:LEN) is breaking out of a bullish flagging pattern, and Kevin thinks this Zacks Rank #2 will eventually challenge its all-time high of $69. So the editor bought to open 2 Nov 52.50 Calls AND sold to open 2 Nov 57.50 Calls.
Meanwhile, Kevin thinks a breakout is coming for IT company CDW (CDW), which has an upside breakout point around $61. The editor wants to be part of this move, so he bought to open 2 Sept. 60.00 Calls AND sold to open 2 Sept 65.00 Calls. Read the full writeup for more on both of these spreads.
Value Investor: Tracey likes the container companies right now because this cyclical space seems ready for an uptrend amid strong global growth. For example, Triton (TRTN) blew past the Zacks Consensus Estimate in its first quarter report, and is expected to grow earnings by 174% in 2017 thanks in part to its merger with TAL. It also has low P/E and P/B ratios, along with a juicy dividend that yielding 6.2%. Due to all these factors, the editor feels that TRTN would be a good addition to the portfolio. Read the complete commentary for more.
Zacks Counterstrike: "The jobs number was surprisingly lower than expected this morning considering what the ADP number showed us yesterday. Payrolls came in at 138k v the 182k expected, while unemployment ticked lower to 4.3%. Markets were strong overnight, but the weak data brought in sellers early in the morning. However, the buyers showed up again and took the S&P 500 to record highs once more. The S&P finished up 0.37%, while the Nasdaq added 0.94%.
"Today the S&P 500, the Dow, and the Nasdaq all finished at all-time highs.
"Market participants have to start wondering if this market will ever go down. And if it does, just what will create a sell off big enough to bring some volatility back into equities. I don’t have the answer, but I can say that this market is very strong. In my eyes, there is just no risk out there at the moment, so let your long positions fly until there is a reason to get out." -- Zacks Counterstrike
Have a Great Weekend,
Jim Giaquinto
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