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The market twisted and turned throughout Tuesday’s session but it eventually got back about half of yesterday’s epic losses, thanks to a late day surge. The Dow started the day with another sharp decline, but it finished with a gain of 2.33% (or 567 points) to 24,912.8. Yesterday it lost 4.6% or 1175 points.
The NASDAQ actually got back more than half of what it lost yesterday, gaining 2.13% to 7115.9 (it lost 3.8% on Monday), while the S&P is knocking on the door of 2700 again with a rise of 1.74% to 2695.1.
Investors are certainly breathing a sigh of relief today, but no one knows what will happen in the days ahead. This has already been a crazy week with one of the worst percentage declines in years followed directly by one of the best…and its only Tuesday! Whatever happens, the editors are gearing up for the rebound. It was another busy day in the portfolios. We’re going right to all the moves, but first a comment from Jeremy that everyone can agree with:
“I will never forget yesterday, fortunes were made and careers were lost. It has been an historic week, I’m ready for it to calm down,” –from today’s Counterstrike.
Today's Portfolio Highlights:
TAZR Trader: Kevin doesn’t know where the bottom is for this market pullback, but he does know that another uptrend is waiting just behind it. As his headline today attests, the editor plans to buy this meltdown while stocks are cheaper than they’ve been in months. On Tuesday, he had four trades to add (or add to) on market weakness today:
• Alibaba (NYSE:BABA)
• Square (NYSE:SQ)
• NVIDIA (NASDAQ:NVDA)
• NASDAQ 100 3X Bull (TQQQ)
BABA was filled right out of the gate on Tuesday and then SQ shortly followed. As of the close though, the other half of the shopping list still proved too expensive. Read the full write up to learn the buy ranges and allocations for these names. And remember that while the market bobs and weaves, Kevin has two rules for you: 1) Know your risk tolerance and 2) be patient and let the volatility come to you.
Momentum Trader: A deeper dive of yesterday’s market crash showed a VIX that was out of control. Fortunately, the index looks to be normalizing a bit today, which leaves Dave thinking that the recent plunge was mechanical and NOT based on underlying fundamentals. Therefore, he expects the market to rebound sharply in the coming days. That leaves only one thing to do…buy!
Dave bought twice in each of his portfolios yesterday, and he did the same today. In MT, he picked up Eldorado Resorts (ERI) and Swift Transportation (KNX). Both of these companies were routed in the pullback, so they should be primed for a nice rebound given their strong earnings trends. They were each added with 11.5% allocations. Read the full write-up for more on these buys and get Dave’s analysis on the VIX’s wild ride.
Stocks Under $10: With the market getting back about half of yesterday’s epic losses, Brian Bolan thought this was a good time to secure a couple of “monster” profits. The editor sold Kemet Corporation (KEM) today for a big return of more than 198%, while also getting out of Ultra Clean Holdings (UCTT) for a profit of nearly 130%. Brian plans to add at least one new addition to the portfolio tomorrow, so stay tuned...
Surprise Trader: While everyone’s watching the volatility in the stock market the past few days, let’s remember that we’re still in the thick of earnings season. Dave certainly hasn’t forgotten, and on Tuesday he added two more names. Both have an automotive theme. The first new buy is Dana Corp. (DAN), a Zacks Rank #2 (Buy) provider of technology driveline, sealing and thermal -management products. It has a huge Earnings ESP of 13.7% for its report before the bell on February 13.
The other addition is Allison Transmission (ALSN), a Zacks Rank #2 manufacturer of fully-automatic transmissions that reports after the bell on February 14. The editor likes its Earnings ESP of 9% and its streak of four straight positive surprises. Each of these stocks go into the portfolio with 12.5% allocations. Learn more in the complete commentary.
Counterstrike: Tennant (TNC) worked out perfectly for the portfolio. Jeremy added this cleaning solutions company back in early January when it was a Zacks Rank #5 (Strong Sell). These days, it has moved up to a Zacks Rank #3 (Hold), and the editor thinks he has gotten what he can out of the position. It was short-covered today for a nice gain of 15.9%, which comes in handy during such an unpredictable and volatile time for the market. By the way, he also sold Sony (SNE) today for a return of 9.7%.
Zacks Short List: This week, the portfolio swapped out four names. The positions that were short-covered include:
• Fluor Corp. (NYSE:FLR, +6.1%)
• Akorn Inc. (AKRX, +0.2%)
• Vulcan Materials (VMC)
• Zayo Group (ZAYO)
The new buys that replaced these names include:
• Autodesk Inc. (NASDAQ:ADSK)
• Cadence Design Systems (CDNS)
• Cavium Inc. (CAVM)
• Tal Education (TAL)
Learn more about this emotion-free portfolio that takes advantage of falling and volatile markets by reading the Short List Trader Guide.
Have a Good Evening,
Jim Giaquinto
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