It’s crunch time for the Senate tax bill, and the market was feeling pretty good about its chances on Thursday. How good? Each of the major indices jumped higher in the session, making new all-time highs and crossing fresh milestones along the way.
The Dow made the biggest news by closing well above 24,000 for the first time ever. The index soared 1.39% today (or more than 331 points) to end at 24,272.4. It was only about a month-and-a-half ago that it first hit 23,000. Needless to say, it’s at a new all-time high. The S&P also reached a new record with today’s gain of 0.82% to 2647.6. The NASDAQ regained more than half of yesterday’s “tech wreck” with an advance of 0.73% to 6874 (it had lost 1.27% on Wednesday).
This strong session also finished off another impressive month for the indices. The Dow gained 3.8% in November and the S&P increased 2.8%, marking eight-month winning streaks for each. The NASDAQ capped off its fifth straight positive month with a gain of 2.2%.
In the portfolios, Large-Cap Trader made several tactical changes by selling one name for a positive return and adding more to three existing positions. ETF Investor proved that it’s not afraid of the retail sector by adding an ETF that invests in the top 25 U.S. retailers. Finally, Options Trader added a straddle to a company that could move in either direction in the coming weeks. Read more in the highlights section below:
Today's Portfolio Highlights:
Large-Cap Trader: With the market in rally mode, John decided to make a few tactical changes to the portfolio on Thursday. First of all, he sold the idling Deutsch Bank (DB) position for a return of approximately 10%. Afterward, the editor added 2% to the portfolio weights of GlaxoSmithKline (GSK), Novo Nordisk (CO:NOVOb) (NVO) and Lion’s Gate Entertainment (LGF.A) each. You may remember that these stocks were all bought together on October 19th, and John now wants to add equally to these “newish” positions. The additions also serve to lessen the portfolio’s exposure a bit to chip stocks, which John has never been comfortable in chasing even before yesterday’s selloff. The portfolio now has a small 1.2% in cash. Get more details on these moves in the full write up.
ETF Investor: Retail stocks have been rebounding nicely of late, and the strong start to this holiday season suggests that the momentum could continue. Neena plans to capitalize on this improvement by adding VanEck Vectors Retail ETF (RTH), which holds 25 of the largest U.S. retailers. The fund has exposure to Amazon (NASDAQ:AMZN) (of course) and brick-and-mortar giants like Home Depot (NYSE:HD) and Wal-Mart (NYSE:WMT), which have weathered the “Amazon effect” better than most. This fund should benefit from the industry’s increased investments in e-commerce operations. The full write-up has more on this addition.
Options Trader: Kevin likes Broadridge Financial (BR) and its industry, which is in the top 14% of the Zacks Industry Rank. Earnings estimates for this tech-based outsourcing solutions company are mostly on the rise and its chart is showing a “beautiful” uptrend. Yet, the editor decided to add a straddle to the company because, despite its many positives, earnings estimates for next quarter are a bit lackluster and the RSI is showing some bearish divergence. In other words, there are reasons for this stock to go higher OR lower. Therefore, the editor bought to open a Jan 90.00 Call AND bought to open a Jan 90.00 Put. Read more in the complete commentary.
Momentum Trader: "What can you say about the Dow’s run other than, “Holy cow!” It’s not even the range of the run that’s been the most impressive thing for me rather the relentlessness. The worst pullback of this run has been from 21,169 down to 20,379. That’s less than 4% to the downside. Even then, the index dipped below the 50-day but nearly hit the moving average during each day it traded below it. The last time the Dow was even within sight of the 50-day was September 8th.
"With the moves higher this week the Dow seems to be accelerating, as if a giant magnet on 25,000 is pulling it higher. The 50-day and 200-day are beginning to separate from each other as both have a decidedly positive slope. This is beginning to go parabolic. The market is en fuego right now. After the rush of earnings season has subsided, the event risks are gone. This market only has one way right now, and that’s up." -- Dave Bartosiak
All the Best,
Jim Giaquinto
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