Erasing Two Pullbacks With One Vote

The market made up for two days’ worth of losses in one session on Thursday. Bolstered by some good earnings reports (especially Wal-Mart (NYSE:WMT)) and a bit of progress on the tax reform front, the major indices rallied back solidly to give the market a chance for weekly gains.

The NASDAQ was the best performer with a jump of 1.3% to a new record of 6793.3. The S&P is a stone’s throw away from 2600 after today’s advance of 0.82% to 2585.6, while the Dow increased 0.80% to 23,458.4.

A strong report from Wal-Mart was a big help to the market on Thursday, as the world’s largest retailer jumped 10.9% on an impressive quarterly report. In addition to better-than-expected earnings and revenue, WMT reported that same-store sales in the U.S. were up 2.7%, while e-commerce sales in the U.S. soared by 50%.

Meanwhile, the House voted on its version of tax reform today and passed it. This hurdle will likely be the easiest for tax cuts to overcome…but it was a hurdle, nonetheless, and the first bit of real progress on this issue in a while. Now it’s the Senate’s turn and (if it passes) then on to reconciliation.

“So is 2600 coming tomorrow and 2700 early next year? I don’t see why not, but the tax plan must go smoothly. The last couple days there seemed to be a lot of concerns that caused market weakness. If we see snags in tax reform over the next couple weeks expect the weakness to come back,” said Jeremy in Counterstrike.

Income Investor was busy today as Brian sold one name for a more than 90% return and then replaced it with a new pick. Technology Innovators also bought today. Learn more about these trades below:

Today's Portfolio Highlights:

Income Investor: Shares of Omega Healthcare Investors (OHI) continue to drop after the REIT missed earnings and revenue estimates in its most recent quarter. Brian doesn’t want to risk anymore of this position’s profit, so he sold OHI today and secured a hefty gain of 92%.

The editor wasted no time in replacing the name by picking up intermodal containers company Triton International (TRTN). With economic conditions improving, the company is in the midst of a positive growth cycle. In other words, demand for shipping containers is greater than the total supply of containers. As a result, TRTN has a total average utilization rate of 98%. It has also beaten or matched earnings and revenues expectations in three of the last four quarters, and is expected to post earnings growth of 37.5% in 2018. Get more specifics on this new buy from Brian in his complete commentary.

Technology Innovators: Over the past five quarters, Square (NYSE:SQ) has beaten four times and matched once. This financial and marketing services company has also posted sequential growth in each of the last four quarters. Brian Bolan likes these performances, but what really got him interested in SQ was its decision to accept bitcoin. The editor believes this could be a big driver that will push earnings estimates higher moving forward. Furthermore, he thinks this stock could possibly double over the next year. Make sure to read the complete commentary for more on this new addition, and get ready for another buy tomorrow.

TAZR Trader: SMART Global Holdings (SGH) doesn’t report its fiscal first quarter numbers until December 21, but things are going so good that the company had to update its expectations. This provider of electronic subsystems to OEMs raised its adjusted EPS and revenue expectations for the quarter today. The company also expects its fiscal second quarter to show strong year-over-year growth. Shares of SGH soared more than 25% on Thursday, which easily gave TAZR the top-performing stock among all the portfolios. In fact, it was three times better than the runner up.

Options Trader: "The market got off to a great start in the morning as it was clear, before the voting on taxes even began, that the House had the votes. The market then added to their gains in the afternoon as it was confirmed that the House indeed passed their tax cut bill.

"The Senate is up next. Their version is expected to move out of committee tomorrow or next week. And then it will be voted on shortly thereafter.

"As we all know by now, the Senate bill looks different than the House. Assuming the Senate’s version passes next week, the real work of reconciling the two will then begin. But again, Congress seems confident that this will get done by year’s end. And judging by today's price action, the market thinks so too." -- Kevin Matras

Momentum Trader: "There is one thing we’ve all been waiting for in this market. Today, we got one step closer to achieving that goal. The 800 lbs elephant in the room since Election Day has been tax reform. Trump promised it. He’s tried to get it done. Now it’s up to Congress. The House passed their version of the bill today and that was enough to get this rally back in high gear.

"Never mind that the Senate still has to deliberate. Ignore the fact that their plan varies from the one the House passed. Let’s not dwell on the negative today and rather celebrate the positive. The House of Representatives got a majority to agree on something.

"Runaway rally for the market as the major averages all cheered the move on Capitol Hill." -- Dave Bartosiak

Have a Good Evening,
Jim Giaquinto

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