SPECIAL NOTE: The December episode of the Zacks Ultimate Strategy Session will be available for viewing no later than Thursday, December 21st. Sheraz Mian, David Bartosiak, Tracey Ryniec, Brian Hamilton and Dr. John Blank will cover the investment landscape from most every angle in this popular event.
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• Sheraz and Tracey Agree to Disagree on what can derail the rally and the downside risks to the market in 2018
• David and Brian answer your questions in Zacks Mailbag
• Sheraz and Brian choose one portfolio to give feedback for improvement
• And much more
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On the day before a widely expected rate hike, the S&P and Dow managed to hit another round of new highs for the third straight session. Unfortunately, the NASDAQ didn’t join the party.
The S&P only advanced by 0.15% on Tuesday, but that was enough for a fresh record at 2664.1. The Dow had a more robust increase of 0.49% for a new high of 24,504.8. The NASDAQ saw green momentarily in the session, but eventually declined by 0.19% to 6862.3.
Remember when the market would bite its nails in the days leading up to a Fed announcement? That’s certainly not the case anymore, especially since everyone is expecting the third and final rate hike of the year. Yellen & Friends could still make some news, but for the most part the editors do not expect it to move the market very much.
“Tomorrow’s announcement will likely be a non-event as the market has priced in a rate hike already. However, there could be language that could change the outlook for 2018,” said Jeremy in Counterstrike.
Speaking of Counterstrike, the portfolio sold one position on Tuesday for a more than 45% winner, while adding a volatile semiconductor connectivity giant that’s taking a break from an otherwise “tremendous” performance this year. Stocks Under $10 picked up an oil related stock that has pulled back from $22…but seems poised for a new leg upward. Also, Short List swapped out three names in its weekly adjustment. Read more below:
Today's Portfolio Highlights:
Counterstrike: Shares of First Solar (NASDAQ:FSLR) took off after a blowout quarter in late October, but shares started to stall once the solar modules manufacturer crossed the $70 threshold. Jeremy thinks this is a great time to close out this position. You may remember that he sold half of it shortly after the report for a 22% profit. Now the second half brings in about 47%. If the stock moves into the low 60s, the editor would be willing to buy it again. But that wasn’t all on Tuesday...
The portfolio also added a starter position in Broadcom (NASDAQ:AVGO), the Zacks Rank #1 (Strong Buy) developer of semiconductor connectivity solutions. Shares are about 25 points off its highs at the moment, but let’s not forget that this stock has enjoyed a tremendous run higher this year. Jeremy thinks this could just be a pause. However, it’s a volatile stock, which is why he took only a 6% allocation…though he’d be willing to buy more if the stock holds at its 200-day MA. Read the full write-up for more on these moves.
Stocks Under $10: The oil well services & equipment industry has put together three consecutive quarters with sequential revenue growth…with the most recent quarter growing by 14%. The space seems to be coming back, and Brian Bolan got involved today with a buy in Smart Sand (SND). This Zacks Rank #1 (Strong Buy) produces northern white raw frac sand for the oil & gas industry. The company used to be too rich for this portfolio with a stock price of $22, but it has since bottomed out. The editor thinks its primed to start moving higher again with its industry. Read the full commentary for more specifics, including SND’s recent earnings, estimate revisions and valuation.
Zacks Short List: The portfolio swapped out three names this week. The short-covered stocks that left the portfolio were:
• IAC/InterActive (IAC, +5.7%)
• Molina Healthcare (MOH, +1.1%)
• PDC Energy (PDCE)
The new buys that replaced these names were:
• Sina Corp. (SINA)
• Gardner Denver Holdings (GDI)
• Incyte Corp. (INCY)
Learn more about this emotion-free portfolio that takes advantage of falling and volatile markets by reading the Short List Trader Guide.
Momentum Trader: "We are inching ever closer to the tax deal on Capitol Hill. Numbers are starting to be thrown around on the compromise it will take for the House and the Senate to get on the same page. A few of the items for contention are the corporate rate, top individual rate, SALT deduction and mortgage interest deduction.
"If you ask me, I’ll be taking the approach of, “Wake me up when it’s over.
"Expect to see some short-term volatility tomorrow as the Fed announces its rate hike. I doubt it’s going to roil financial markets too much. The move is well priced-in when you look at Fed funds futures but I still expect to see green on the screen into the afternoon session." -- Dave Bartosiak
Good Evening,
Jim Giaquinto
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