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It feels like the good old days! In other words, it feels like it did a month ago, before the market dipped into a correction that included a pair of 1000-point plunges for the Dow. Stocks could certainly drop again, especially in a rising rate environment. But the editors are feeling a lot better after two straight sessions with gains of more than 1%.
“While the short trade looked good on Tuesday and Wednesday, it became clear on Friday that the bulls were charging forward,” said Jeremy Mullin in Counterstrike. “Looking forward, we are back to our bullish mentality. The portfolio is positioned long and as long as that bear doesn’t come back we will keep it that way.”
This bullish feeling stems from a 1.58% (or nearly 400-point) surge for the Dow on Monday to 25,709.3. Also, the S&P climbed 1.18% to 2779.6 and the NASDAQ advanced 1.15% to 7421.5. The indices are now more than halfway to getting back all of the correction’s losses.
Counterstrike was also one of the portfolios that were active today, as Jeremy picked up a trucking company that could be “off to the races” in short order. Technology Innovators added a tech stock that recently reported strong results and an encouraging guidance, while Black Box Trader replaced 6 names this week. Read all about these changes in the highlights section below, along with tips on how to trade around a market correction in the latest Zacks Confidential.
Today's Portfolio Highlights:
Counterstrike: The trucking space is in the top 2% of the Zacks Industry Rank right now thanks to strong quarterly performances from companies like Landstar System (LSTR). Late last month, this provider of integrated transportation management solutions announced a positive surprise of 6% for its fourth quarter and raised its guidance on both the top and bottom lines. But Jeremy sees several positive indicators in LSTR’s chart that suggest shares could be heading higher. If the stock can get over $113, then the editor believes it would be “off to the races”. He added it to the portfolio on Monday with a 10% allocation. Read the full write-up for more.
Technology Innovators: The market looks to have found some stable ground, so Brian Bolan went back to buying on Monday. He picked up Bandwidth (BAND), which is currently a Zacks Rank #3 (Hold)…but the editor thinks that will change soon. The company recently announced a solid quarter with an impressive guidance. Brian was especially impressed that the outlook for next quarter has moved to a profit of between 7 cents and 10 cents compared to the consensus of an 8-cent loss. Plus, being a cloud-based communications platform means its services are in high demand. Learn a lot more about this new addition in the complete commentary.
Black Box Trader: The portfolio had six changes in this week’s adjustment. The stocks that were sold from the list include:
• Sysco Corp (NYSE:SYY, +2.7%)
• Builders FirstSource (BLDR, +1.7%)
• Wabash National (WNC)
• KB Home (KBH)
• Sally Beauty (SBH)
• Meritor Inc. (MTOR)
The new buys that replaced these names are:
• C.H. Robinson Worldwide (CHRW)
• Conduent Inc. (CNDT)
• Cosan Ltd (CZZ)
• Fluor Corp (NYSE:FLR)
• Ply Gem Holdings (PGEM)
• The Michaels Co (MIK)
Read the Black Box Trader's Guide to learn more about this computer-driven service designed to take the emotion out of investing.
Zacks Confidential: We finally had the long-awaited stock market correction. We’ve also gotten back more than half of the losses. So now the big question is: Have we seen the lows…or is there more to come? John Blank has been around the block a couple of times and knows how to handle stock market corrections, which is why Kevin put him in charge of this week’s Zacks Confidential. Read his article and learn about the bull and bear cases, along with three recommendations by clicking: How to Profit from This Stock Market Correction.
Momentum Trader: “That recent volatility spike is set to fade away and be forgotten. A string of victories coming out of the hole have put the market back on a very bullish trajectory. It’s not just the number of days in the green but the size of the moves that are so significant and calming. Several trading days after coming down to put the 200-day into play, the market is now beginning to test the top end of the trading range all over again.
“Among all the major market indexes, the NASDAQ Composite has had the most linear bounce back from the recent market lows. Not only has the bounce been pretty dramatic, but it’s been a textbook move in cooperation with the Commodity Channel Index. When I’m looking for a CCI Buy I want to see the index dip below -100 then cross back up through the zero line to get the buy. Sometimes you can jump the signal by buying the cross back over the -100 line but that signal is weaker than the cross over the zero line.
“You can see the crossing of the zero line around Valentine’s Day. At the same time, the market stalled out that day. If you’re playing a signal like that, it makes you very nervous because if that CCI were to reverse at that zero line it’s “Look out below!” Luckily, the NASDAQ Composite kept on going after spending a few days moving sideways. Note how as the market chopped sideways the 50-day moving average stayed below the market. That sort of bullish support was a key in pushing this thing higher.” – Dave Bartosiak, who is also head of Surprise Trader.
Until Tomorrow,
Jim Giaquinto
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