Everything was moving along nicely on Friday until Apple (NASDAQ:AAPL) said it would be re-closing stores in a handful of states. Stocks took a turn for the worse after the announcement, but still easily secured their fourth positive week in the past five.
The NASDAQ now has a 6-day winning streak and advanced 3.7% for the week. Meanwhile, the S&P was up 1.9%, while the Dow advanced 1% over the past five days.
It’s a solid reversal from last week’s sharp step back, which was brought about by the epic June 11th selloff that saw all indices plunge by more than 5% and the Dow drop over 1860 points.
However, this week’s advance didn’t get any help from Friday’s session. The big blow was Apple (AAPL) announcing that it would re-close 11 stores in Florida, Arizona, North Carolina and South Carolina. These states have seen sharper rises in coronavirus cases than most.
The news really hit the market right in the gut, since its main concern right now is that an increase in cases could impact or completely stop the economic reopenings and jeopardize the recovery.
The S&P’s first rebalancing of the year and quadruple witching also added to the volatility today.
The NASDAQ managed to keep its winning run alive… but only by the slimmest of margins. The index rose 0.03% (or about 3 points) to 9946.12. But it still counts!
Unfortunately, the other indices couldn’t follow on Friday. The Dow slipped 0.80% (or about 208 points) to 25,871.46, while the S&P was off 0.56% to 3097.74.
So we’re back to watching the daily count of coronavirus cases, which we knew was necessary once the states started to reopen. But this time we’re better prepared to deal with the sickness and, most importantly, are keeping relatively calm unlike earlier this year.
Let’s just keep our masks on and continue moving forward…
Today's Portfolio Highlights:
Options Trader: There’s a lot of innovation in the biotech sector right now, both in fighting the coronavirus and in treating a countless number of other diseases and disorders. In fact, it’s difficult for investors to pick just one or two names. However, Kevin found a way to play the whole sector. On Friday, the editor added a few bull call spreads in S&P Biotech ETF (XBI), which tracks the S&P Biotech Select industry and has holdings in Moderna (NASDAQ:MRNA), Regeneron (NASDAQ:REGN), Biomarin (BMRN), Vertex (NASDAQ:VRTX) and Gilead (NASDAQ:GILD), among many others. The portfolio bought to open 3 Oct 107.00 Calls AND sold to open 3 October 115.00 Calls. If XBI can climb a little more than 7% from here by the mid-October expiration, then these spreads will bring a return of 122%. Read the full write-up for more specifics on these spreads.
Blockchain Innovators: The additive manufacturing industry has been coming around to blockchain for a while now to provide greater security during the 3D printing process. Stratasys (NASDAQ:SSYS) is already using the technology with its products, which piqued Dave's interest right from the start. The editor also likes that earnings estimates are finally turning higher and that there's plenty of ground to recover before reaching recent highs above $29. Plus, next year's revenue growth is forecast to come in at 12.14%, while EPS is set to grow 164.1%. Dave likes what he sees with SSYS and added the stock to the portfolio on Friday. Read the full write-up for more.
Home Run Investor: The portfolio shed a lot of names this week, including a triple-digit profit in Fiverr International (NYSE:FVRR) yesterday. Therefore, Brian will be adding a few positions in the coming days, which he started on Friday by picking up Rambus (NASDAQ:RMBS). This chip stock doesn’t have the best earnings history, but the editor is most interested with its rising earnings estimates. In fact, RMBS is a Zacks Rank #2 (Buy). It also has a great valuation and achieved revenue growth of 32% in its most recent quarter. Read the full write-up for more on this new pick.
Insider Trader: "What will the consumer do? It's unlikely that the US consumer will go back to the severe restrictions and full lockdown we saw in April this summer. Even if some states have outbreaks, it will be a more select shutdown and restrictions.
"That's good news for the US economy. The key is getting as many people back to work as possible in travel and the restaurant industries.
"There will also still be another big stimulus package coming before August. There's still ongoing debate as to what will be in it. But it should provide another boost to the economy, which should help with some of the set-backs that are going to be inevitable.
"Even with stocks trading near highs, our strategy remains unchanged: don't fight the Fed (or Congress)." -- Tracey Ryniec
Have a Great Weekend!
Jim Giaquinto
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