The NASDAQ Catches Up and Sets Its Own New Record

And now all three major indices can say that they reached new all-time highs in October, a month that has been nothing short of spectacular with only one session left. Unfortunately, the final two FAANG reports after the bell today left a lot to be desired, which may have an impact on Friday.

While its counterparts were consistently making history over the past week or so, the NASDAQ seemed stuck approximately 1% away from its own record. Well, it made up that gap in a hurry on Thursday by soaring 1.39% (or about 212 points) to 15,448.12. That’s a new all-time high.

The S&P also reached a new high after pulling back slightly on Wednesday. The index rose 0.98% to 4596.42. The Dow advanced 0.68% (or nearly 240 points) to 35,730.48, but is just below its latest record set on Tuesday.

We go into the final day of October with the NASDAQ and S&P both up by nearly 7%, while the Dow has gained about 5.6%. That's a nice change from September and a great start to the fourth quarter. However, the last day of the month may be a bit rough.

While the beginning of earnings season has been fantastic for the most part, we received some disappointing reports from a couple heavy hitters after the bell today. VERY heavy hitters!

Apple (AAPL) and Amazon (NASDAQ:AMZN) both underperformed on their top and bottom lines. (Technically, AAPL matched earnings expectations, but that’s not what investors are used to from the iPhone maker.) These stocks were solidly higher in Thursday’s session in anticipation for these reports, which helped the NASDAQ make that record-breaking run today. But as of this writing, both have dropped by more than 3.5% afterhours.

It’s quite a change from the big tech reports from Tuesday night, as strong numbers from Microsoft (NASDAQ:MSFT) and Alphabet (NASDAQ:GOOGL) (GOOG) sent those stocks to new all-time highs.

"The last of big tech's results this afternoon from Apple (NASDAQ:AAPL) and Amazon (AMZN) were not so glamorous, with the much-anticipated wage pressures and supply chain bottlenecks finally revealing themselves in a big way. Tomorrow's price action may not be as buoyant as what we experienced today," said Dan Laboe in Headline Trader.

We’ve had a mixed bag of economic data as well. Jobless claims for last week came to 281,000, which marks a third straight week below 300K and another pandemic-era low. It also beat expectations. However, the first estimate for Q3 GDP was a measly 2%, or well off expectations at 2.6%. For now though, investors are looking past this number since the Delta variant was particularly stubborn during the quarter and is now hopefully in the past.

Today's Portfolio Highlights:

Insider Trader: Supply chain problems and rising labor costs really took a bite out of Enerpac Tool Group (NYSE:EPAC) in its report from late September. Shares of this industrial tools maker have plunged 12% since that quarterly release, which also included earnings that missed the Zacks Consensus Estimate. Despite these challenges though, two directors bought shares of their own company earlier this week on October 26. Tracey decided to follow these two insiders because it appears that the infrastructure bill is inching closer to reality... and EPAC would be a big beneficiary. The editor added EPAC on Thursday with a 10% allocation. The full write-up has much more on this new addition.

TAZR Trader: For the second time this week, Kevin added to the portfolio’s position in Pinterest (NYSE:PINS). The editor appreciates its transition from a social media platform to a full-fledged e-commerce site. He added first on Monday after shares dropped on news that PayPal (NASDAQ:PYPL) would not be buying the company. And then he added more today around $45 on optimism for its quarterly report scheduled for next Thursday. Kevin wouldn’t be surprised if there was another suitor or partner interested in this innovative name. In fact, PINS has already convinced YouTube’s former head of content partnerships to join the company. Meanwhile, this service had the top performer among all ZU names on Thursday as Ford (F) rose 8.7% after its solid quarterly report last night. Magnite (MGNI) is also on the scoreboard with a rise of 7.8%. Read the full write-up for more on PINS and a suggestion on what to do with F after this runup.

Surprise Trader: Who doesn’t love pancakes and profits? Dave thinks he can get both with today’s addition of restaurant company Denny’s (DENN). This Zacks Rank #1 (Strong Buy) beat by 50% in its most recent report, which marked the third positive surprise out of the last four quarters. DENN now has a positive Earnings ESP of 15% for the quarter coming after the bell on Tuesday, November 2. Analysts are calling for earnings growth of 541% for this year and another 46% for next. Dave likes the divergence of rising estimates with a more sluggish price, which opens up a fantastic opportunity. He added DENN on Thursday with a 12.5% allocation, while also selling Tronox (TROX). Get more specifics on today’s action in the full write-up.

Commodity Innovators: The portfolio swapped lithium for gold miners on Thursday. The Global X Lithium & Battery Tech ETF (LIT) reached Jeremy’s targets and is now backing off a bit, so the editor sold the fund and banked a more than 15% return in a little over a month. The new addition is VanEck Gold Miners ETF (NYSE:GDX), which gives the service exposure to gold without directly investing in the volatile precious metal. This addition has a mid-term holding period as the editor expects gold to show some momentum in the next three months and bring the miners along for the profitable ride. Read the full write-up for more.

Options Trader: It’s time to once again reposition the portfolio’s options in Thermo Fisher (NYSE:TMO) now that the premium has doubled. The last time Kevin made such a move in TMO was mid-August. This time he sold to close the December 600.00 Call for a 154% return. He then put on a bull call spread by buying to open a January 640.00 Call AND selling to open a January 660.00 call. The editor decided to go with a spread because the options are getting a bit pricey. This move offers potential for a very healthy gain, but is less expensive and mitigates against time decay/premium erosion. Get more specifics on this move in the full write up.

Until Tomorrow,
Jim Giaquinto

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