The S&P and Dow had another late-day rally, but still finished on the negative side for a second straight session. This pullback smarts a bit because the market has been pretty strong ever since the election in November, but it’s important to keep things in perspective. Stocks still finished the first month of 2017 in the green, which is a marked improvement over January 2016 when the S&P and Dow were each down by 5% or more and the NASDAQ slipped by nearly 8%.
Tuesday’s session continued to be impacted by concerns about Washington, along with some rough earnings reports. The S&P fought back hard from morning weakness and was off by only 0.09% to 2278.9. The Dow stumbled a bit more though and finished lower by 0.54% to 19,864.1. The NASDAQ managed a complete recovery to eke out a 0.02% advance to 5614.8. Tomorrow will be a busy session with the ISM Manufacturing report and the Fed Meeting Announcement, when they will almost surely keep rates right where they are. The strong Apple (NASDAQ:AAPL) quarter reported after the bell could also have an impact.
In the portfolios, Alibaba (NYSE:BABA) was bought by Zacks Counterstrike and TAZR Trader; the former service also bought a second position. Large-Cap Trader added a couple of European financial positions, while Surprise Trader picked up a name that looks set for a positive surprise on Thursday. Finally, Zacks Short List replaced three names in this week’s adjustment. Give it all a look below:
Top Portfolio Highlights:
Zacks Counterstrike: Opportunity is knocking right now! Jeremy decided to use this recent market pullback to add a couple of Zacks Rank #1s to Zacks Counterstrike on Tuesday. Each of the stocks recently reported earnings and are being bought with 6% allocations. Here they are:
You may know Alibaba (BABA) as the “Amazon (NASDAQ:AMZN) of China”…just without the triple-digit gains. But Jeremy does think the company can advance 20% to 25% over the next six months. The stock recently defended a HFT push lower above the $100 level, so the editor wants to be long in front of this level with expectations for a move to $110. Let’s just hope President Trump doesn’t have any problems with China over the next month or so.
The other buy on Tuesday was semiconductor manufacturer Cree (CREE). Despite a strong quarterly report, the company got beaten down subsequently. That’s classic HFT behavior, so Jeremy knew now was the time to buy. He’s expecting the stock to get back to $31 over the next month. Make sure to read the complete commentary for more on both of today’s moves.
TAZR Trader: Kevin also thinks that Alibaba Group (BABA) is headed for $110, so he made this Chinese operator of online and mobile marketplaces the newest addition to Zacks TAZR Trader on Tuesday. The editor has been watching this name for a while, and its recent move to Zacks Rank #1 status finally convinced him to pick up a 7% allocation. The rank upgrade comes after an impressive 28% earnings beat in its most recent report. The full write-up has a lot more info on today’s moves, including the sale of CTSH.
Large-Cap Trader: The Finance sector is #1 in the Zacks Sector Rank, and John wants some exposure for the Large-Cap Trader. But he doesn’t want to buy the overbought USA names. Instead, the editor sold LII and split the proceeds between two European banking shares, since he believes these names are “climbing back up that wall of worry” amid Brexit and the European elections.
The two new buys are Barclays (LON:BARC) PLC (BCS) and Deutsche Bank (DE:DBKGn) (DB), which are both Zacks Rank #1s that are safer bets to beat estimates in upcoming reports. They are also part of the Banks-Foreign industry, which is in the top 30% of the Zacks Industry Rank. BCS has a Zacks Style Score of B for Value and it reports on February 23, while DB has a Zacks VGM of A and reports on February 2. Read the complete commentary for all the specifics on these new additions.
Surprise Trader: Eric considers Snap-On (SNA) to be “a textbook case that makes for a compelling pick to beat earnings yet again this quarter”. SNA has beaten quarterly earnings estimates for five years now and has a positive Earnings ESP for its next report on Thursday before the bell. Plus, the company is a Zacks Rank #2 and part of an industry (consumer discretionary – handheld tools) that’s in the top 35% of the Zacks Industry Rank. The editor added SNA to Surprise Trader on Tuesday with a 12.5% allocation. Get more info on this new pick in the full write-up.
Zacks Short List: The portfolio sold three names in this week's adjustment, including BIDU and WY. But the biggest performer was Murphy Oil (NYSE:MUR), which brought a 9.5% return. The new additions replacing these names were CF Industries (CF), Incyte Corp. (INCY) and PTC Inc. (PTC). Learn more about this emotion-free portfolio that takes advantage of falling and volatile markets by reading the Short List Trader Guide.
Have a Good Evening,
Jim Giaquinto
Before You Go...
• In this week's Zacks Market Edge Podcast, Tracey welcomed Eric Dutram. They discussed the hottest ETFs for 2017 and which funds are on the horizon.
• Have you taken a look at this quarter's Ultimate Four report? Tracey, Neena and both Brians each offered a stock that has great upside potential for this quarter. Earnings season isn't over yet, so make sure you look at this special report.
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