Europe Extends U.S. Losing Streak to 4 Days

We’ve been concerned about slower growth overseas for much longer than we’ve been worried about sluggishness here at home. So the European Central Bank’s decision to cut its GDP forecast for 2019 was more than enough to extend the market’s losing streak to four days.

Yes, we’ve been in the red all week so far… and today was one of the sharper steps back. The NASDAQ dropped 1.13% (or about 84 points) to 7421.46. The S&P continues to retreat from 2800 with a further slip of 0.81% to 2748.93, while the Dow was off 0.78% (or 200 points) to 25,473.23. The major indices did manage to finish off their lows.

Fortunately, stocks remain solidly higher for the year thus far. This losing skid feels like a long time, but the market had been in a very good mood until just recently.

The ECB reduced its growth forecast for this year to 1.1% from its previous forecast of 1.7%. It also plans to establish a new TLTRO (targeted longer-term refinancing operations) stimulus program. While investors usually appreciate such measures, the news instead reiterated a concern that they've been worried about for a while now.

The market doesn’t need much of a push these days to take a step back, especially after the runup in January and February. Investors have grown frustrated with how long its taking to get a trade deal and worried that an official agreement may not make much of a difference anyway. And there are also fears over slower growth here in the U.S. as well.

Unfortunately, there doesn’t seem to be a catalyst for the short-term to bridge the gap to the hoped-for meeting between President Trump and China President Xi that is being discussed for later this month or early April. Tomorrow’s jobs report will probably not be enough to salvage this week … especially in the market’s current mood … but a strong reading might be able to stop the slipping and sliding ahead of the weekend.

Today's Portfolio Highlights:

Home Run Investor: Shares of Yext (YEXT) bucked the sluggish market on Thursday and moved higher after beating earnings last night. However, guidance was a bit light, so Brian Bolan saw an opportunity to sell this provider of digital media technology services for a gain of 19% in just a little over two weeks. The editor replaced this position by adding Lindblad Expeditions (LIND), a Zacks Rank #1 (Strong Buy) expedition travel company. He sees this name as another good diversification play at this uncertain time. In addition, earnings estimates for next year and the full year are on the rise. The complete commentary has more info on this new pick.

TAZR Trader: Since reporting a mixed quarter a week ago today, AppFolio (APPF) has dropped and then bounced. Today, it still trades above where it closed after the earnings announcement. The only problem is that earnings estimates have been sharply lowered, making this cloud-based software solutions company a Zacks Rank #5 (Strong Sell). Kevin thinks APPF will test the post earnings low and maybe even dip as low as $60. He shorted the stock on Thursday with a 5% allocation. The complete commentary has more on this move, including a look a what the analysts are saying.

Surprise Trader: After the bell next Thursday, Zumiez (ZUMZ) will be going for its fourth straight positive surprise. This apparel and shoes retailer is coming off a beat of 14.5% last time and has a positive Earnings ESP for next week’s event. For that upcoming quarter, analysts expect this Zacks Rank #2 (Buy) to grow earnings by more than 35% over the previous year. Dave added ZUMZ today with a 12.5% allocation. He also sold Osisko Gold (OR) and secured a 10% profit in a little less than a month. Read the full write-up for more.

Stocks Under $10: The miners have been showing some strength recently, especially gold miners. But Brian Bolan doesn’t want to invest there. Lithium is a different story, though. The editor thinks this chemical element has “a much longer tail to it”, given the increasing need for batteries. To take advantage of this space, the editor picked up Lithium Americas (LAC). Earnings estimates are moving in the right direction for the company, which underscores its status as a Zacks Rank #2 (Buy). Read the complete commentary for more.

All the Best,
Jim Giaquinto

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