Market Too Nervous To Rally Again

The major indices head into Friday’s session with losses for the week, as the mixture of trade and political concerns threaten a second straight week in the red.

The NASDAQ dropped 0.58% (or more than 46 points) on Thursday to 8030.66. It’s down by about 1% so far this week.

The Dow was off 0.3% (or nearly 80 points) to 26,891.12 and the S&P slipped 0.24% to 2977.62. These indices are down by 0.1% and 0.5%, respectively, through Thursday.

Stocks are coming off a strong Wednesday session that saw encouraging trade news take precedence over the recent impeachment frenzy.

It makes sense that the market would reverse a bit after yesterday’s rally in this uncertain environment, especially following a news report stating that the U.S. probably won’t be extending the waiver that allows its companies to sell to Huawei.  

On the other hand, China’s Foreign Minister Wang Yi had some nice things to say about the US showing goodwill in negotiations and that it could yield results at the bargaining table if it continues.

And then behind everything (where it will likely be for the next several months) is the latest volley in the impeachment drama, as the whistleblower complaint against President Trump was released.

What can you say about it? Depending on who you ask in Washington, it’s either the most horrible thing that’s ever happened in the history of our country, or it’s a complete waste of time.  

All the market sees is uncertainty. Investors just hope that the squabbling won’t make it even more difficult to get a trade deal done or hurt what is otherwise the strongest economy on the globe.

Maybe we can get a good headline or two tomorrow that lifts stocks into the green for the week. Fingers crossed...

Today's Portfolio Highlights:

ETF Investor: With all of this volatility stemming from trade issues, slowing global growth and now politics; Neena is looking for some high-quality, dividend growing stocks for the portfolio. Such names should perform better than most in these uncertain times. The editor picked up the Vanguard Dividend Appreciation ETF (VIG) on Thursday, which holds companies that have increased their dividends for at least 10 straight years. Some of those companies include stable, large-caps like Microsoft, Visa and Walmart. By the way, the portfolio also sold SPDR Bloomberg Barclays Convertible Securities ETF (CWB) today for a 3.6% return. Read the full write-up for a lot more on today’s moves.

Insider Trader: Everything looks good for Costco (COST) heading into its earnings report next week, but Tracey decided to take some profit in this retailer on Thursday. Growth stocks are “petering out” and COST hit new all-time highs recently, so the editor sold 75% of the position for a return of 17%. She’s hanging onto 25% as the company's monthly sales have been “outstanding”. The portfolio also sold Covetrus (CVET) today.

Counterstrike: In a market that moves at the whims of the news cycle, it’s enough to just get close to your targets. Nobody wants to risk a double-digit return just to squeeze out a few more percentage points. That was the idea behind Jeremy selling Boot Barn Holdings (BOOT) and Callaway Golf Company (ELY) on Thursday. By exiting these positions now, the editor secured a 20.9% return for BOOT in less than 2 months and a 10% profit for ELY in a little more than one month. Now he’s “waiting for the next headline to hit”.

Income Investor: "Despite reassurances from President Trump—he tweeted that a deal with China could come “sooner that you think” on Wednesday,” pushing stocks into a rally into the overnight session—it seemed that things had stalled on the trade front.

"Bloomberg reported that the U.S. wasn’t very likely going to extend a waiver that would allow some companies to continue doing business with Huawei Technologies. Top chip stocks like Micron (MU) and Qualcomm (QCOM) fell as a result today.

"But, it looks like trade talks are set to resume next month in Washington, according to CNBC.

"Amid all the big trade headlines, we also had to digest some important economic data Thursday, most of which was positive." -- Maddy Johnson

Options Trader: "Stocks closed modestly lower. And while they are currently down for the week, they don’t need much of a move tomorrow to finish up for the week.

"We shall see.

"One thing that could really move the market is the upcoming U.S.-China trade talks. But that’s still two weeks away. However, we finally have a hard date for when that will happen -- and that’s October 10th. High-level, face to face talks will resume in Washington, DC at that time.

"While few are expecting a full-blown trade deal at these talks, you never know. Especially after President Trump, earlier this week, said a trade deal with China 'could happen sooner than you think.'" -- Kevin Matras

Until Tomorrow,
Jim Giaquinto

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