All Mixed Up to Start a Big Week for the Market

We haven’t seen many mixed markets since things started turning dicey for stocks in early October. But on Monday, that’s exactly what we got. Another rough session for the FANGs meant that the NASDAQ couldn’t join its counterparts on the positive side.

The Dow climbed 0.76% (or about 190 points) to 25,461.7, while the S&P was up 0.56% to 2738.3. All three of the major indices are coming off a solid week of 2%+ gains.

Except for Netflix (+2.05%), the FANGs remained under pressure. The market hasn’t gotten over Apple’s quarterly report just yet, in which the iPhone maker beat on the top and bottom lines but was unimpressive when it came to shipments and guidance. It was off an additional 2.84% on Monday after falling 6.6% on Friday for its worst single-day in years. Amazon was down nearly 2.3% as well.

The FANGs really got messed up during the October selloffs and lost their seemingly insurmountable spot as market leader. And now President Trump is talking about antitrust proceedings against tech giants, though such statements were made in an interview with no actual movement on this issue in Washington.

It was a low volume day in what is sure to be a very eventful week. First up, of course, is the midterm elections tomorrow. Most people believe the market will be just fine no matter what the Congress looks like after the votes are counted. The important thing is that a market uncertainty is cleared up.

Then later in the week, the Fed’s two-day policy meeting comes to a close. Nobody expects a rate hike right now…that will almost definitely come in December. But Jerome Powell and his Friends are being watched very closely by the market as its biggest concern right now is rising rates. We may get a sign on what the Committee plans to do next year amid a strong economy and a historic jobs market.

Today's Portfolio Highlights:

Momentum Trader: Since bottoming out on October 26, shares of Horizon Technology Finance (HRZN) have been up nearly every day. This business development company is now knocking on the door of its 52-week high. Dave likes the momentum he’s seeing in this Zacks Rank #2 (Buy) since it reported a solid earnings beat in its most recent quarter. The editor added HRZN on Monday with a 12.5% allocation. Read the full write-up for more.

Surprise Trader: Car rental staple Hertz Global Holdings (HTZ) beat by more than 34% in its last quarterly report. Now we're getting ready for its next report on Thursday after the bell, and this Zacks Rank #2 (Buy) has a solid Earnings ESP of 13.4%. Dave thinks it is all set for another beat later this week, and so he bought a 12.5% allocation in HTZ on Monday. Read the complete commentary for more.

Black Box Trader: For the second week in a row, the portfolio replaced six names in its weekly adjustment. The stocks sold today included:

• Spirit Air (SAVE)
• United Continental Holdings, Inc. (UAL)
• UnitedHealth Group, Inc. (UNH)
• Exelixis, Inc. (EXE)
• Synchrony Financial (SYF)
• Bunge Ltd. (BG)

The new buys that replaced these names are:

• Sprouts Farmers Market (SFM)
• Nordstrom (JWN)
• Anthem, Inc. (ANTM)
• HCA Healthcare (HCA)
• Old Republic Int'l Corp. (ORI)
• Booz Allen Hamilton Holding Corp. (BAH)

Read the Black Box Trader's Guide to learn more about this computer-driven service designed to take the emotion out of investing.

Zacks Confidential: With more than 75% of companies having reported, Kevin thought this was a good time for an update on earnings season. And that means Sheraz Mian, Director of Research for Zacks Premium, is back for one of his in-depth scorecards on the winners and the losers. HINT: It’s been a solid earnings season, but is all the more interesting as it occurred during a market correction. Learn what to do from here by reading his complete commentary with a couple recommendations: Q3 Earnings Season Scorecard.

All the Best,
Jim Giaquinto

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