Not Ready to Bounce Yet

The market isn’t in the mood to start repairing the damage from last week’s sharp selloff just yet, as tech again led the major indices lower to start a new week. Thankfully, stocks didn’t have another epic pullback like we saw last Wednesday and Thursday.

The Dow bounced all over the place on Monday. The last hour alone saw the index drop from a nearly 150-point gain to a loss of practically 90 points, which is where it closed. It still had the best performance on a percentage basis with decline of 0.35% to 25,250.55.

The S&P finally broke a six-session losing skid on Friday, but it was back in negative territory after the weekend with a slide of 0.59% to 2750.79. Like the Dow, it chopped around and stretched into the green momentarily a few times during the day.

Another weak session for tech helped complicate things for the S&P, but it really took a toll on the NASDAQ. The index spent all its time in the red and finished with a slump of 0.88% to 7430.74. As you’d expect, it was another rough session for the FANGs as Apple dipped more than 2%. Facebook had the best day with a decline of only 0.14%, but all others slipped by more than 1%.

Only one of the FANGs is scheduled to report this week, and that’s Netflix tomorrow. The streaming giant has been under pressure more than its counterparts recently, which explains why it is now a Zacks Rank #3 (Hold) due to a few downward revisions from analysts. The market will be watching this report with a lot of interest tomorrow.

For the moment, stocks seem rather directionless. They remain unnerved by last week’s sharp selloff, yet we’re still dealing with a strong economy. Unfortunately, we’re also still dealing with the same problems that led to last week’s plunge, namely rising rates, trade issues, tech concerns and earnings skepticism. Let’s hope that another positive season, which is expected, can improve the market’s mood.

Today's Portfolio Highlights:

Surprise Trader: Now that the market has calmed down a bit after last week’s sharp selloff, let’s put our focus back where it belongs… earnings season! Dave felt comfortable putting some cash to work today, especially in the beaten-down NASDAQ index. The editor bought a 12.5% allocation in ASML Holding (ASML), a Zacks Rank #2 (Buy) company in the semiconductor manufacturing space. It has a positive Earnings ESP of 2.63% for the quarter coming this Wednesday before the bell. Read the complete commentary for more on this new buy.

Black Box Trader: The portfolio swapped out six names in this week's adjustment. The stocks that left the service today were:

• Kohl's Corp. (KSS)
• Hertz Global Holdings, Inc. (HTZ)
• T-Mobile US, Inc. (TMUS)
• CVS Health Corp. (CVS)
• Voya Financial, Inc. (VOYA)
• United Continental Holdings, Inc. (UAL)

The new buys that replaced these positions are:

• Bunge Ltd. (BG)
• Callaway Gold Co. (ELY)
• Herbalife Nutrition Ltd. (HLF)
• Ingersoll-Rand Plc (IR)
• The Progressive Corp. (PGR)
• Unum Group (UNM)

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: Earnings seasons have been solid for nearly a decade now. But will such strong performances continue in the third-quarter and beyond? When Kevin Matras has a question about earnings, there’s one guy he turns to … Zacks’ Director of Research Sheraz Mian. It’s time for one of his in-depth articles that highlight which sectors and industries should perform the best…and the worst. He also highlights a couple of stocks to consider. Check out his analysis by clicking: Previewing Q3 Earnings Season.

Until Tomorrow,
Jim Giaquinto

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