S&P Goes Where It’s Never Gone Before

What a great way to kick off another busy week of earnings!

The S&P finally closed at all-time highs again on Monday, as the market continues to benefit from optimism on the trade front and better-than-expected corporate results.

The index didn’t just sneak into record territory; it surged by more than 10 points over the previous closing high. An advance of 0.56% today took the S&P to 3039.42, which easily eclipsed last July’s 3025.86.

However, the best-performing index was the NASDAQ, which jumped 1.01% (or nearly 83 points) to 8325.99.

This might as well be “FAANG Week” with three of the five tech leaders scheduled to report. All of those names were positive on Monday, especially Alphabet (+1.97%), Netflix (+1.82%) and Apple (+1%).

(It should be noted, though, that shares of Alphabet are down about 2% afterhours as of this writing since the company missed earnings in its report after the bell.)

The NASDAQ also enjoyed solid performances from some of last week’s big winners, such as Microsoft (+2.46%) and Intel (+0.50%).

While investors are thrilled with earnings season for the most part, the main reason for today’s record-setting run may have been trade. U.S. and China officials have both suggested that agreement on “Phase One” is close with President Trump even saying it was “ahead of schedule”.

The NASDAQ and S&P have now closed higher for four straight sessions and have winning streaks of 4 weeks and 3 weeks, respectively.

The Dow was also positive last week, but Boeing had kept the index from going on its own run in the time.

But this week won’t be all about earnings. We have a Fed meeting on the horizon and odds for yet another rate cut are well over 90% at the moment.

Assuming there are no surprises, investors will be paying close attention to the Committee's language to see if this might be the last cut for a while given all the positive news of late.

So get ready for another crazy week… and maybe some more new highs!

Today's Portfolio Highlights:

Insider Trader: Last week, big-cap drug manufacturer Eli Lilly (LLY) raised its full-year earnings guidance in its quarterly report. The company has several promising drugs in its pipeline, including one for migraines. However, shares remain down by more than 7% for the year. In the days after the report, the CEO of LLY and a director bought shares of their own company. Tracey also sees an opportunity here, so she added the stock on Monday with a 10% allocation. Read the complete commentary for more and don’t be surprised to see another buy later this week.  

Surprise Trader: Another busy week of earnings season started today with the addition of MarineMax (HZO), the country’s largest recreational boat and yacht retailer. This Zacks Rank #2 (Buy) beat by 9.1% last time, and now has an impressive Earnings ESP of 21.62% for the quarter coming before the bell tomorrow, October 29. Dave added HZO with a 12.5% allocation. He also sold Dril-Quip (DRQ) on Monday. Read the full write-up for more on today’s moves.

Technology Innovators: We’re only a day away from Silicon Motion (SIMO) reporting its earnings, but Brian is buying this chip stock anyway. Earlier this month, the company preannounced good revenue and better-than-expected margins, which should be good news for earnings. Plus, the editor really likes SIMO’s position as a supplier for AAPL. If the replacement cycle for the recently-launched iPhone 11 is strong, then that should be a solid tailwind for SIMO that could send the stock soaring. Learn a lot more about this new addition in the full write-up.

Counterstrike: The portfolio started another busy week of earnings with a couple smaller buys. USANA Health Sciences (USNA) is a nutrition company that finally broke out of its 2019 rut after reporting a nearly 30% positive surprise last week while raising its full-year guidance. The Lovesac Company (LOVE) is a home furnishings company that’s popular with the younger generation. The stock popped after a solid report but has come back down again, giving Jeremy a great entry point. The editor added USNA and LOVE on Monday with 5% and 4% allocations, respectively. They are both Zacks Rank #1s (Strong Buys). Read the full write-up for a lot more, including the stops you should be using. 

Black Box Trader: The portfolio replaced half of its positions in this week’s adjustment, and cashed in three winners along the way. The stocks sold this week include:

• CVS Health (CVS, +6.4%)
• Target (TGT, +4.6%)
• Taylor Morrison Home (TMHC, +4.1%)
• Allstate (ALL)
• D.R. Horton (DHI)

The new buys that replaced these names are:

• CDW (CDW)
• Crocs (CROX)
• Frontline (FRO)
• US Foods Holding (USFD)
• Verizon Communications (VZ)

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

All the Best,
Jim Giaquinto

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