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SPECIAL ALERT: The August episode of the Zacks Ultimate Strategy Session will be available for viewing no later than Wednesday, August 11. Kevin Matras, David Bartosiak, Neena Mishra, CFA, FRM, and Sheraz Mian will cover the investment landscape from several angles in this popular event.
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• And much more
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Stocks began Tuesday’s session in the red, but finished higher after a strong second half. In other words, it was pretty much the reverse of Monday’s action. Along the way, the S&P got back to a new high for the first time in over a week.
The index rose 0.82% to 4423.15, barely making history by less than one point from the last record of 4422.30 on Monday July, 26. Meanwhile, the Dow advanced 0.80% (or about 278 points) to 35,116.40 and the NASDAQ was up 0.55% (or around 80.23 points) to 14,761.29.
It’s a nice rebound from yesterday’s mixed session when the S&P and Dow lost early gains and sold off in the final hour. The NASDAQ managed a slight advance despite the downward pressure.
There were no big changes between the two sessions. Investors are still concerned about the delta variant, rising inflation and potential taper talk from the Fed. They’re also a bit nervous about the heavy slate of economic data being released in the days ahead, especially the Government Employment Situation report on Friday.
However, investors are also buying any dips that come around amid a strong earnings season. More than 80% of the S&P companies that have reported so far have beaten earnings and revenue expectations. It continued today with positive earnings surprises from heavy hitters like Alibaba (BABA), Amgen (AMGN), BP (BP), ConocoPhillips (COP) and Activision Blizzard (ATVI), just to name a few.
Tomorrow will be another busy day of earnings with more than 400 companies coming to the plate, but we’ll also be getting another round of economic data. The big release on Wednesday will be the ADP Employment report, which begins three straight days of important jobs data. Jobless claims comes on Thursday and, as mentioned above, the all-important monthly BLS report closes out the week.
Another number to watch tomorrow is ISM Services. Last time, the print was 60.1 in June, which missed expectations and the previous month’s result. However, it remained solidly in expansion territory over 50. The ISM Manufacturing report came out yesterday, which also slightly missed expectations but remained above 50.
Today's Portfolio Highlights:
Surprise Trader: In addition to being a Zacks Rank #1 (Strong Buy), Avnet (AVT) is also part of a space in the Top 2% of the Zacks Industry Rank (Electronics – Parts Distribution). The company is one of the world’s largest distributors of electronic components and computer products. It is scheduled to report earnings on Wednesday, August 11, when it will be going for a sixth straight quarterly beat. An Earnings ESP of 9.82% suggests that AVT is well on its way to continuing that streak. Dave added the stock on Tuesday with a 12% allocation, while also selling Schneider National (SNDR) for more than 4% in less than two weeks after a lackluster post-earnings drift. Read the full write-up for more on all of today’s action. In other news, this portfolio had two of the best performers of the day with Terex Corp. (TEX, +6.4%) and AdvanSix (ASIX, +5.3%).
Stocks Under $10: The latest addition to the portfolio is Volt Information Sciences (VOLT), a Zacks Rank #2 (Buy) staffing name that focuses on IT. The company has topped the Zacks Consensus Estimate for five straight quarters now... and some of those beats have been BIG! In fact, the average surprise over the past four quarters is more than 400%. Brian also likes its valuation and is especially impressed by its margins improving to breakeven from a 3% loss. Best of all, the margins look to be positive moving forward. Read the full write-up for more on today’s addition. Meanwhile, this service also had a top performer on Tuesday as Alto Ingredients (ALTO) rose 6%.
TAZR Trader: With the NASDAQ looking a bit vulnerable at the moment, Kevin thought this was a good time to trim a few positions and bank a couple double-digit profits. Advanced Micro Devices (AMD) and Cadence Design Systems (CDNS) have both been big performers since being added, so the editor took partial profits of 39% and 20.9%, respectively, to play it safe at a volatile time. He also sold some of Qualcomm (QCOM) after Google announced it was dropping the company’s chips to make their own. The stock still brought an 8.4% return. Read the full write-up for more.
Counterstrike: It looks like we could be in store for a volatile August, so Jeremy decided to add some protection to the downside. The editor bought a 7% allocation in ProShares Ultra VIX ShortTerm Futures ETF (UVXY) to get some exposure to the VIX, which could spike close to 30 if the market heads lower during this historically “strange” month. Remember, UVXY moves 1.5X the VIX and was a double-digit winner for this portfolio last month. The portfolio also added 4% to Direxion Daily S&P 500 Bear 3X Shares (SPXS) to increase its S&P short hedge as a dip to 4300 wouldn’t be out of the question in a selloff. If the market gets back to all-time highs, Jeremy has no problem in exiting these positions. Read the full write-up for more.
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