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A Small Rebound is Better Than No Rebound

The market didn’t have the vigorous rebound that we all would have liked after yesterday’s stiff selloff, but investors will take any type of positive close in the current trade-obsessed environment. 

Many of the editors considered Monday’s plunge to be an overreaction, especially after White House officials walked back concerns of restricting Chinese investments of U.S. tech. But apparently confusion over the administration’s trade policy limited the upward momentum. 

In the end, tech rebounded enough to boost the NASDAQ by 0.39% to 7561.6. The S&P rose by 0.22% to 2723.1. The Dow pulled back from a more than 100-point advance earlier in the session, but still gained 0.12% to 24283.1. 

The Russell 2000, which was weathering the trade turmoil better than most until yesterday, had the best rebound in the session. It gained 0.63% to 1667.9. 

Apart from trade stuff, one of the big pieces of news today was oil rising nearly 3.5% and eclipsing $70 per barrel. Counterstrike felt this was a great time to sell half of an oil-related name for a double-digit return. The portfolio also bought a software company that’s pulled back despite a strong quarterly report. 

Other portfolio moves today included TAZR taking a small bearish hedge and Stocks Under $10 picking up a solid long-term tech play. And Short List swapped out two names this week. Read the full write-up below for more on all of these moves: 

Today's Portfolio Highlights: 

Counterstrike: For 15 straight quarters now, software staple Adobe Systems (ADBE) has beaten the Zacks Consensus Estimate. Its most recent positive surprise was 8%...and it expects more of the same in the second half. Despite all this, program sellers attacked the stock and drove it lower. Jeremy sees an attractive technical level for a stock that has soared to nearly $350 from $60 in just four years. He added ADBE on Tuesday with an 11% allocation. By the way, the editor also decided to sell half of VelocityShares 3X Long Crude Oil ETN (UWT) for a 25.2% profit in just three weeks. Read the complete commentary for more on these plays, along with a look at ADBE’s chart. 

TAZR Trader: The White House may be talking tough on trade in a general sense, but the particulars are often murky as officials routinely walk back the more controversial statements. The market is left in a weakened state amid this uncertainty, which has Kevin thinking that a small bearish hedge is a good play right now. Therefore, he used half of the portfolio’s 9.4% position in cash to buy Russell 3X Bear ETF (TZA). The editor used the other half to buy more of NVIDIA (NVDA). Read the full write-up for specifics on these moves. 

Stocks Under $10: The portfolio could use a solid long-term tech play...and Brian Bolan found one on Tuesday with his addition of Adesto Technologies (IOTS). As the ticker states, this is a move to capitalize on the Internet of Things (IOT). The editor is most impressed with its revenue growth, which is expected at 38% for this quarter year over year and 44% for next quarter. Learn a lot more about this new addition in the full write-up. 

Zacks Short List: The portfolio switched out two positions this week. It short-covered MercadoLibre Inc. (MELI) and NetScout Systems (NTCT). These names were replaced by adding Ionis Pharmaceuticals (IONS) and TAL Education Group (TAL). Learn more about this emotion-free portfolio that takes advantage of falling and volatile markets by reading the Short List Trader Guide. 

Momentum Trader: “When you’re getting pounded with overhand rights, uppercuts, and left hooks all day, catching a jab doesn’t feel all that bad. Yesterday’s market was a slugfest, with bears relentlessly punishing equities all day. That helped set the stage for a bounce today but I’m afraid it wasn’t the sort of broad based bounce back we’d hoped for. Instead, the recovery was limited to small caps and tech stocks. A familiar friend indeed. 

“The late day weakness today sunk the mega caps of the Dow but did little to disband my tech/small cap thesis. I expect to continue to add holdings in their higher beta area of the market while the large caps slog back-and-forth.” – Dave Bartosiak, who is also editor of Surprise Trader and Blockchain Innovators.

All the Best, 
Jim Giaquinto

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