Stocks Hold Onto Gains Ahead of Powell Speech

The major indices couldn’t replicate yesterday’s post-Thanksgiving rally, but they managed to hold onto all the gains and even add a little despite a weak open.

The Dow slumped more than 220 points at its worst on Tuesday, but the back half of the session was mostly higher as defensive areas improved. The index rose 0.44% (or about 108 points) to 24,748.73. The S&P advanced 0.33% to 2682.17.

The NASDAQ was much more erratic than its counterparts but managed to eke out a gain of 0.01% to 7082.7. While that’s nothing to write home about, correction-fatigued investors should be at least content that the beleaguered index held onto all of yesterday’s 2% surge.

Everyone’s talking about trade as we inch closer and closer to the G-20 meeting that begins on Friday. On the one hand, President Trump and White House officials stress the importance of communication with Chinese President Xi and the possibility of some sort of breakthrough. On the other hand though, they don’t want expectations too high and Trump is letting everyone know that the plan is still to implement more and higher tariffs moving forward if there’s no deal.

But before we go to Argentina, we’ll be going to New York where Jerome Powell is scheduled to give a speech. As with trade, there’s not a lot of optimism on Wall Street that the Fed Chair will lighten up on more rate hikes next year in the wake of this correction… but you never know. If his language is deemed to be more dovish than before, we might be in store for three straight days of gains to start this week. Stay tuned…

Today's Portfolio Highlights:

Counterstrike: The market looks like it might rise into the G-20 meeting that begins on Friday, so Jeremy thought this was a good time to pick up a couple names. Firstly, the editor added a 6% allocation in online marketplace Lending Tree (TREE), which has been halved from its 2018 highs. But it could be poised for a sharp move higher as a strong quarterly report has exposed its oversold position.

The other buy was a 10% allocation in Nice Ltd. (NICE), a provider of enterprise software solutions that also reported a good quarter. Shares did not plunge on the news, which is actually pretty encouraging given the sharp selloffs. Both of these stocks are Zacks Rank #1s (Strong Buys). Jeremy strongly suggests using limit orders in these moves, so read the complete commentary for more instructions.

Surprise Trader: Athletic apparel has performed really well for the portfolio this quarter. So why deviate from what’s working? Dave went back to the well on Tuesday by adding Lululemon (LULU) with a 12.5% allocation. This Zacks Rank #1 (Strong Buy) yoga-inspired apparel company is part of a space in the top 17% of the Zacks Industry Rank. The editor really likes its positive Earnings ESP of 4.89% for the report coming after the bell on December 5. LULU has beaten for six straight quarters with an average surprise of more than 19% in the past four. The editor thinks it is primed for another outperformance. Read the full write-up for more.

TAZR Trader: Sure, the market was up a bit on Tuesday, but this isn’t the bounce that Kevin was looking for. He thinks instead of volume buying there’s just a half-hearted optimism that some sort of progress on China trade will be made at the G-20 this weekend. Therefore, he sold the oldest batch of SMART Global Holdings (SGH) to secure a 12% return. The editor also decided to get out of ProShares Ultra Pro QQQ (TQQQ) as all the best cyber shopping news could barely push Amazon to $1600. The position brought a gain of 4% in just one day. Read the complete commentary for more on today’s moves.

Zacks Short List: The portfolio short-covered Canopy Growth Corp. (CGC) on Tuesday for a nice return of 23.3%. It also got out of Catalent (CTLT). The new buys this week that replaced these names are Baidu (BIDU) and Tencent Holdings (TCEHY). Learn more about this emotion-free portfolio that takes advantage of falling and volatile markets by reading the Short List Trader Guide.

Have a Great Evening,
Jim Giaquinto

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