Late Surge Saves Weekly Winning Streaks

Trade concerns resurfaced yesterday and continued to haunt Friday’s session, but a late-day rally lifted stocks and kept their weekly winning streaks alive.

The NASDAQ rallied enough to finish the day with a gain of 0.14% to 7,298.2, while the S&P managed to advance 0.07% to 2707.88. These indices both spent almost the entire session in the red before that final rush to the upside.

The Dow also rallied off a low of nearly 300 points, but couldn’t completely recover and finished on the negative side for a third straight session. It had to settle with a dip of only 0.25% (or about 63 points) to 25,106.33.

The trade news really rocked the market and threatened to end the bounce that we’ve enjoyed since Christmas Eve. However, the bulls had a strong third act to end the week. The NASDAQ and Dow improved by nearly 0.5% and 0.2%, respectively, extending both of their winning streaks to 7 weeks. The S&P closed higher by about 0.05% for its second straight week in the green.

Stocks didn’t like hearing that President Trump and President Xi of China wouldn’t be meeting before the trade deadline at the beginning of March, which is supposed to signal higher tariffs. And it didn’t help that White House economic advisor Larry Kudlow said there was still “a pretty sizable distance” between the two countries.

Nevertheless, trade negotiations pick up again next week as Treasury Secretary Steven Mnuchin and U.S. Trade Representative Robert Lighthizer make their way to China. And there’s always a chance that the upcoming deadline could be extended if progress is being made.

Trade is back at the front of the market’s mind, so the headlines we get out of those meetings next week will have a big say on whether this winning run stretches to 8 weeks. In the meantime, though, the editors used the market’s recent hiccups to make some moves, including buying positions at reduced prices or taking double-digit profits to play it safe. Take a look at their trades below...

Today's Portfolio Highlights:

Counterstrike: This pullback over the last two days gives Jeremy an opportunity to add 5% more to a couple existing positions that were too expensive just a few days ago. Shoe Carnival (SCVL) doesn’t report until late next month, but the editor thinks shoes are pretty hot right now and this stock should make up what it lost over the past several weeks. Meanwhile, Jeremy loves e-commerce services company Etsy (ETSY), but its earnings later this month can send the stock sharply in either direction. However, shares are now just too attractive to pass up. Read the complete commentary for a lot more on these moves, including their recommended stop prices.

Technology Innovators: What a busy week for the portfolio! Brian Bolan added three times and today he’s selling a couple names for double-digit profits. Shares of Forescout Technologies (FSCT) are soaring today after this security pure play for the IOT space reported strong quarterly results. The editor has talked about taking big profits more frequently in 2019, so he sold FSCT on Friday for a 31.3% return. Programmable microchip maker Xilinx (XLNX) has also been climbing of late, convincing Brian to sell the name and bank a 33.3% profit in a little over 3 months.

Value Investor: Given all the market uncertainties at the moment, Tracey is interested in buying more stable mid- and large-cap companies. But there are always exceptions. On Friday, the editor decided to add ZAGG (ZAGG), which is a volatile small cap. However, this maker of invisableSHIELD screen protection for iPhones is a Zacks Rank #1 (Strong Buy) that has all the signs of a classic value stock. Plus, with a PEG under 1.0, it also has the rare combination of value AND growth. Learn a lot more about this new pick in the full write-up.

Stocks Under $10: The software security space has been “red hot” of late, so Brian Bolan filled one of the portfolio’s open spots on Friday with Zix Corp. (ZIXI). The company is a leading provider of hosted email encryption and e-prescribing services. This Zacks Rank #2 (Buy) preannounced last month and the stock has continued to gain ground. The editor believes ZIXI is on its way to a beat when it reports on the last day of this month. In fact, he thinks the stock will reach double digits before the summer. Moving forward, Brian still wants to get the portfolio up to 15 names, so more buys are likely on the way next week.

Home Run Investor: Shares of Bottomline Technologies (EPAY) plunged recently after its quarterly report failed to impress. Brian Bolan thinks the selloff was a bit overdone. Nevertheless, the editor is all about protecting capital and taking nice gains these days, so he sold EPAY on Friday while he could still get a nice 17.3% return. Look for a replacement next week.

Have a Great Weekend,
Jim Giaquinto

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