A lot of stuff was thrown at the market on Friday, including Apple's "disappointing" report, a very strong jobs number and trade rumors. In the end, stocks couldn't extend the three-day winning streak… but the week finished solidly on the positive side.
The NASDAQ was up 2.7% this week, while the Dow and S&P each advanced about 2.4%. That's quite a dramatic improvement from last week when the NASDAQ and S&P each lost around 4% with the Dow down about 3%.
Despite beating on both the top and bottom lines, we knew that Apple's quarterly report from yesterday would probably not benefit the market on Friday. The company announced soft iPhone shipments and guidance, which ultimately took a bite out of all the major indices. AAPL dropped by 6.6% for its worst single-day loss in years, but it didn't cause another October-like selloff.
Meanwhile, the jobs report was impressive with 250,000 added last month, compared to expectations of around 185,000. The unemployment rate stayed at a historically low 3.7% and wages rose by 3.1%. On the one hand, a report like this should help calm anyone's fears that the economy is slowing down. But on the other hand, there's even less chance now that the Fed would reconsider a rate hike in December, which some investors were hoping for.
And then there's President Trump, who's been sounding a lot more bullish lately that some kind of deal could be worked out with China. The market would love nothing more! But all we have so far is a Tweet and a few comments to reporters; there's nothing solid. Plus, other administration officials are throwing cold water on the idea of a deal coming anytime soon.
Add all this stuff together and you get a market that started in the green, swung sharply to the red and managed to pare some of the losses by the close. The NASDAQ ended Friday's session lower by 1.04% to 7356.99, while the S&P was off 0.63% to 2723.06. The Dow declined 0.43% to 25,270.83.
It's too bad the three-day winning streak came to end, especially since it was the first of its kind in over a month. However, that rally led to a solid week that the market really needed. After the horrors of October… we'll gladly take it!
Next week, we'll see what the midterms have in store for us! Today's Portfolio Highlights: Counterstrike:
The market finally broke out to a three-day winning streak, but that was followed by a so-so report from Apple and some conflicting reports on trade discussions with China. As a result, the 200-day was tested and rejected, leading Jeremy to take some profits and get short. First of all, he sold these names:
• Half of United Rentals (URI) for a 13.5% profit in 7 days
• Atlassian Corp. (TEAM) for a 12.7% profit in 6 days
• ProShares UltraPro QQQ (TQQQ) for a 1% gain in 7 days
The editor replaced these names by short selling Eagle Materials (EXP) with a 7% allocation. The cement maker was getting jackhammered along with the housing sector, but then shares took off after its earnings report. The problem was that the quarter wasn't that impressive, according to Jeremy, and the stock just got caught up in the relief rally. Therefore, he sees a nice short setup with EXP. The portfolio also added ProShares UltraPro Short Dow30(SDOW) with a 7% allocation, which should be a nice hedge if the market moves lower again. Read the complete commentary for more. Stocks Under $10:
While the market was taking a break after a three-day rally on Friday, shares of Harmonic (HLIT) were jumping. Brian Bolan liked to see that resilience and decided that this small-cap video services provider would be a good move for the portfolio. The company has already reported a solid quarter with a 300% positive earnings surprise, so there's no need to sit on pins and needles waiting for its turn in this hectic earnings season. Rising earnings estimates have made HLIT a Zacks Rank #2 (Buy). If the market turns around, Brian thinks this stock could shoot higher. Read the complete commentary for a lot more on this buy. Surprise Trader:
In its last report, medical products company Haemonetics (HAE) beat the Zacks Consensus Estimate by more than 40%. It has topped our expectations for eight straight quarters now with an average surprise of nearly 25% in the past four. Dave thinks HAE is set for another outperformance when it reports before the bell on Tuesday. This Zacks Rank #1 (Strong Buy) has a positive Earnings ESP of 5.5% for the upcoming quarter and is part of a space in the Top 38% of the Zacks Industry Rank. The editor added the stock on Friday with a 12.5% allocation. Read the full write-up for more. Home Run Investor:
The recent correction took its toll on Upland Software (UPLD), but this provider of cloud-based Enterprise Work Management software held up well in today's lower market. Brian Bolan is feeling pretty good about its quarterly report coming next Thursday. The company has beaten the Zacks Consensus Estimate for four straight quarters with an average beat of 23% in that time. This Zacks Rank #2 (Buy) also has a pretty good valuation. The editor thinks this stock will do well when the market improves, so he picked it up for the portfolio on Friday. The full write-up has more on this new addition. Technology Innovators:
Programmable microchip maker Xilinx (XLNX) reported a solid beat and raise quarter recently, including a positive earnings surprise of 16% and sales growth of 20%. Plus, there's talk of signing a big contract with Microsoft. Brian Bolan likes what he's seeing from this Zacks Rank #2 (Buy) and believes it could be a good long-term trade that jumps past $100 if the market gets its act together. Read the full write-up for more.
Have a Great Weekend!
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