Up a Little, Down a Little

Whether stocks are up a bit or down a bit on a daily basis, this low volume market isn't moving very much at the moment as we begin earnings season. On Wednesday, the needle was pointed down for the major indices, but as expected the losses were slight.

The S&P is hanging onto 2900 by its fingernails with a dip today of 0.23% to 2900.45. Regardless, that’s four straight sessions above the mark. It remains the closest major index from its all-time high with less than 1% to go.

The NASDAQ’s stay above 8,000 proved to be temporary as the index slipped 0.05% on Wednesday to 7996.08. By the way, Netflix, which disappointed investors with a softer-than-expected second-quarter guidance yesterday, was only down by about 1.3%.

The Dow looked like it may sneak into positive territory before the closing bell, but it fell just short. The index was breakeven generally speaking, but technically it dipped 0.01% (or about 3 points) to 26,449.54.

You can tell the market is tired and a bit cranky right now because there were reasons to move higher under better sentiment. China’s economy grew 6.4% in the first quarter. Despite the trade complications between our two countries, such a strong reading should assuage some investor fears about slowing global growth.

And speaking of trade, The Wall Street Journal reported that negotiators think a signing ceremony could be coming late next month or early June. Now that would have gotten the market really excited a few weeks/months ago.

Instead, it looks like we’re just going to wait for more earnings reports to be released. So far, the season has been pretty slow as expected, but not even close to the disaster that the most pessimistic were fretting. Apparently, we’re also going to sit around and twiddle our thumbs about trade until that ceremony actually takes place, rather than rallying or plunging on any headline.

In addition to all this, we're in a holiday-shortened week and many investors have probably checked out already. Tomorrow is the final day of the week since the market is closed for Good Friday. If the pattern holds, then Thursday should be a positive session... but just barely.

Today's Portfolio Highlights:

Surprise Trader: Tired of banks? Dave certainly is, so today’s addition comes from a completely different space: medical instruments. Thermo Fisher Scientific (TMO) is a Zacks Rank #2 (Buy) that calls itself “the world leader in serving science”. The company has a positive Earnings ESP for the quarter coming on April 24th before the bell. The editor also believes that TMO is oversold relative to its earnings trend after coming well of its highs. That’s exactly what he likes to see, so TMO was added on Wednesday with a 12.5% allocation. Read the full write-up for more.  

Healthcare Innovators: The portfolio is using the recent “single-payer panic” to juggle its exposure to the managed care organizations. Basically, all the political rhetoric among presidential hopefuls and challenges to the ACA have taken the fun out of this space for many investors… even though analysts are appreciating improving earnings potential moving forward. Therefore, Kevin sold Centene (CNC) on Wednesday for a nice 30.8% return, which made room for a couple MCOs that are on sale due to all the hubbub, He added Anthem (ANTM) and Cigna (CI), which have both dipped in the double-digits during this panic. But the editor sees a couple bargains. Get more specifics on today’s moves in the full write-up.

Home Run Investor: As ZU subscribers know, the materials space has worked well for Brian Bolan in another portfolio. The editor decided to bring that success to this service through the addition of Advanced Emissions Solutions (ADES). This Zacks Rank #1 (Strong Buy) develops, offers and implements environmental technologies, equipment and specialty chemicals that enable coal-fueled power plants to meet emissions regulations. The factor that really stands out to Brian is the company’s “explosive” earnings growth. Earnings estimates have been on the rise for this quarter, next quarter, this year and next year. In fact, the projected earnings growth for this stock is 74%. It also has a good dividend. Learn more about this new addition in the complete commentary. 

Options Trader: "We’ll see how that range holds up tomorrow. (Markets are closed on Friday so tomorrow is the end of the trading week.)

"Either way, the market looks poised for an upside breakout. Whether that’s tomorrow, or next week, or a couple of weeks from now, it sure looks like it’s coming.

"With an excellent economy, the best jobs market ever, low inflation, low interest rates, record corporate profits, and an historic U.S-China trade deal (potentially) in the near offing, stocks look ready to soar.

"While earnings season could very well be the catalyst for an upside breakout (it’s off to a great start), a U.S.-China trade deal will likely be the biggest driver, once we get it (assuming we do)."
-- Kevin Matras

All the Best,
Jim Giaquinto
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