NASDAQ Starts August with a New Closing High

Despite not having a new coronavirus relief package yet, stocks had a strong start to August on Monday and even saw a new closing high for one of the major indices.

The market is coming off its fourth straight month of gains with June seeing the NASDAQ rise 6.8%, while the S&P and Dow grew by 5.5% and 2.4%, respectively.

The NASDAQ set the pace again today with a rise of practically 1.5% (or about 157 points) to a closing high of 10,902.80.

The index got help from Microsoft (MSFT), which jumped 5.6% on reports that it’s thinking about buying TikTok. And it doesn’t hurt that good old Apple (AAPL) rose 2.5%.

Meanwhile, the Dow rose 0.89% (or around 236 points) to 26,664.40 and the S&P advanced 0.72% to 3294.61.

The federal benefits to help Americans through this pandemic have officially expired, and the folks in Washington are still arguing about what comes next.

It didn’t have much of an impact today. First of all, we know they’ll pass something sooner or later. Neither side wants to leave millions of people out to dry in one of the most challenging times in history.

And secondly… earnings season has been pretty good! Granted, everyone is feeling the impact from this shutdown, but most of them are finding ways to deal with it.

The market is still breathing a sigh of relief over last Thursday, when Facebook (FB), Amazon (AMZN), Apple and Alphabet (GOOG) all reported better-than-expected results after the bell.

But still, let’s hope Washington gets its act together quickly, because operating without a net will start to impact this market at some point.

We received some good economic data on Monday as well with the ISM Manufacturing Index reaching 54.2 in July, which topped expectations and the previous month’s reading of 52.6%. (Remember, anything over 50 is expansion).

The report is the first of several this week with most eyes being on the Government Employment Situation report on Friday.

The market is going for its fifth straight month of gains in August… and we got a good start today. Let’s keep it going!

Today's Portfolio Highlights:

Counterstrike: Fans of Crocs (CROX) aren’t going to let a pandemic keep them from buying these odd-looking yet super comfortable and durable shoes. These loyal consumers helped the company report an earnings beat of 740% in its most recent quarter! Revenue also outperformed substantially as e-commerce surged by 67%. Shares have pulled back about 14% after initially moving higher, which is exactly what Jeremy looks for in this portfolio. He believes the support levels will hold with the stock eventually moving higher. Therefore, CROX was added on Monday with a 10% allocation. The editor also sold the idled Domino's Pizza (DPZ) for an 8.5% return in just under three months. Read the full write-up for more. 

Technology Innovators: Consumers still don’t feel very comfortable going to a hotel during this pandemic. Therefore, the recent upgrade in Agilysys (AGYS) provided Brian with a great opportunity to sell this software name that serves the hospitality industry. On Monday, he got out of AGYS to secure a 28.4% return in just under four months. The editor wants to keep this portfolio fully invested, so he immediately filled the open position by adding Progress Software (PRGS), a Zacks Rank #2 (Buy) that offers the leading platform for developing and deploying mission-critical business applications. The stock has a decent earnings history and solid valuation, but the editor is most attracted to software names because of their margins. And in this case, he sees operating margins of 26% for PRGS. Read the full write-up for a lot more on these moves. By the way, this portfolio had a top performer on Monday with MaxLinear (MXL) rising nearly 9.5%.

Surprise Trader: The cosmetics space is in the Top 28% of the Zacks Industry Rank… and Nu Skin Enterprises (NUS) is a Zacks Rank #1 (Strong Buy) from this area. The company beat by 50% last time and now has an Earnings ESP of 6.35% for the quarter coming after the bell on Wednesday, August 5. Dave started off another busy week of earnings by adding NUS on Monday with a 12.5% allocation. The editor also sold SPX Flow (FLOW) for a 3.3% return in less than a week. The complete commentary has more on today’s action. 

TAZR Trader: Profits and sales for Keysight Technologies (KEYS) predictably dropped during the early days of the pandemic, but Kevin has always kept his eye on this 5G player. Now, estimates have stabilized and a return to growth appears to be on the horizon. The editor appreciated the company's acquisition of Eggplant, a software firm specializing in software testing with machine learning automation. And also liked the more recent collaboration set up for automotive communication systems that support ADAS. On Monday, Kevin finally added KEYS with a 10% allocation. Read the full write-up for more specifics.

Black Box Trader: Half of the portfolio was replaced in this week's adjustment... and one of the stocks brought a double-digit return. The names that were sold today included:

• Vista Outdoor (VSTO, +29.1%)
• Big Lots (BIG, +9.75%)
• Principal Financial Group (PFG, +0.7%)
• Office Depot (ODP)
• Summit Materials (SUM)

The new buys that filled these positions were:

• Amkor Technology (AMKR)
• AutoNation (AN)
• Camping World (CWH)
• Commercial Metals Co. (CMC)
• (SOHU)

Read the Black Box Trader’s Guide to learn more about this computer-driven service designed to take the emotion out of investing.

Until Tomorrow,
Jim Giaquinto

Recommendations from Zacks' Private Portfolios:

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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