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Stocks Rise for Third Day in a Row

Stocks put together a third straight day of advances on Tuesday as it tries to climb out of the hole that was dug in the previous two weeks. The major indices fought back from a soft morning to finish modestly higher though well below the 1%+ gains on Friday and Monday. Still, every little bit counts in a market that is still reeling from the sharp pullback and hoping that the worst is over.

The NASDAQ got back above 7000 today with an increase of 0.45% to 7,013.5. The S&P advanced 0.26% to 2662.9 and the Dow was up 0.16% to 24,640.5. These indices are still approximately 7% off of recent highs from just a few weeks ago, though that’s improved from the 10% deficits seen last Thursday.

“The choppiness and relatively low volume were most likely related to the CPI data coming out tomorrow. All eyes will be on inflation and speculators will move the bond market in response. I expect a sell off if inflation ticks higher,” said Jeremy in Counterstrike.

Speaking of Counterstrike, the market calmed down enough for the editor to add a new position and more allocation to an existing one. Meanwhile, Brian Bolan has been selling a lot in his portfolios recently, but today he added one back to Stocks Under $10 and Technology Innovators each. Finally, Short List replaced five positions and banked three profits. Give it all a look below:

Today's Portfolio Highlights:

Counterstrike: Now that the market has calmed down a bit, Jeremy is feeling better about making some portfolio moves. On Tuesday, he added W.W. Grainger (GWW), a Zacks Rank #1 (Strong Buy) supplier of facilities maintenance products. The company recently reported a strong quarter, including a 35% earnings beat and a sharply higher guidance. The pullback gives the portfolio a good entry for a stock that has just recently been much higher...and should be again. It was bought with a 13% allocation. Jeremy also added 5% to his allocation in IDEXX Labs (IDXX), which entered the portfolio earlier this month and should drift higher with further market stability. Read the full write-up for more on this new buy, including a look at its chart.

Stocks Under $10: Shares of J.Jill (JILL) really bottomed out a few months back, but Brian Bolan is seeing signs that this specialty retailer of women's apparel is turning things around. For example, a firm recently raised its price target on the stock and there has been some insider buying of late. Plus, JILL is a Zacks Rank #2 (Buy) that beat the Zacks Consensus Estimate by more than 40% in its latest quarter. The editor feels that he’s getting a good name at a good price. Read the full write-up for more.

Technology Innovators: The cybersecurity names have held up really well in this pullback, so Brian Bolan decided to pick a name from this space for his next buy. Qualys (QLYS) provides cloud security and compliance solutions to protect organizations from cyber-attacks and other risks. Last night, the company reported a beat-and-raise quarter, which suggests that it could be set up for a post-earnings drift higher. It also has a great history of consistently beating quarterly earnings estimates. The editor thinks this Zacks Rank #3 (Hold) is all set for a boost in rank. Learn more about this new addition in the full commentary.

Zacks Short List:
Half the portfolio was swapped out this week, and three of the short-covered stocks were positive. The five names that left the portfolio today include:

• Baidu Inc. (BIDU, +8.2%)
• PTC Inc. (PTC, +6.9%)
• Liberty Global (LBTYA, +5.2%)
• Cavium Inc. (CAVM)
• Tal Education (TAL)

The new additions that replaced these names are:

• Zayo Group (ZAYO)
• Charter Communications (CHTR)
• Ionis Pharma (IONS)
• National Oilwell (NOV)
• Square Inc. (SQ)

Learn more about this emotion-free portfolio that takes advantage of falling and volatile markets by reading the Short List Trader Guide.

Momentum Trader: "We’ve been checking on the VIX a lot lately because it’s been all over the news. The business media is battling it out over these inverse VIX products and there have also been some recent allegations about manipulation of volatility. I’m not going to get caught up in all that. The VIX is an important measure of the implied volatility of S&P 500 index options. More than a “fear gauge” it’s a gauge of the expected range in the market. 

"We typically see spikes in the VIX happen at least once a quarter. It’s important to keep tabs on this during periods of time where the market is under pressure. As long as the VIX continues to unwind, I feel comfortable on days like today. If the market comes down closer to the 200-day and we see a spike in the VIX, it’s a bad sign for things to come.

"While the hysterics of last week have passed, the market is still not on solid ground. All we can do is try to insure we’re sticking to the basics of the Zacks Rank. By focusing on stocks with solid fundamental stories, we should be best positioned to weather the storm." -- Dave Bartosiak, also editor of Surprise Trader
 

Have a Good Evening,
Jim Giaquinto

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