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Market Not Satisfied with Today's Trade Headlines

Trade headlines gave us a rally on Monday…and then took some of it back on Tuesday. This morning, President Trump stated that he was “not satisfied” with recent talks between the U.S. and China. It was just yesterday, though, that Treasury Secretary Steven Mnuchin mentioned “very meaningful progress” with the negotiations, which sent shares sharply higher on Monday.

But on Tuesday, stocks slipped after a positive open and really took a header in the last hour or so. In the end, the Dow dropped 0.72% to 24,834.4 and the S&P was off 0.31% to 2724.4. The NASDAQ slipped 0.21% to 7378.5. After hitting new highs for several straight sessions, the Russell 2000 actually had the worst drop on a percentage basis today with a slide of 0.75% to 1625.2.

“(I)n the big scheme of things, the trade talks are heading in the right direction. As long as tensions aren’t rising, stocks should hold up fine. I’m sure we will see some hiccups along the way, but I fully expect something to get done with China trade. I look forward to the day its put behind us,” said Jeremy in Counterstrike.

It was a busy day for the portfolios. Momentum Trader added a stock that will capitalize on the strong consumer as we move into warmer weather. Value Investor and Stocks Under $10 each added energy names, while ETF Investor jumped onboard the rising small caps. Let’s get right to all of these moves and more in the highlights section below:

Today's Portfolio Highlights:

Momentum Trader: The economy is strong and the weather is finally turning warmer; the perfect combination for the Leisure and Recreation Products industry. It’s no wonder the space is in the top 13% of the Zacks Industry Rank. And one of the biggest leisure activities is golf. Callaway Golf (ELY) is a major name in the sport thanks to its famous line of Big Bertha golf clubs. The company hits new highs consistently, so Dave decided to add it on Tuesday as millions of golfers prepare to hit the links this summer. By the way, he also sold Vistra Energy (VST) for an 8.6% return. The full write-up has more on these moves.

Counterstrike: Shares of Oshkosh (OSK) have jumped above their 50-day moving average since being added to the portfolio last week. That mark was Jeremy’s signal to add more shares of this Zacks Rank #1 (Strong Buy) manufacturer of market access equipment, specialty vehicles and truck bodies. The editor picked up another 5% for the OSK position on Tuesday and now believes it can move past the 200-day at $82.44, which could spark a major move higher. In other news, the portfolio also sold half of Atlas Worldwide Holdings (AAWW) for a return of 6.8% and all of Open Text (OTEX). Read the full write-up for more on today’s moves.

Value Investor: The energy rebound cycle has only just begun, so Tracey added more exposure to the space today...but this time with a little more risk. The editor bought WildHorse (WRD), a mid-cap E&P that’s up 45% year-to-date but still cheap compared to its peers. In addition to its value characteristics, WRD also beat its production forecast in the first quarter and is expected to grow earnings by 290% this year. Get a lot more specifics on this new buy in the complete write-up.

ETF Investor: Small-cap stocks are finally flexing their muscles after lagging their larger counterparts. Neena wants more exposure to this asset class in the portfolio, so she added SPDR S&P 600 Small Cap Growth ETF (SLYG) on Tuesday. The fund focuses on some of the hottest sectors at the moment, including healthcare, industrials, technology, consumer discretionary and financials. It’s also one of the cheapest ETFs in the space. Learn more about this new addition in the complete commentary.

Surprise Trader: Not every company reports in the thick of earnings season, so this portfolio can still find potential profit outside of the peak time. Take Booz Allen Hamilton (BAH) for example. This Zacks Rank #2 (Buy) provides management and technology consulting services to the US government in the defense, intelligence and civil markets. The company reports before the bell next Tuesday and has a positive Earnings ESP of 3.62%. Last time, it beat by 11% for a fourth straight positive surprise. Dave is expecting more of the same next week and added BAH today with a 12.5% allocation. The full write-up has more on this new pick.

Stocks Under $10: The portfolio is nearing full capacity with its addition of Energy XXI Gulf Coast (EGC) today, marking the 14th name out of an ideal number of 15. EGC is part of the oil and gas E&P industry, which fits in with Brian Bolan’s plan of getting more aggressive since it lives and dies on the price of crude. Oil has been trending higher for a while, and the editor expects it to continue as we enter the summer driving season. Read the full write up for a lot more on this new addition.

Zacks Short List:
The portfolio short-covered these four names in this week’s adjustment:

• MGM Resorts (MGM)
• Incyte Corp (INCY)
• Flowserve Corp (FLS)
• Boyd Gaming (BYD)

It replaced these positions by adding the following stocks:

• Charter Communications (CHTR)
• Ionis Pharmaceuticals (IONS)
• Spectrum Brands (SPB)
• Thomson Reuters (TRI)

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

Have a Good Evening,
Jim Giaquinto

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