…by the Skin of the S&P's Teeth

With the S&P surpassing 2400 yesterday by only a little more than two points, you wouldn’t think the index could afford to move lower on Tuesday and still stay above that mark. However, this market has a knack for lethargy, so it managed to retain the milestone by the slimmest of margins. The S&P was down only 0.07% in the session, or 1.65 points, to end at 2400.7.

Similarly, the Dow was off by 0.01% to 20,979.8. The NASDAQ, though, kept its winning ways going with an advance of 0.33% to yet another new record of 6169.9.

“I feel like I haven’t seen anything like this in my career, and it turns out I haven’t,” said Jeremy in Counterstrike . “Before today, during the past 15 trading days, the S&P 500 has moved w/in a range of 1.02%, the least volatile 15 days in history. WOW!”

Though such an environment makes it difficult to trade, the editors are still finding opportunities. The Surprise Trader added two well-known large caps on Tuesday that are scheduled to report later this week. TAZR also added twice to help diversify the portfolio, while Stocks Under $10 picked up a stock as well. Meanwhile, Black Box Trader swapped out four names. See more below:

Today’s Portfolio Highlights:

Surprise Trader: There are still some big companies that have yet to report this earnings season…and Eric added two of them on Tuesday. One of the new buys was retailing giant Wal-Mart (WMT), which is enjoying an “incredible turnaround” from the slump of 2014-2015. It has beaten the Zacks Consensus Estimate for six straight quarters now, and has a positive Earnings ESP for its scheduled report on Thursday before the bell.

The other buy was Deere & Company (DE), which has amassed an average surprise of 60% over the past four quarterly reports. This Zacks Rank #2 farm equipment giant hasn’t missed since November 2012 and has an Earnings ESP of 4.3% for its next report on Friday before the bell. Eric also likes that DE is part of a space in the top 6% of the Zacks Industry Rank. WMT and DE each received allocations of 12.5%. The full write-up has a lot more.

TAZR Trader: The portfolio added some diversification on Tuesday with 7% allocations in Edwards Lifesciences (EW) and MasTech (MTZ). EW has finally made it to Goldman’s “Conviction Buy” list and may NEVER go below $110 again. Meanwhile, MTZ is a construction services company that has already been a winner for TAZR , but the editor sees even more opportunity and value in the low $40s. Learn a lot more about these new buys in the full write-up.

Zacks Short List: There were four swaps this week. The stocks that were short-covered and left the portfolio are:

• GoDaddy (GDDY)
• Newmont Mining (NEM)
• Level 3 Communications (LVLT) and
• Snyders-Lance (LNCE)

The new buys that replaced these names are:

• IAC/InterActiveCorp (IAC)
• Live Nation Entertainment (LYV)
• Occidental Petroleum (OXY) and
• Zillow Group (Z)

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

Stocks Under $10: Guidance Software (GUID), a leader in digital investigative solutions, has beaten the Zacks Consensus Estimate eight times in the last nine quarters. But what Brian Bolan really appreciated was that quarterly earnings estimates have been trending to the positive for several months. The same has been true for 2017 and 2018 expectations. Now, GUID is expected to generate earnings growth of 118% this year and 57% next. Learn a lot more about this new buy in the full write-up.

Reitmeister Trading Alert: “After the Housing Starts and Industrial Production reports Tuesday the Atlanta Fed calculated that Q2 GDP is looking like +4.1%. Yes, I know that seems a bit too robust which is why I then checked the Blue Chip Economists panel where they are expecting still impressive +3.1% growth.

“Either way, it appears that GDP is taking a big leap forward from the tame +0.7% pace for Q1. Thus, there is little wonder why stocks closed above 2400 for the second straight day. This increases the odds that a breakout is under way with more stock gains soon to roll in.

“Investors should grab the reigns of this bull and ride it to new heights.” — Steve Reitmeister

Have a Great Evening,
Jim Giaquinto

Recommendations from Zacks’ Private Portfolios:

Believe it or not, this article is not available on the Zacks.com website. The commentary is a partial overview of the daily activity from Zacks’ private recommendation services. If you would like to follow our Buy and Sell signals in real time, we’ve made a special arrangement for readers of this website. Starting today you can see all the recommendations from all of Zacks’ portfolios absolutely free for 7 days. Our services cover everything from value stocks and momentum trades to insider buying and positive earnings surprises (which we’ve predicted with an astonishing 80%+ accuracy). Click here to “test drive” Zacks Ultimate for FREE >>

Zacks Investment Research