Gains of 1%+ for Everyone
SPECIAL NOTE: Does this rally have enough legs to last all the way to the presidential inauguration? Or will it take a break along the way? This is one of the topics that Steve Reitmeister and Dave Bartosiak will be tackling in the final Zacks Ultimate Live Webinar of 2016. The duo will also be discussing their outlooks for 2017, their top recommendations, and some Zacks Rank pointers. And as always, they’ll be taking questions from ZU subscribers like you. Send your questions to [email protected], but remember that you must participate IN THE LIVE EVENT to get answers from Steve and Dave. So join these editors right here tomorrow, December 8 at 12:00 noon ET.
The market just had its best day since the presidential election. And that’s really saying something! Stocks have been on an upward trajectory ever since the votes were cast, which was a month ago tomorrow. There was a bit of a lull last week, but the rally has come roaring back.
The S&P jumped 1.32% today to 2241.4, while the Dow surged 1.55% (which is just shy of 300 points) to 19,549.6. Both of these indices hit records on Wednesday, as did the Russell 2000 with its 0.88% advance to 1364.5. The NASDAQ didn’t finish at a new high…but it’s really close. It did participate in the 1%+ rally with an increase of 1.14% to 5393.8.
“The market is sending you a message,” said Steve in RTA. “And that is to stay invested when the long term trends are bullish. Too often those market timing moves have you on the sidelines just as the next rounds of profits unfold.”
The editors surely plan to take advantage of this post-election rally for as long as it lasts. The portfolios were full of activity on Wednesday. Reitmeister Trading Alert added a company that’s in turnaround mode, and made room for the new move by taking two double-digit profits. Zacks Counterstrike has a real winner on its hands with Western Digital, but Jeremy still decided to sell half of it for a solid return, while letting the rest ride. Meanwhile, Options Trader , Insider Trader and Momentum Trader all found stocks to add on the day. Let’s get right to it:
Big Winners for RTA and Counterstrike
→ Burlington Stores (BURL) looks priced for perfection to Steve, which means it would have to keep reporting impressive beats or risk a plunge. Instead of hoping for the best with this lucrative position, the editor decided to sell it and move his money elsewhere. He got out of his remaining BURL shares in Reitmeister Trading Alert for a solid return of 13.1%.
However, to make room for a new addition, Steve had to trim another position. Given its recent surge in shares and its large allocation in the portfolio, he decided to sell some Foot Locker (FL)…and make nearly 18%! FL will now have a 6.5% allocation. Read about the new addition below:
→ As Jeremy likes to say: “nobody ever went broke taking profits” . Though up more than 8% today with strong bullish sentiment, the editor of Zacks Counterstrike sold half of his Western Digital (WDC) position. The sell brings a nice return of 16.3% to the portfolio in less than a month! And there’s still half of this position to capitalize on the momentum.
Today’s Portfolio Highlights:
• The “Trump Trade” has made it difficult for Steve to find good value since so many stocks have been bid up. So he went outside the box a bit and found an out-of-favor- name that’s ripe for a turnaround. Groupon (GRPN) had an epic plunge from its days as a $25 stock and one of the hottest IPOs in the market. (Today it’s less than $4.) However, the editor believes that management is steering the company into a healthy turnaround, as evidenced by its status as a Zacks Rank #2 (Buy) after a couple of good quarters. Basically, Steve feels it’s worth the risk to add a stock that could easily double in the next 12-24 months. So he bought GRPN for Reitmeister Trading Alert on Wednesday with a 6% allocation.
• There are only 9 days left for the Option Trader ‘s bull call spread in Arrow Electronics (ARW)…and Kevin wants more time. Therefore, the editor got out of the spread with a small profit and immediately bought to open a March 72.50 Call in ARW, which has 100 days of time.
While the portfolio got rid of one bull call spread, it added another in the Russell 2000 Small-Cap ETF (IWM) by buying to open an April 135.00 Call AND selling to open an April 145.00 Call. Options Trader made a 135% profit on a similar spread in IWM last month, so Kevin is trying it again. If IWM moves up approximately 7.3% to $145 or higher by its mid-April expiration, this spread will increase 140%. Read the complete commentary for more on these moves.
• Shares of Versum Materials (VSM) are on a hot streak…and yet three insiders (the CFO and 2 directors) still picked up shares this week. Tracey likes to see insiders picking up companies with rising shares, since it’s a signal that they’re buying on momentum. VSM is a specialty chemical company that makes advanced materials and delivery systems for the semiconductor industry, which means it combines Tracey’s two favorite industries of chemicals and semis. So it was an easy choice to add the stock to Insider Trader on Wednesday. VSM is a Zacks Rank #2 (Buy) mid-cap company that should see earnings growth of 10% next year. Furthermore, some believe it will start paying a dividend in 2017 due to its strong cash flow. Read more in the complete commentary.
• Believe it or not, but Dave thinks that a “bigtime turnaround story” is developing for Sodastream (SODA). This Zacks Rank #2 (Buy) maker of home beverage carbonation systems is breaking out to 52-week highs on serious volume. The editor doesn’t like to “fall in love with the stocks of yesteryear”, but its Price Consensus and EPS Surprise Chart is intriguing enough for him to take a 12.5% allocation in SODA for Momentum Trader . Read more in the full write-up.
• “Overall, the bullish trend continued in the market for Wednesday’s session as the vast majority of the major market sectors gained over 1% on the day. Tech was a star that gained about 2% while industrials and consumer discretionary were right around that level too.
“Broad based optimism continues to infect the market and drive additional buying in a number of key segments, with little chance of an end in sight. There appears to be a bit of a fear of missing out effect hitting sectors now too. People were just on the sidelines for too long for this not to happen eventually, and with the sudden burst of optimism and solid jobs market, there is more reason than ever for some to dive in, driving prices higher across the board,” said Eric in Surprise Trader .
Good 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’ exclusive recommendation services. If you would like to follow the Buy and Sell signals in real time, we’ve made a special arrangement for you.
Starting today you can see all the recommendations from all of Zacks’ portfolios, from value stocks and momentum trades to “insider buying” and positive earnings surprises (which we’ve predicted with 80%+ accuracy), you can gain unrestricted access to our best ideas for the next month.
Click here to find out more >>
Zacks Investment Research
