IBM/Oil Scrambles Market

Stocks were all mixed up on Wednesday, making it more difficult than ever to predict what their next real move will be. The Dow and S&P both started the session in the green, but another drop in sales for IBM and a slide in oil prices ultimately dragged them into the loss column. However, the NASDAQ and, more surprisingly, the small-cap Russell managed to hang on to gains.

Specifically, the S&P was down 0.17% to 2338.2, while the Dow slipped 0.58% to 20,404.5 thanks largely to IBM. Though well off the highs of the session, the NASDAQ still finished on the plus side by 0.23% to 5863, as the Russell advanced 0.38% to 1367.1.

While no one knows where we go from here in the short term, the editors are determined to have a good earnings season. Surprise Trader added its sixth stock of the week and gained some exposure to the industrials. Home Run Investor had a similar idea by picking up a name that should benefit from a solid environment for housing. Learn more about these moves in the highlights section below. Looking forward, Zacks Counterstrike is expecting to add tomorrow or Friday.

Today’s Portfolio Highlights:

Surprise Trader: The Earnings ESP for Caterpillar’s (CAT) upcoming quarterly report is approaching 10%! Add that to its solid history at earnings season, and this well-known construction equipment company seems poised for good results next Tuesday. So Eric bought CAT on Wednesday with a 12.5% allocation, marking the portfolio’s sixth addition this week and giving it more exposure to industrials. This Zacks Rank #1 is part of a space in the top 10% of the Zacks Industry Rank. The editor also sold PGR today. Read the full write-up for more on CAT.

Home Run Investor: Dave sees a very accommodative environment for housing right now, so he took advantage by buying BMC Stock Holdings (BMCH). This Zacks Rank #2 provides building products and services to the residential housing market, and it is expected to grow earnings by 52.8% this year and 22.74% next year. The stock is just starting to grab the attention of larger institutional players, so the editor sees this as a great time to get involved before the next leg higher. Read the full write-up for more.

Zacks Counterstrike: “Markets were strong for the better part of the day until DOE inventories caused crude oil to fall 4%. This drop brought in sellers to the S&P, but couldn’t do much damage. Indices did turn red, but finished around the unchanged mark.

“Fed Beige book was out today, but there wasn’t any shockers in there to move markets one way or the other. Rail traffic improved for the 14th straight week, which is always a good indication of a strong economy.

“Technically speaking nothing changed form yesterday as the market was rather dull. And we all know the saying to never short a dull market. My current thinking is that without geopolitical headlines, this market grinds higher and the next two days will likely do just that.” — Jeremy Mullin

Until Tomorrow,
Jim Giaquinto

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