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What a change of pace this week has been with tech taking a backseat despite a rise in coronavirus cases and a delay in some reopenings.
How much of a change was it? Well, last week the NASDAQ blew the doors off its counterparts with a jump of 4%, but this week it was the only major index to finish in the red.
The Dow had the best performance over the past five days by advancing 2.3%, thanks to vaccine hopes and the beginning of earnings season taking attention away from the pandemic. Meanwhile, the S&P rose 1.2% this week.
These indices now have three-week winning streaks.
Then there’s the NASDAQ, which was down over 1% in these five days after back-to-back winning weeks.
After leading the market higher for months during almost any type of sentiment, tech has been out of favor lately. Investors had been concerned for a while that the space was just too hot for its own good.
And it didn’t help that Netflix (NFLX) reported disappointing results last night, including an earnings miss and a soft outlook for third-quarter subscriber growth. The streaming giant was down 6.5% today.
Friday’s session turned out to be rather dull compared to the week as a whole, which you probably remember began with an epic late-day plunge on Monday that spoiled solid morning gains. But today stocks didn’t move much at all.
The S&P rose 0.28% to 3224.73, while the NASDAQ advanced by the same percentage (or nearly 30 points) to 10503.19. The Dow finished in the red, but only by 0.23% (or about 62 points) to 26,671.95.
Earnings season will get a whole lot busier next week. Usually those reports would be the market’s main focus, but who knows what kind of vaccine or virus news we will get? And will tech bounce back?
Enjoy the weekend, but be prepared for another busy week to come…
Today’s Portfolio Highlights:
Value Investor: The portfolio made a few moves on Friday to get on the right side of market sentiment, namely this pesky pandemic continuing to linger and delaying some of the reopenings. Tracey bought food distributor B&G Foods (BGS) and air freight company Atlas Air Worldwide (AAWW). Both of these stocks are Zacks Rank #2s (Buys) and remain cheap despite shares moving higher. They will also both benefit from a continuation of this “stay-at-home” economy. Make sure to read the complete commentary for specifics on all their value characteristics. The editor also sold the underperforming J2 Global (JCOM) and Oxford Industries (OXM) positions today.
Blockchain Innovators: Companies can use smart cloud-based software-as-a-service and unified communications-as-a-service platforms to develop blockchain solutions and apps. Therefore on Friday, Dave added a company that specializes in these platforms. Ooma (OOMA) is a Zacks Rank #2 (Buy) from the communication – components space, which is in the top 29% of the Zacks Industry Rank. OOMA has doubled off the mid-March lows and is a “stay-home economy” play. The editor also sold the slumping FangDD Network (DUO). Read the full write-up for more on today’s moves. By the way, this portfolio had the second-best performer of the day as Net Element (NETE) rose 11.4%.
Surprise Trader: This whole portfolio is in the green right now, which is a great place to be as we prepare for earnings season to really get busy next week. So Dave is hoping that PolyOne (AVNT) can continue this success when it reports before the bell on Wednesday July 22. This premier provider of specialized polymer materials, services and solutions beat by more than 9% last time and has a positive Earnings ESP of 3.63% for the upcoming report. The editor added AVNT on Friday with a 12.5% allocation, while also selling Sleep Number (SNBR) for an approximately 7% return in 10 days. In other news, Marten Transport (MRTN) was a top performer today by rising 6.2%
Insider Trader: The portfolio put its remaining cash into Bed Bath & Beyond (BBBY) on Friday. So why would Tracey buy a retailer that she said in the past was one of the most poorly run in the industry? Well, that old management is gone and has been replaced with a whole new team, including the CEO, marketing, digital, the CFO and everything else. Furthermore, a director bought 34,000 shares a few days ago. The directors NEVER bought in the ‘old’ BBBY, so this insider must see an opportunity. Tracey is going to follow that director with a 6% allocation in BBBY, which is all the remaining cash in this portfolio. However, the editor warns that this will be a ‘rocky ride’ since the company still has a ways to go after years of mismanagement. Read the full write-up for more on this new buy.
Technology Innovators: Calix (CALX) is a global leader in access innovation, but Brian considers it more of a cloud play than anything else. The company has beaten the Zacks Consensus Estimate for four straight quarters with an average beat of 43% over that time. And rising earnings estimates have made the stock a Zacks Rank #2 (Buy). The editor also appreciates its earnings growth of more than 100% and believes its margins will continue to improve. He added CALX on Friday and also sold the underperforming PagerDuty (PD). Read the complete commentary for more on today’s moves.
Have a Great Weekend!
Jim Giaquinto
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