SPECIAL ALERT Remember, the April episode of the Zacks Ultimate Strategy Session is now available for viewing! Don’t miss your chance to hear:
▪ Sheraz and Kevin Cook Agree to Disagree: Forecasting the Decline and Recovery. What models to use to navigate the next few months as the stock market rushes back and forth forecasting its own predictions
▪ Kevin Matras discusses when the coronavirus-induced bear market will end, and when recovery will begin in Zacks Mailbag
▪ Sheraz and Kevin Cook choose one portfolio to give feedback for improvement
▪ Market conditions from both fundamental and technical views
▪ The full list of top-performing stocks over the past 30 days
▪ New stocks added to the ZU portfolio
▪ And much more
Simply log on to Zacks.com and view the April episode here. And please let us know what you think of these monthly episodes. Email all feedback to mailbag@zacks.com.
The best way to avoid another round of the Friday blues is to simply not have a Friday session!
Stocks finished this short week on Thursday with a second consecutive day of gains, which has been a rare occurrence since the coronavirus took hold.
The end result was one of the best weeks we’ve seen in years. The Dow climbed approximately 12.7%, while the S&P jumped 12.1% and the NASDAQ rose 10.6%.
And that was just a four-day week!
The Fed was once again the star of the show, as Jerome Powell and Friends are really taking this economic emergency seriously.
The Chair announced a massive liquidity injection that comes to approximately $2.3 Trillion in programs to support the economy, including small businesses.
And it’s a good thing they’ve got our back. Jobless claims soared by another 6.6 million last week, which was more than expected. The three-week total now comes to approximately 16 million.
Its no wonder why so many people are skeptical of this comeback. The economic impact of this shutdown is immense. Such numbers are hard to handle and we’ll be getting a lot more of them in the weeks ahead, not to mention a bad earnings season or two.
And we still don’t know when we’ll be open for business again and how quickly things will get back to normal.
But today the market was in a good mood. Horrible jobs numbers are expected, and investors welcome all the help that the Fed can give.
Plus, and most importantly, we’ve been getting some encouraging data that the spread of the coronavirus is slowing, which might mean we’re in the process of “flattening the curve”.
On Thursday, the S&P jumped 1.45% to 2789.82, while the Dow rose 1.22% (or about 285 points) to 23,719.37. The NASDAQ advanced 0.77% (or around 62 points) to 8153.58.
Next week will be a new adventure. Earnings season begins… and it will be a very different earnings season than we could’ve imagined when the last one ended. Also, we’ll have to see if Congress can get its act together and follow the Fed’s lead with another round of relief.
Finally, after the bell today OPEC+ agreed to cut output by 10 million barrels per day in May and June. Energy prices have been another major story of late.
But that’s next week. Right now, let’s just enjoy this much-deserved three-day weekend… while still practicing our social distancing, of course!
Today’s Portfolio Highlights:
Value Investor: You’ve heard Tracey say “don’t fight the Fed” countless times in her commentaries. So you can bet this editor will do something on a day when the central bank puts “all its weight behind the economy to prevent bankruptcies and liquidity concerns”. She decided this was a good time to get into a few healthcare stocks, as this space should bounce back relatively quickly. On Thursday, the portfolio added:
• Aimmune Therapeutics (AIMT) – developed a new treatment for peanut allergy
• Exact Sciences (EXAS) – cancer diagnostics company that makes Cologuard
• InMode (INMD) – uses radio-frequency tech for a beauty treatment
Tracey considers these names to be values, given their products, revenue generation and the stock pullbacks. Read the complete commentary for a lot more on each of these new buys, including specifics on their value characteristics.
Counterstrike: The S&P 2800 level has always been the place where Jeremy planned to go neutral and start playing both sides. Well, we finally hit that mark today, and the editor has plenty of candidates to short. On Thursday, he short sold Chipotle (CMG) with a 7% allocation and Caterpillar (CAT) with a 6% allocation. You already know what these companies do; the former is a popular casual Mexican grill and the latter is the largest global manufacturer of construction & mining equipment. These stocks seem very different, except they’re both Zacks Rank #5s (Strong Sells) that are being hurt by this coronavirus shutdown. They’ve also both seen a move higher recently that can’t be sustained in the current environment. Read the complete commentary for particulars on these shorts.
Surprise Trader: This portfolio is about to get a whole lot busier with earnings season right around the corner. But Dave got started today with the addition of UnitedHealth (UNH), which is part of the highly ranked Medical – HMO industry (top 18% of Zacks Industry Rank). The stock has an Earnings ESP of 4.01% for the quarter being reported before the bell on Wednesday, April 15. The editor added UNH on Thursday with a 12.5% allocation. Read the full write-up for more.
TAZR Trader: The relief rally continued this morning despite another sharp increase in jobless claims (thanks Jerome). In such an unpredictable environment, Kevin wants to try and gauge investor sentiment and then use any extremes to buy or sell depending on the activity. Therefore, he sold half of QQQ 3X Bull (TQQQ) and S&P 3X Bull (UPRO) each for gains of 11.1% and 19.4%, respectively, on Thursday to bank some profits after a nice short week of green. Make sure to read the editor’s complete commentary to learn about the “3 major tasks” for investors at this difficult time.
Commodity Innovators: Finding commodity-sensitive stocks that are winning in this unpredictable environment is not easy. However, Jeremy added one today! He picked up Hormel (HRL), the meat and food products company that’s probably most well known for canned chili. Food is about as “essential” a product as you get in challenging circumstances, which is why groceries are flying off the shelves these days. And now the drop in hog prices is reducing their input costs. Plus, HRL has a solid balance sheet, pays a dividend and has a “fantastic” chart. Jeremy also sold VanEck Vectors Agribusiness ETF (MOO) for a 24.4% return in less than a month. Read the full write-up for more on today’s moves.
Healthcare Innovators: With the market’s rally this morning, Kevin finds it important to take profits when he can amid this “volatility of uncertainty”. Therefore, he sold Healthcare 3X Bull (CURE) for a 17.1% return in just a little under a month. Read the full write-up for the editor’s gameplan moving forward.
Options Trader: “Stocks were all set to have a lousy day after Weekly Jobless Claims showed a larger than expected increase in first time unemployment claims. But this has been the common theme we’ve seen over the last three weeks. So nobody can really say they were surprised.
“But the good news outweighed the bad.
“And that was reiterated by Fed Chair, Jerome Powell, who said the economic recovery can be “robust” once the economy reopens, and that the high unemployment is just temporary due to the coronavirus. All sentiments many market watchers share. But it’s always good to hear it from an authority like Mr. Powell.
“Reports that the administration is looking to reopen the economy on a “rolling basis” in the next 4-8 weeks is welcomed news. While that means we’ll still be stuck at home for the rest of the month, it’s great to know we’re getting closer and that the social distancing has been working.
“And when we finally do reopen our economy, with people getting back to work, and consumers and businesses spending money again, that will truly be a time for America to celebrate.” — Kevin Matras
Enjoy the Three-Day Easter Weekend!
Jim Giaquinto
One More Thing: We’ve just released our new 5 Stocks Set to Double Special Report which includes five stocks our team believes have the potential to grow +100% in the next 12 months. This latest report features favorite stocks from David Bartosiak, Tracey Ryniec, Dan Laboe, Madeleine Johnson and David Borun. Log on to Zacks.com to see these stocks today.
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