Market Rises to Begin a Busy Earnings Week

Stocks cautiously moved higher on Monday as we begin a jam-packed week of earnings.

We’ll have a pretty good read on this earnings season by the end of the week. A significant portion of the market will be reporting in the next few days, including most of the FAANGs (Facebook, Alphabet and Amazon).

And of course, by the middle of next week, we’ll know if the Fed cuts rates and by how much.

But on Monday, these two issues still hung over investors without resolution. Given how much the market hates uncertainty, the indices’ gains (as slight as they may have been) were still encouraging.

The NASDAQ left its counterparts in the dust due to a strong day for tech, especially semiconductors. The index rose 0.71% (or more than 57 points) to 8204.14.

The S&P advanced 0.28% to 2985.03, while the Dow recovered from negative territory to inch out a gain of 0.07% (or about 17 points) to 27171.90.

It was only last Monday that the major indices were all at record highs. Since then though, stocks have been searching for the next catalyst and posted their first negative week of July.  

Most companies have beaten expectations so far this season, but the bar had been lowered and the market is being very picky on which names get a post earnings drift.

And even though everybody is expecting a rate cut next week, investors are still worrying about whether it’s a half-point cut or a quarter-point. Some are even concerned that there might not be a cut at all.  

So it’s going to be a crazy week… but will it also be a green one? We’ll see…

Today's Portfolio Highlights:

Surprise Trader: This is a busy week of earnings, so it only makes sense that it should be a busy week for this portfolio as well. Dave made TWO buys on Monday with 11% allocations in Chipotle Mexican Grill (CMG) and JetBlue Airways (JBLU) each. CMG beat by nearly 13% last time, and the editor is expecting a repeat performance given its positive Earnings ESP of 1%. The addition of JBLU capitalizes on the strong showing for airlines so far this earnings season. The space is in the top 12% of the Zacks Industry Rank. Both of these names are quick turnarounds that report tomorrow with CMG coming after the bell and JBLU announcing before the bell. Read the complete commentary for more.

TAZR Trader: New Relic (NEWR) is a software analytics company that specializes in application performance management (APM). Kevin added NEWR with a 7% allocation because the editor considers the platform a quality “adjunct” to data mining and modeling portfolio position Alteryx (AYX, up 36%+ since inception in late May) and former holding Splunk (SPLK, sold for a double-digit profit earlier this month). Given NEWR’s 20% drop since March quarter earnings, the editor likes the risk/reward much better for NEWR than SPLK, including a price-to-sales ratio under 8X with over 25% sales growth. Plus, ever since CRM bought DATA in June, he’s had his eye on AYX and NEWR being the next likely targets. Read the complete commentary for a lot more on this new addition.

Technology Innovators: This portfolio needs to get fully invested as we head toward the tech end of earnings season… and Brian found a perfect candidate in Mitek Systems (MITK). Shares of this company have turned around in July after dropping from $12 in May and June. Brian thinks this stock can get back to $12 and more in the coming months. It reports again after the close on July 25. Read the complete commentary for a lot more on the addition of MITK.

Black Box Trader: The portfolio sold four positions as part of this week’s adjustment, including Axalta Coating Systems (AXTA) for a solid return of 14.5% in a month. The other three sells today were:

• Summit Materials (SUM)
• Walmart (WMT)
• Ingersoll-Rand (IR)

The new buys that replaced these names are:

• HP Inc. (HPQ)
• Liberty Global (LBTYA)
• Lockheed Martin (LMT)
• Skechers U.S.A. (SKX)

Read the Black Box Trader’s Guide to learn more about this computer-driven service designed to take the emotion out of investing.

All the Best,
Jim Giaquinto

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