The NASDAQ Needs No Break

The major indices reached new all-time highs to start the session (which means they started the day slightly in the green), but when the closing bell rang a few hours later only the NASDAQ managed to hang on for another closing record.

A disappointing result from a retail giant and more concern on signing a trade deal were blamed for today’s sluggishness, though it could also be that the market needed a break after its slow but steady record-breaking course.

The NASDAQ is still on that trajectory as it gained 0.24% (or nearly 21 points) on Tuesday to 8570.66. That’s its third record close in a row.

However, the other two lost their gains early. The S&P looked like it might finish slightly higher, but ultimately dipped by 0.06% to 3120.18. The Dow never even considered going green and finished 0.36% (or about 102 points) lower to 27,934.02.

The big blow for the index came from home improvement giant Home Depot, which was up approximately 42% this year heading into the session.

However, the stock slipped 5.4% on Tuesday after disappointing same-store sales and a reduced forecast for 2019.

It should be noted, though, that the company blamed its reduced guidance on benefits from certain investments taking “longer to realize than our initial assumptions” and not on weakness from the consumer.

Other brick-and-mortar retailers didn’t have an excuse for their performance though, including Kohls and its nearly 20% plunge.

Another headwind on Tuesday was President Trump threatening higher tariffs if the U.S. and China don’t agree on a deal. This comes a day after news that Chinese officials were pessimistic about an agreement.

Despite today’s challenges, the market avoided a stiff selloff again. We’re just a few points away from new records, but the choppiness of late suggests we might need a new catalyst to spark another breakout higher.

Today's Portfolio Highlights:

Healthcare Innovators: It’s days like this when investing in innovative yet risky healthcare stocks really pays off! CRISPR Therapeutics (CRSP) released some positive interim data today on CTX001, which showed the potential to be a curative CRISPR/Cas9-based gene-editing therapy for people with sickle cell disease and beta thalassemia. Shares of CRSP soared 17% on Tuesday to become the best-performer of the day among all ZU names. The news also helped shares of Intellia Therapeutics (NTLA, +10.2%) and Editas Medicine (EDIT, +7.8%), which means this portfolio had three of the top 5 movers on Tuesday.

Large-Cap Trader: It was a busy day for the portfolio as John swapped out three positions. Firstly, he sold a couple of names for big returns, including Fortinet (FTNT, +34.6%) and United Rentals (URI, +24.9%). The editor also got out of National Steel Company (SID).

The three new buys were added with equal weights, which comes to approximately 6% each. They are:

• Entregris (ENTG) from the Electronics from the Manufacturing Machinery space
• Leidos Holdings (LDOS) from the Aerospace-Defense group
• Manulife Financial (MFC) from the life insurance space

All three of these names are Zacks Rank #2s (Buys) that are reporting again in February. Each of them have excellent histories of beating Zacks Consensus Estimates, including in their latest reports. (In fact, ENTG and LDOS beat by double digits last time!) They are also from highly-ranked industries, especially ENTG’s space in the top 5%. Read the full write-up for a lot more on today’s moves.

Surprise Trader: Retailers are the last big group to report during earnings season, so we knew that Dave would be adding a few of these names this week. On Tuesday, he picked up Zacks Rank #2 (Buy) off-price retailer Ross Stores (ROST) with a 12.5% allocation. The company has a positive Earnings ESP of 1.78% heading into its quarterly report after the bell on Thursday. The editor is especially confident of this pick after the strong earnings report from TJX Companies. By the way, Dave also sold Seaspan (SSW) today to make room Read the full write-up for more.

Insider Trader: We don’t see insiders buying high-quality, big cap names very often, but McDonald’s (MCD) is an exception. Shares of the fast food giant are down more than 11% over the past three months, and they can’t seem to gain any momentum since its successful CEO was fired for an HR violation. However, a couple of insiders see it as a buying opportunity. Recently, the Non-executive Chairman of the Board and a director bought shares of their own company. Tracey decided to add MCD on Tuesday with a 10% allocation. She also sold Johnson Controls (JCI) today. Read the full write-up for more.

Zacks Short List: The portfolio replaced a couple names in this week’s adjustment. The stocks that were short-covered included Wynn Resorts (WYNN, +0.9%) and TAL Education (TAL). The new buys that replaced these positions are Ceridian HCM Holding (CDAY) and Etsy (ETSY). Learn more about this emotion-free portfolio that takes advantage of falling and volatile markets by reading the Short List Trader Guide.

Until Tomorrow,
Jim Giaquinto

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