Stocks Clinch Three-Peat With Another Positive Week

Stocks didn’t make new highs in Friday’s mixed session, but they did put together another positive week with the Dow continuing its impressive winning streak.

We’ve enjoyed more than a full week of encouraging trade news, beginning on September 5 when the U.S. and China agreed to new talks in early October. More recently, China said it will buy more agricultural products and President Trump said he’s open to an interim deal.

The Dow hasn’t closed in the red since this tide has turned, and its winning run continued on Friday. The index rose 0.14% (or about 37 points) to 27,219.52, marking its 8th straight session in the green.

The other indices fell a bit behind. The NASDAQ was off 0.22% (or about 18 points) to 8176.71 and the S&P was down 0.07% to 3007.39.

However, all of them closed higher for a third straight week. The Dow climbed 1.6%, while the S&P and NASDAQ each gained just under 1%.

Hopefully, this improved relationship isn’t ruined in the coming days from any headlines or tweets, especially since the Dow and S&P remain less than 1% away from new highs.

While this week was about trade, next week will be about the Fed. The market expects another rate cut and some dovish words when the Committee meets.

Investors are feeling a lot better about the economy since the recession fears from a few weeks back. The trade conflict cooled down and economic data has been mostly positive, such as today’s better-than-expected retail sales result for August.
 
As far as investors are concerned, the Fed needs to keep the good times going. If it does what the market expects, then we’ll probably reach new highs in short order. But if we don't get that cut… oh boy!

Today's Portfolio Highlights:

Stocks Under $10: Finding your center is great, but making money while you do it is even better! On Friday, Brian added Gaia (GAIA), a Zacks Rank #2 (Buy) maker and distributor of videos on yoga and self-help that’s on some big platforms like Roku and Amazon. The company has beaten earnings estimates by double-digits in the past two quarters and appears on its way to profitability. But the editor really likes its sustainable business model and momentum. With the shorts covering and business growing, Brian's getting in on the ground floor of a potentially huge winner. Read the full write-up for more on this new buy.

Value Investor: Has the bottom been reached for Micron (MU)? Tracey isn’t certain, but notices that a few “brave” analysts have raised estimates and helped the stock rise to a Zacks Rank #2 (Buy). While the estimate picture remains “awful”, the editor reminds us that its often “darkest before the dawn” when it comes to cyclical stocks. Demand is expected to improve toward the end of the year and analysts will be late to the party until its conclusive that the bottom is in. We’ll know a lot more when MU reports on Sep. 26. Tracey decided to get involved now, but warns that this could be a volatile name. By the way, she also sold Progressive (PGR) for a 16.3% return after the stock hit one of the portfolio’s stops. Read the complete commentary for more on today’s moves. 

Counterstrike: "Indices failed to break to all-time highs after a morning session that showed some strength. Markets drifted lower most of the day, but managed to close above the 3000 level ahead of a potential volatile week. The market felt like it was still stuck in a summer Friday today as stocks chopped around on low volume.

"The big takeaway from the week is that the China risk has gone away and now traders will look to the Fed. The market has rallied significantly over the last few weeks and all it needs is a dovish Fed to continue higher. I think we will get a 25-basis point cut, but Powell will use language that will reiterate a dovish stance. I think the market will like that outcome and we can see all-time highs.

"No cut would bring a big sell off, while a 50-basis point cut would bring a massive lift off. Your guess is as good as mine, but I think Powell wants to remain as neutral as possible, which means the sweet spot is the middle with a quarter point cut." -- Jeremy Mullin

Have a Great Weekend!
Jim Giaquinto

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