Stocks Nearly Breakeven to Start Earnings Season

President Trump threw some fuel on the trade war fires on Friday, but the market largely took it in stride. The session and the week in general were basically breakeven to a little lower as we head into the busiest week of earnings season.

In a CNBC interview, the President said he’s willing to place tariffs on all Chinese goods coming to the U.S. That would be about $500 billion! Needless to say, that’s not what the market wants to hear. Nor does it want to hear Trump criticizing the Fed for raising rates.

Given such headlines, it’s rather impressive that this skittish market didn’t just selloff to end the week. Instead, the S&P slipped by only 0.09% and stayed above 2800 at 2801.8. The NASDAQ declined 0.07% to 7820.2, while the Dow dipped by a scant 0.03% to 25,058.12.

The Dow was the only one of the Big 3 to finish the week higher by a little more than 0.15%. The other two were down just slightly over the past 5 days (the S&P was off by only 0.5 of a point!).

We’ve said it before and we’ll say it again now…thank goodness for earnings season! If the market wasn’t able to focus on all the reports, then it could easily succumb to all the trade turmoil. The big news today was good old Microsoft, which reported strong results after the bell last night. The software giant gained nearly 1.8% today and reached a new high. Another significant winner was Honeywell (+3.79%).

But next week is when things get really interesting. We already got a rather lackluster report from Netflix, but the rest of the FANGs are set to report when we get back from the weekend. Alphabet (GOOG) starts things off on Monday, while Facebook (FB) comes on Wednesday and Amazon (AMZN) on Thursday. While these companies will get much of the market’s attention next week, it’s just the tip of the iceberg of all the reports that will be hitting the street. So be ready for some moves from the editors.

On Friday in the portfolios, Dave again made moves in more than one service. He banked double-digit winners in both Momentum Trader and Surprise Trader, while also adding again to the latter. TAZR Trader picked up a couple energy names and Counterstrike welcomed a financial giant. Finally, Options Trader added a few bull call spreads. Learn about it all in the highlights section below:

Today's Portfolio Highlights:

Surprise Trader: A strong economy means good times for the transports, and Dave wants to have plenty of exposure to the space. So when the editor sold railcar lessor GATX (GATX) today for a 16.7% profit in just a little over a week, he immediately got into another transport-related name. Echo Global Logistics (ECHO) provides technology-enabled transportation and supply chain management services. The company has a positive Earnings ESP for the quarter coming on Wednesday, July 25. Dave was most impressed with its three straight quarters of double-digit positive surprises and hopes that it will continue next week. He added ECHO on Friday with a 12.5% allocation. Read more about these moves in the full write up.

TAZR Trader: With oil on an uptrend and the portfolio heavy with tech, Kevin wanted to pick up an energy name before the end of the week. He searched for a stock with a mix of growth, relative value and a chart opportunity. The editor found two of them! Instead of trying to pick one, Kevin bought both. On Friday he put the portfolio’s remaining cash into Pioneer Natural Resources (PXD) and Cimarex Energy (XEC). Read the full write up for specifics on each of these new buys.

Options Trader: Shares of Central Garden (CENT) have been on a roller coaster ride since joining the portfolio in March. It has finally recovered from a pullback, but the 3 July 45.00 Calls have run out of time. Kevin still likes this lawn, garden and pet supplies company, so he let those options expire and bought a few bull call spreads with more time. He bought to open 4 Jan. 45.00 Calls AND sold to open 4 Jan 50.00 Calls. If CENT can get to $50 by the mid-January expiration, then these moves will bring a 177% return. Get more specifics in the complete commentary.

Counterstrike: Earlier this week, Goldman Sachs (GS) beat the Zacks Consensus Estimate for a fifth straight quarter. In fact, the 28% positive surprise was its biggest over that time. And yet, like many financial companies lately, the immediate response from the market was to pull shares lower. Jeremy thinks GS has a lot of room to move higher and believes a breakout of this week’s range above $234 could push the stock to the 200-day at about $264. He added the stock today with a 13% allocation. By the way, the portfolio also sold Baidu (BIDU) for a 4.3% return. Read the full write-up for more.

Momentum Trader: In less than a month in the portfolio, Liberty Media Formula One Group (FWONA) has accelerated by 14.1%. This parent of the Formula One Group really took off after its recent quarterly report, but Dave noticed that the momentum has died down. Therefore, he cashed in that double-digit profit today.

Have a Great Weekend,
Jim Giaquinto

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