Wow...the market is REALLY nervous about the possibility of a Donald Trump victory next week. How nervous? The S&P declined for its ninth straight session on Friday; it’s worst losing streak since December 1980, which was in the aftermath of another presidential election. Even the Great Recession didn’t bring a drought like this.
The jobs report was just fine, neither a massive beat nor a demoralizing disaster. In past months, that was the magic recipe for a higher market...but not now. Stocks actually did rally on the news with the S&P nearly hitting 2100 again...it just couldn’t hold it. By the closing bell, the S&P was down 0.17% to 2085.2, the Dow declined 0.24% to 17,888.3 and the NASDAQ slipped 0.24% to 5046.4. The silver lining is that the election is early next week.
Despite all the uncertainties, the portfolios were making moves on Friday. The editors have been trying to use this overcast market to their advantage, which certainly paid off for Zacks Counterstrike today. Jeremy sold a bearish protection bet that he feels captured much of the fear of a potential Trump victory, bringing a double digit gain. The ETF Investor also had a big win after getting stopped out of a fund. Both of these portfolios also added today. Income Investor also had a big return as it works to reduce its exposure to rate-sensitive sectors. Furthermore, Tactical Trader saw opportunities to add to a couple of existing positions. Learn about it all below:
Ending the Week with some Big Winners
→ The ProShares Ultra Short-Term Futures (UVXY) position in Zacks Counterstrike has done its job by capturing most of the fear that Donald Trump may win next week. Now with the market beginning to factor in that possibility, Jeremy wants to get out before the actual election. He sold UVXY for a strong 40% profit in just a little over a week.
→ Income Investor wants to reduce its exposure to rate-sensitive sectors, since the Fed has indicated they could raise short-term rates at the December meeting. Therefore as stated yesterday, Neena decided that it was best to get out of Healthcare Trust of America, Inc. (HTA), which is a healthcare REIT. The sale brought a profit of approximately 36%.
→ The SPDR S&P Dividend (SDY) position in ETF Investor hit its stop yesterday, and so Eric sold it. The fund, which targets the dividend aristocrat space, brought a gain of 15% to the portfolio. There was also an addition today (see below).
Today's Portfolio Highlights:
• Oil-related assets should hold up well or even rally regardless of who wins the election next week. Zacks Counterstrike is getting into the space with a leveraged ETF and a top-ranked stock. Jeremy added a 5% allocation in VelocityShares 3X Long Crude Oil ETN (UWTI). This position will move three times the price of crude oil, so it should prosper when the price rebounds from its sharp plunge of late.
The editor also added Plains All American Pipeline L.P. (PAA). This Zacks Rank #1 (Strong Buy) natural gas and crude oil company recently reported a solid quarterly performance...but dropped once the HFTs swooped in. Jeremy sees a longer-term bounce on the horizon, so he acted today with a 6% position in the name. Read the complete commentary for a lot more on both of these moves.
• Uncertainty reigns supreme in the market right now, given the tightening election and the Fed’s cloudy interest rate policy. The ETF Investor plans to take advantage of this uncertainty by adding PowerShares S&P 500 Downside Hedged Portfolio (PHDG). This ETF invests in the S&P 500 with a hedge of VIX futures. The editor believes this is a safer play that will reward the portfolio should sluggish trading continue, along with significant upside participation. Read the full write-up for more.
• The Tactical Trader saw a couple opportunities to add to positions on Friday. Firstly, Kevin put an extra 5% into AMN Healthcare Services, Inc. (AMN) after reviewing the positive analyst reaction to the doctor and nurse recruiter's quarterly report. Also, it appears that GoPro's stumbles won't impact Ambarella's (AMBA) holiday quarter as much as investors feared. In fact, the editor saw an analyst report that says estimates for AMBA remain conservative, thus offering upside surprises. Kevin added an extra 5% to this position as well. Read more in the complete commentary.
• "The U.S. stock markets woke up a bit, and the S&P500 made it up +0.4% intraday. Then, as usual with the last 9 trading sessions, the indices fell back. The soft optimism was due to a 'goldilocks' jobs report. The jobs data was in line with a DEC rate hike, but no more than that.
"Good to see the bounce at the 2100 level today. It will most likely not hold on Monday or Tuesday. It is going to be a couple stale days more before the Tuesday election. Just sit tight until then. However, we did see all of our positions up during trading today," said John in Large-Cap Trader.
• "This was the longest losing streak since 1980 (nearly 36 years). Analysts point to election jitters. And I have to agree as we've been saying that for the last two weeks.
"We've also been pointing to the 200-day moving average support as likely needing to be touched before the market is in a technical position to start heading back up. Well, the S&P closed right at its 200-day MA support level of 2,085. So now, we wait until Tuesday night/Wednesday morning to see if putting the election behind us will allow the market to refocus on the fundamentals and start moving back up.
"Once the initial reactions are done and over with, I would expect the market to march back on up, much like the market did after the Brexit vote. As long as the economy continues to march ahead, so should stocks," said Kevin in Options Trader.
Have a Great Weekend!
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