North Korea, Harvey Can't Keep The Market Down

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If Hurricane Harvey couldn’t rattle the market on Monday, then North Korea’s latest missile test wasn’t going to do it on Tuesday. Stocks actually opened the session sharply lower on news that the latest test flew over part of Japan. However, as the day wore on and worries subsided, the major indices were able to mount a rebound that left all three on the positive side by the closing bell. 

The S&P advanced 0.08% to 2446.3, while the Dow increased 0.26% to 21,865.4. The NASDAQ performed the best with a rise of 0.30% to 6301.9. 

“The market seems to be in a react first and ask questions later mode when it comes to North Korea,” said Eric in Surprise Trader. “Any possible escalation is immediately sold-off, but as it turns out to be yet another false alarm, things cool down and get back to normal again. I’d expect this sort of trend to continue in the near-term.” 

The portfolios sprung back into action today with Home Run Investor, Stocks Under $10 and Short List all making additions. Meanwhile, Healthcare Innovators had a huge winner today as Kevin decided it was time to take profits on one of the portfolio’s best performers. The highlights section below has more on all these buys.

Today's Portfolio Highlights: 

Healthcare Innovators: As mentioned here often (including yesterday), Juno Therapeutics (JUNO) has been a big winner for the portfolio. The company was one of the inaugural picks of this service back in April, and it has since been among the top movers numerous times. After another double-digit surge today lifted the stock to within striking distance of his price objective, Kevin felt it was finally time to cash in. The editor sold JUNO on Tuesday for an impressive 70% return in approximately 4 months. 

Home Run Investor: The health insurance business is “making big bucks”, and Dave wants a piece of the action to further diversify and insulate the portfolio from its tech risk. Therefore, the editor bought Health Insurance Innovations (HIIQ), a developer and administrator of web-based individual health insurance plans and ancillary products. This Zacks Rank #1 (Strong Buy) has “tremendous” revenue and EPS growth, which has led to a string of positive earnings estimate revisions over the past year. Read the complete commentary for more on this new addition.

Stocks Under $10: Recent indications suggest a sector rotation into solar names, so Brian wants to get some exposure to the space. Today he added Vivint Solar (VSLR), a Zacks Rank #2 (Buy) provider of residential solar energy systems. The company is still losing money for now, but its recent quarter included an earnings beat and a huge lift in revenue. In fact, VSLR has strung together four straight quarters of positive earnings surprises and sequential revenue growth, which has the editor thinking that “the growth is ready to break out”. Read more about this new addition in the full write-up, and get ready for another buy tomorrow. 

Zacks Short List: This week, the portfolio short-covered ConocoPhillips (COP, +2%) and GoDaddy (GDDY). The two new buys that replaced these names are Jd.com (JD) and Occidental Petroleum (OXY). Learn more about this emotion-free portfolio that takes advantage of falling and volatile markets by reading the Short List Trader Guide. 

Counterstrike: "Well today, we officially stumbled across the “Bizarro Market”. If you didn’t follow the last 24 hours, you might look at the latest news and think there is a lot of trouble out there. A major U.S. city is under water and North Korea is shooting missiles over Japan. Time to sell stocks right? 

"Well today was evidence that the market doesn’t care about either of those events. After a gap down of about 0.75%, the slow grind higher today was a resilient enough sign that the market doesn’t believe that a North Korea event will happen. In addition, the market thinks that the cleanup and rebuilding of Houston will help the economy more than hurt it. 

"The S&P continues to just hang out around 2440. That level is a magnet for some reason and until there is some concrete reason for participants to either buy or sell the market, we will remain stuck." -- Jeremy Mullin 

Have a Good Evening, 
Jim Giaquinto

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