Strong Week Despite Weak Finish

PROGRAMMING NOTE: John Blank appeared on CNBC's Closing Bell this afternoon and talked about results from the big banks as earnings season kicks off. Click here to check it out. 

The major indices slipped for a second consecutive Friday in a week that was mostly green. Thankfully, the pullback wasn’t stiff enough this time to completely ruin the market’s weekly performance. In fact, stocks did pretty well over the last 5 days.

The NASDAQ jumped by 2.8% this week as Facebook rebounded from recent weakness while its CEO was testifying on Capitol Hill. The S&P advanced 2% and the Dow was up 1.8%.

Earnings season got underway on Friday with some of the big banks reporting. The results were pretty solid and the major indices initially rose on the news, but they quickly scurried onto the negative side and spent most of the session there. The market is really hoping that a strong season will get investors’ minds back on our economic fundamentals and off trade war fears, potential bombing campaigns, risings rates, FBI raids and presidential tweets.

The Dow finished with a 0.50% slide to 24,360.1, while the NASDAQ was down 0.47% to 7106.7 and the S&P declined 0.29% to 2656.3. While these results are disappointing after three positive sessions in the past four, it is a much better outcome than last week. You may remember that each of the major indices plunged by more than 2% last Friday and pulled the market’s weekly performance into the red after a three-day winning streak.

This isn’t the easiest environment in which to trade, but that hasn’t scared off the editors. It’s been an active week in the portfolios. Not only are they grabbing new positions before they move higher again, but we’ve also seen a lot of double-digit winners of late. For example, Value Investor sold two names for big returns today, and also added a new pick.

Brian Bolan has been a buying machine lately, and today he added a chip company in Stocks Under $10 and a retailing giant in Technology Innovators that’s been in the President's tweets A LOT recently. Finally, ETF Investor picked up a fund to take advantage of the outperforming biotech space. Learn more about all of this in the highlights section below:

Today's Portfolio Highlights:

Value Investor: The portfolio had a busy end to the week by cashing in two double-digit winners and adding a new position. Firstly, Tracey got out of Copa (CPA) as rising crude prices will likely lead to higher fuel costs for the airline. Meanwhile, YY (YY) was sold after the Chinese government cracked down on some of that country’s most popular apps, which does not bode well for the name. CPA brought a profit of approximately 26% while YY gained around 18%.

The new buy is Sony (SNE), which has already seen positive results for 5 of the 7 categories from its 2015 turnaround strategy. Shares are up 56% in the past year and 7% year-to-date, yet the stock is still cheap and has all the classic value fundamentals. Analysts are most excited with SNE’s use of AI for developing car sensors and its music division, which has experienced a surge in streaming revenue over the past few years. Read the complete commentary for more on all of today’s moves.

Stocks Under $10: The market pullback took a toll on chips just like every other space, but the industry is still highly ranked and appears to be moving forward again. That smells like a great buying opportunity to Brian Bolan, who plans to be more aggressive with his next few additions now that the VIX is moving lower. On Friday, the editor bought inTest Corp. (INTT), a Zacks Rank #2 (Buy) maker of testing equipment for electronics and semiconductors. The stock hit a 52-week low recently but has been rather strong since then and carries a Zacks Style Score of “A” for Growth. Read the full write-up for more on this new pick and be ready for another addition on Tuesday.

ETF Investor: Smaller biotech names are outperforming in 2018 as several of their cutting-edge therapies are being approved by the FDA. In addition, the big pharmaceutical companies are in the mood to buy these innovative names after the tax reform…even if they have to pay hefty premiums to get them. Neena wanted exposure to all this activity but needed something to spread out the risk of this inherently volatile area. The editor bought SPDR S&P Biotech ETF (XBI), an equal-weighted ETF with a focus on small caps and micro caps. It has 116 holdings and is one of the cheapest ETFs in the space. Read the full write-up for more.

Technology Innovators: President Trump may have a problem with Amazon (AMZN), but Brian Bolan doesn’t. The editor thinks this retailing colossus will blow past earnings again when it reports on April 26. This was really a no-brainer: revenues are growing, earnings are growing and the stock has dipped from its high. Historically, AMZN held poor Zacks Ranks, but that was before AWS really took control of profitability. These days, it is a Zacks Rank #1 (Strong Buy). Read the full write-up for a lot more on this new addition and the acrimonious relationship it has with the President.

Options Trader: "As trade tensions eased and the US response to Syria appears to be deferred to a future date, stocks enjoyed an impressive week of gains.

"And with Q1 earnings season set to officially begin next week, stocks are poised for even more gains. (Stocks typically rise during earnings season. And since this bull market began in 2009, the average increase for stocks during earnings season is more than 2%, with gains seen more than 70% of the time.)

"But given how the market has diligently held support and has staged a promising rally, the gains should be even bigger as Q1 earnings should be just a catalyst that ultimately propels stocks back up to their all-time highs.

"And with a robust economy, historical tax cuts, and surging corporate profits, the market should then begin a whole new leg higher." -- Kevin Matras

Have a Great Weekend,
Jim Giaquinto

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