Topsy-Turvy With Tech

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The Dow ended seven straight sessions of gains and four straight sessions of highs on Wednesday, as the index slipped 0.29% to 18,868.1. The S&P was off by 0.16% to 2176.9. However, technology continued yesterday’s momentum and pushed the NASDAQ higher by 0.36% to 5,294.6, which is a bit of a reversal since the space had not participated in much of the post-election rally.

The editors consider today’s dip to be both normal and healthy for a market that is likely to hit more records before the year is out. “This is normal for a market that has had such a big run from election night,” said Jeremy in Counterstrike “I wouldn’t be surprised if we close the week right around 2175-2180 and then continue higher next week.” Steve echoed such sentiment in RTA today, which is featured in the highlights section below.

The portfolios stayed active in Wednesday's session, and this time Insider Trader joined the party with a sell that brought a more than 50%(!) return and a buy for a retailer that’s “just too darn cheap’ at the moment. Zacks Counterstrike added a couple more names that should advance from beaten down levels, while Surprise Trader added the most popular athletic footwear retailer. Finally, Momentum Trader got involved by adding a pair of names as well. See below for more:

Insider Trader Makes 50%+!

→ The financials and the regional banks have just experienced “the mother of all rallies”. Tracey still likes the space, but thinks this is a good time to halve the position in KeyCorp (KEY) and take an impressive 53% return for Insider Trader. The editor is letting the rest ride for now and would consider any significant pull back in shares as a buying opportunity. The portfolio also added today (see below).

Today's Portfolio Highlights:

• Retailers are getting a boost now that the election is over, so Insider Trader picked up a stock from the space that’s “just too darn cheap” right now. Tuesday Morning (TUES) is an off-price retailer that’s in turnaround mode. In its most recent report from late last month, TUES announced that net sales increased $9.6 million year over year. But more importantly, same-store sales improved by 5.1%. With a return to profitability expected this year, the CEO and a director both picked up shares of their own company in the wake of the report. Tracey followed by taking a 10% position in TUES for the portfolio. Read a lot more about this new addition in the complete commentary.

• After a strong quarterly report, shares of streaming giant Netflix (NFLX) soared 30% to $130. The stock has since pulled back under $115 and, therefore, right into the crosshairs of Zacks Counterstrike. Jeremy added the stock to the portfolio on Wednesday with a 12.5% allocation. NFLX is a new Zacks Rank #2 (Buy) and the editor expects it to rally back to the recent highs and beyond in 2017.

The editor also picked up a 13% allocation in Barracuda Networks (CUDA), which designs and delivers security and data protection solutions. It recently reported an earnings beat, but HFTs pulled it lower. Jeremy thinks it’s ready to break out higher after a month of running in place between $22 and $24. Learn more about both of these new additions in the complete commentary.

Surprise Trader is getting ready for the holidays by buying one of the best known shoe retailers in the world: Foot Locker (FL). Earnings estimates for the stock have been rising as we head toward its quarterly report before the bell on Friday. This Zacks Rank #2 (Buy) has a positive Earnings ESP and a Zacks VGM Score of “B”. Plus, several other retailers have performed well in recent reports, which is another good sign for the upcoming release. Eric added FL to the portfolio on Wednesday with a 12.5% allocation. Read the full write-up for a lot more on this new pick.

• The Momentum Trader had a “two-fer” on Wednesday as Dave picked up Zayo Group (ZAYO) and Mimecast (MIME). ZAYO provides bandwidth infrastructure services, which means its part of a space in the top 20% of the Zacks Industry Rank. The stock has been consistently hitting fresh 52-week highs over the past several weeks. The position has a 12.5% allocation.

MIME is “more of a slow and steady growth story” as it chops along the chart but still manages to move higher. The company offers cloud security and risk management services. Dave is adding a smaller 9.2% allocation in this name. Learn more about both of these additions in the complete story.

• "The post-election action has been fast and furious. Profits rolled in…but not in a straight forward fashion given the massive sector rotation games at play.

"So it was nice to have a bit of a breather on Wednesday as stocks had a mild session. They are likely just gathering strength for a shot to break above 2200.

"Yes, I expect to break above this year. But think we will find some resistance there on the initial attempts…which, as I said yesterday, is probably coming before Thanksgiving," said Steve in Reitmeister Trading Alert.

Until Tomorrow,
Jim Giaquinto

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