SPECIAL ALERT: The July episode of the Zacks Ultimate Strategy Session will be available for viewing no later than Wednesday, July 8. Kevin Matras, Jeremy Mullin, David Borun and Sheraz Mian will cover the investment landscape from several angles in this popular event.
Don’t miss your chance to hear:
▪ David and Jeremy Agree to Disagree on whether the equities markets are outpacing the Main Street recovery
▪ Kevin answers your questions in Zacks Mailbag
▪ Sheraz and David choose one portfolio to give feedback for improvement
▪ And much more
Remember, we need your input. Please submit your questions for Zacks Mailbag and Portfolio Makeover by Thursday morning, July 2. Email now to [email protected].
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Despite recent anxiety over rising coronavirus cases and a still uncertain economic recovery, we got a reminder on Tuesday of just how far we’ve come from the darkest days of this pandemic.
The NASDAQ finished the second quarter today with a gain of approximately 30.6%, while the S&P was up nearly 20% and the Dow jumped around 17.8%.
Those are the best quarterly performances for the indices in over two decades.
But even more satisfying, the results provided an amazing comeback from the first quarter’s shellacking, which saw the Dow and S&P plunge by 20% each and the NASDAQ decline by about 14%.
Such a recovery would’ve seemed impossible back in March, when the economic shutdown was in its early stages and many thought a depression was on the horizon.
Stocks also just completed its third consecutive month of gains, as the NASDAQ jumped 6%, the S&P rose 1.8% and the Dow advanced 1.7%.
June started out with a lot of optimism as the country slowly started to reopen from state to state. However, we’ve been more cautious of late due to a rise in coronavirus cases.
The indices rallied into the close once again on Tuesday. The NASDAQ finished higher by 1.87% (or about 184.61 points) to 10,058.76, while the S&P was up 1.54% to 3100.29.
The Dow, which soared by 580 points on Monday, added another 217 points today. It was up 0.85% to 25,812.88.
The new month and the new quarter will kick off with a couple of jobs reports. ADP employment will come out tomorrow and be followed on Thursday by the government employment situation report.
Today’s Portfolio Highlights:
Surprise Trader: We’re all thinking about masks and other types of protective clothing during this pandemic, but Unifirst (UNF) has been all about such things for decades now. This Zacks Rank #2 (Buy) rents and sells work clothing and protective apparel. It’s services also include weekly cleaning and maintenance. In addition to uniforms, hard hats, lab coats and countless other products, the company’s protective apparel also includes face masks. This is one of Dave’s “quick turnaround ideas”, as UNF reports before the bell tomorrow. It beat by more than 9% last time and has an Earnings ESP of 18.46% for Wednesday’s report. The editor added UNF on Tuesday with a 12.5% allocation.
Zacks Short List: Half of the portfolio was changed in this week’s adjustment. Four of the five stocks that were short-covered brought positive returns, including a double-digit winner. The positions that left the service today included:
• Twitter (TWTR, +12.7%)
• Advanced Disposal Services (ADSW, +7.4%)
• NuVasive (NUVA, +7%)
• Burlington Stores (BURL, +6.8%)
• The TJX Cos. (TJX)
The new buys that filled these open spots were:
• China Lodging (HTHT)
• IAC/InterActiveCorp (IAC)
• Mimecast (MIME)
• NovoCure (NVCR)
• Royal Dutch Shell (RDS.A)
Learn more about this emotion-free portfolio that takes advantage of falling and volatile markets by reading the Short List Trader Guide.
Counterstrike: “As we have been talking, the negative news about COVID is just noise. While we sold off last week, the move lower could have been more about pension rebalancing than anything COVID related. After technical support was confirmed, buyers have stepped back in and we saw the squeeze higher.
“I have some unofficial totals for Q2, with the S&P up 19.94%, the Dow up 17.77%, and the Nasdaq up 30.63%. There is absolutely nothing bearish about those numbers. No matter how negative the world is right now, we have to read what is right in front of us. The charts remain bullish and the results speak for themselves.
“I expect the rest of the week to continue to be more of the same. We will see headline risk met with underlying buying, fueling a grind up like atmosphere. I don’t want to get too ahead of ourselves, but a move over 3150 in the S&P and the bears will be in dire straits. I have 3345 and 3422 Fibonacci targets. If for some reason the COVID news fades or we get promising vaccine news, we could see a quick acceleration higher.” — Jeremy Mullin
Until Tomorrow,
Jim Giaquinto
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