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NASDAQ Hits New Record as Netflix Rebounds

Any concerns that Netflix signaled bad things for earnings season proved to be short-lived on Tuesday. The streaming giant more than halved its loss by the closing bell, allowing the NASDAQ to return to an all-time high.

The tech-laden index advanced 0.63% today to a new record of 7,855.1. As with all of the major indices, it started the day in the red on fears that Netflix would take a big bite out of the market. The FANG stock was off by about 14% at the start after reporting softer-than-expected subscriber growth yesterday. But investors obviously saw this as a buying opportunity. Netflix finished the session lower by only about 5.2%.

“The bullish tone is showing itself again. With some negative earnings headlines out of Netflix, we still saw a really nice up day. This is the second time in as many weeks we saw a gap down met with furious buying. This is an overwhelmingly positive sign,” said Jeremy Mullin in Counterstrike.

The NASDAQ also got some help from Amazon, which is having a successful Prime Day despite some well-publicized technical difficulties. The online retailing giant advanced nearly 1.2%.

Meanwhile, the S&P reclaimed 2800 by rising 0.40% to 2809.6. The Dow, which has only closed lower once since July 4th, rose 0.22% to 25119.9 for its fourth straight day in the green.

Jerome Powell had a part to play in the market's gain as well. The Fed Chair gave a very upbeat reading of the economy to the Senate Banking Committee today. He also said that the plan was to gradually continue raising rates for now, which the market seems to be fine with.

In other news, the portfolios saw Dave add to Surprise Trader again (of course), while also picking up an E&P company for Momentum Trader. Brian Bolan made good on his promise of a new trade by buying a construction company for Stocks Under $10. In addition, ETF Investor found a fund to capitalize on the growing need for cybersecurity. Get details on these moves and more in the highlights section below:

Today's Portfolio Highlights:

Stocks Under $10: As promised, Brian Bolan added a new position for the second straight day as he works on getting the portfolio up to between 17 and 20 names. The latest addition is Orion Group (ORN), a Zacks Rank #1 (Strong Buy) construction company that will add more diversification to the service. The past two earnings reports included huge surprises, while earnings estimates for 2018 have been on the rise. It will report again in early August. Read more in the complete commentary.

Momentum Trader: Crude oil’s surge over $65 is just the kind of thing a momentum guy like Dave loves to see. The editor has been searching for an E&P stock to buy, and on Tuesday he picked up Lone Star Resources (LONE) with a 12.5% allocation. Shares dropped all the way to $4 from $16 and then rebounded to its present price of more than $9. The stock has a lot of ground to make up to get back to its highs, and Dave believes the momentum is there to do it. Read the full write-up for more on this new buy.

ETF Investor: Whether in business or politics, one of the biggest topics right now is the rise of cyberattacks. A hot industry has emerged from the demand for cybersecurity and it is largely insulated against a trade war or an economic slowdown. Neena wants a piece of this space, so she added ETFMG Prime Cyber Security ETF (HACK) to the portfolio on Tuesday. The fund provides exposure to the global cybersecurity industry, including companies that provide hardware, software, consulting and services to defend again cybercrime. Read the full commentary for more on this new buy.

Surprise Trader: Shares and earnings estimates of Ingevity Corp. (NGVT) have one of those beautiful “bottom-left to top-right” charts that Dave (and most investors) really love. In addition, this chemicals business enjoys a healthy Earnings ESP number of 9.14% for the quarter coming next Wednesday, July 25th. The editor believes this Zacks Rank #2 (Buy) is a good candidate for a surprise next week, so he added NGVT on Tuesday with a 12.5% allocation for his seventh buy in seven days. Read more in the complete write-up.

Zacks Short List:
For its weekly adjustment, the portfolio short-covered Agnico Eagle Mines (AEM) and NetScout Systems (NTCT). The new buys that replaced these names are MGM Resorts Intl (MGM) and Newmont Mining (NEM). Learn more about this emotion-free portfolio that takes advantage of falling and volatile markets by reading the Short List Trader Guide.

Have a Great Evening,
Jim Giaquinto

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