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Market Takes Off After Tariffs Pushed Back

For the first time in a while, we got some good trade news on Tuesday and the major indices responded appropriately with rallies of 1.5% or more.

The NASDAQ soared 1.95% (or more than 150 points) to 8016.36. The S&P advanced 1.48% to 2926.32 and the Dow rose 1.44% (or around 372 points) to 26,279.91.  

The indices more than made up for yesterday’s declines of over 1%.  

The rally was sparked by news that some of those tariffs scheduled for September 1 will be delayed until December 15. Consumer goodies like cell phones, laptop computers and video game consoles will be part of this delay, which removes a potentially huge stumbling block for the holiday shopping season.

Shares of Apple advanced 4.23% after the announcement, while Best Buy jumped nearly 6.5%.

August has been a rough time for trade. It started on Aug 1 when President Trump threatened new tariffs, and continued on Aug 5 when China retaliated and gave the market its worst session of the year.  

This delay couldn’t have come at a better time! Ever since this escalation, investors have been in a somber mood as they worried about slowing global growth and even the possibility of a recession.

The market, however, has been fighting back and paring losses against such sentiment with support from the strong economy. But some real improvement between the U.S. and China with hopes of future talks could get stocks back on the right track and toward their highs.

So, we got the type of headline that we needed to snap the market out of its doldrums. As expected, it came out of nowhere. But can it last?

The editors are skeptical of this rally right now, but it’s nothing that a few more hundred-point advances can’t fix!

Today's Portfolio Highlights:

Counterstrike: Just when Jeremy was finally ready to make some buys with the market in freefall, the major indices stage a huge rally on news of delayed tariffs. Therefore, the editor decided to add a name that has nothing to do with China or the trade conflict. On Tuesday, he bought a 10% allocation in GW Pharmaceuticals (GWPH), a Zacks Rank #1 (Strong Buy) that develops cannabinoids for a broad range of diseases. The stock really took off after beating the Zacks Consensus Estimate by 65% in its recent report, but it has since come back down to earth. Jeremy sees an opportunity to pick up ‘one of the more legit pot stocks’ at a bargain price. Read the complete commentary for more on this buy, including a look at its chart.

Surprise Trader: The past three quarters have all been beats for 1-800 Flowers (FLWS), including a surprise of more than 27% in the most recent report. Dave thinks this e-commerce florist is all set to outperform again when it reports on Thursday, August 22 before the bell. It has a positive Earnings ESP of 6.67% and all of its estimates have been moving in the right direction since late last year, underscoring its status as a Zacks Rank #1 (Strong Buy). The editor added FLWS on Tuesday with a 12.5% allocation. He also sold MDC Holdings (MDC). Read the full write-up for more.

TAZR Trader: Enjoy this rally while you can because Kevin doesn’t think it will last. In fact, he believes the market should be up much more on the “tariff peace” news. And since he pictures more back-and-forth between the two titans of trade, more weakness is probably in store for stocks. Therefore, he took profits to raise more cash. The editor sold more Alteryx (AYX) for a return of 56.5% and half of The Trade Desk (TTD) for 13.6%. The portfolio also sold Square (SQ) for 1.6% as it has not been participating in this rally at all. 

Stocks Under $10: Despite the market’s strong session, Brian decided to add a defensive name on Tuesday. The editor picked up Newmark Group (NMRK), a Zacks Rank #2 (Buy) commercial real estate advisory firm. This company brings some diversification to the portfolio as it’s a departure from the ‘hit parade of high-tech names that we are used to.’ The editor also sold AXT, Inc. (AXTI), which keeps the portfolio at 14 names. Read the full write-up for a lot more on today’s moves.

Zacks Short List:
This week’s adjustment included four changes. The portfolio short-covered the following names:

• Anadarko Petroleum (APC, +1.3%)
• Western Digital (WDC, +0.3%)
• Zayo Group Holdings (ZAYO)
• Ionis Pharmaceuticals (IONS)

These positions were replaced by adding:

• Gardner Denver Holdings (GDI)
• Inphi Corp. (IPHI)
• iRobot Corp. (IRBT)
• 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 Good Evening,
Jim Giaquinto

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