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NASDAQ has Three-Day Winning Streak

The market understandably lost a bit of its excitement over the three-day Easter weekend, but the major indices still came well off their lows of the session on Monday.

In fact, the NASDAQ recovered so much that it crossed into the plus side in the final hour and now has a THREE-DAY winning streak.

The indices are coming off one of their best weeks in years, thanks to slowing coronavirus cases and an unprecedented amount of support from the Fed.

The four-day week saw surges of more than 12% for the Dow and S&P each, along with a more than 10% advance for the NASDAQ.

Such an epic rally naturally has investors concerned that the market is getting a little too cocky, especially since the economy is still locked down. The session started in the red and continued to fall for the first couple hours before getting its act together.

The Dow cut its more than 600-point plunge in half and finished with a loss of ‘only’ 1.39% (or about 328 points) to 23,390.77. The S&P also saw a nice recovery to finish off by 1.01% to 2761.63.

But the NASDAQ’s recovery was a lot better than just “nice”. The index actually closed in the green for a third consecutive session. We haven’t seen that since the coronavirus really took hold.

It rose 0.48% (or nearly 39 points) today to 8192.42. The chips had good performances, as well as a few of the FAANGs like Netflix (NFLX, +7%) and Amazon (AMZN, +6.2%).

We continued to get good news on the coronavirus spread, as New York’s governor said the worst was over. The state has seen the most cases of the sickness in the country, and the U.S. has the most cases in the world.

Hard-hit European countries have also been enjoying a slowing of the spread, including Italy.

We’ve been waiting for this kind of good news for a long time, so it’s no wonder people are talking about the timeline for re-opening the country. But investors know that’s easier said than done given how unpredictable things still are.

We’ll get some idea of the economic impact as earnings season starts this week. This quarter’s numbers will only partially take the coronavirus toll into account, but the market will be watching the guidances. Many outlooks have already been pulled or cut.

The big banks take up a good amount of space early in the season. JPMorgan (JPM) and Wells Fargo (WFC) report tomorrow. Johnson & Johnson (JNJ) also goes to the plate on Tuesday.

Meanwhile, Wednesday will see reports from Goldman Sachs (GS), Morgan Stanley (MS), Bank of America (BAC), Citigroup (C) and also UnitedHealth (UNH).

Get ready for another busy week! 

Today's Portfolio Highlights:

Surprise Trader: Here we go! Earnings season kicks off this week with several of the banks scheduled to report. Dave is also starting this busy period in that same space with the addition of BCB Bancorp (BCBP), a regional bank in the Northeast. The company has beaten estimates for five straight quarters, and has a positive Earnings ESP of 4.17% for the report coming later this week or early next. The editor added BCBP on Monday with a 12.5% allocation. He also sold Lululemon (LULU) for a 1.5% return. Read the complete commentary for more.   

Counterstrike: The portfolio is covering its bases to start this week with both a long side and a short side trade. Virtu Financial (VIRT) is one of those few companies that are really benefiting from all this volatility. This Zacks Rank #1 (Strong Buy) is a market making and financial services company that focuses on offering liquidity to global markets by buying and selling securities. So the stock is a direct beneficiary of all these crazy ups and downs. Earnings estimates are moving higher (as its Zacks Rank attests), and Jeremy thinks they will continue to advance heading into the quarterly report on May 7. He added VIRT on Monday with a 6% allocation.

On the other side of the coin, the editor also added a 7% allocation in ProShares UltraPro Short QQQ (SQQQ). The bounce back from mid-March lows has been impressive, but now stocks are coming up on levels where Jeremy wants to get short. Among all the areas that have gotten ahead of themselves, he thinks tech may be especially susceptible to a pullback. This position will help him benefit from the next pullback. Read the complete commentary for more on today’s moves. 

Technology Innovators: It was a good day for the tech space, but Bottomline Technologies (EPAY) didn’t join in the fun as much as others. Therefore, Brian got a good entry point to add this Zacks Rank #2 (Buy). The company provides collaborative payment, invoice and document automation solutions to corporations, financial institutions and banks around the world. Brian believes the market still has a bullish bias and is in the process of increasing the portfolio’s exposure. So read the full write-up for more on EPAY and don’t be surprised if there’s another buy in the days ahead.

TAZR Trader: With so many unknows in the market right now, Kevin wants to reduce stock market exposure this week before the next round of selling. Therefore, he sold the rest of QQQ 3X Bull (TQQQ) and SPX 3X Bull (UPRO) on Monday for gains of 15% and 15.9% respectively. The editor also bought a starter position in Dow30 3X Bear (SDOW). Read the full write-up for more on these positions and Kevin’s gameplan for this week.

Black Box Trader: The portfolio sold four positions in this week’s adjustment… and three of them were profitable. The stocks that left the service today included:

• Nasdaq (NDAQ, +2.9%)
• Dollar General (DG, +2.6%)
• Bristol-Myers Squibb (BMY, +1.8%)
• Booz Allen Hamilton (BAH)

The new buys that replaced these names are:

• General Mills (GIS)
• Teekay Tankers (TNK)
• Clorox Co. (CLX)
• Hain Celestial (HAIN)

Read the Black Box Trader’s Guide to learn more about this computer-driven service designed to take the emotion out of investing.

Until Tomorrow,
Jim Giaquinto

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