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Wild Month Ends with a Calm Pullback

SPECIAL ALERT: The April episode of the Zacks Ultimate Strategy Session will be available for viewing no later than Wednesday, April 8. Kevin Matras, Kevin Cook, Jeremy Mullin and Sheraz Mian will cover the investment landscape from several angles in this popular event.

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▪ Sheraz and Kevin Cook Agree to Disagree: Forecasting the Decline and Recovery. What models to use to navigate the next few months as the stock market rushes back and forth forecasting its own predictions
▪ Kevin Matras answers your questions in Zacks Mailbag
▪ Sheraz and Kevin Cook 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, April 2. Email now to mailbag@zacks.com.

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It’s only fitting that this difficult month would end with a negative session, but at least we were spared from another “look out below” plunge that had impacted much of March.

Stocks made a good effort this morning to continue recent positive performances from last week and Monday, but  the advance faded in the afternoon and the losses accelerated in the final hour.

Nevertheless, a Dow decline of “only” 1.84% (or about 410 points) to 21,917.16 could be considered a minor silver lining during a month that saw four “circuit breakers” and three 2000+ single-day plunges.  

The S&P slipped 1.6% to 2584.59 and the NASDAQ was off 0.95% (or about 74 points) to 7700.10.

We’ve been getting a lot of good news in the fight against the coronavirus recently, including big moves from the Fed and Congress. And just today President Trump tweeted about a “very big & bold” infrastructure bill.

We’ve also been enjoying some encouraging news on advancements in vaccines, treatments and testing.

The market has responded favorably to all of this lately.

However, the virus continues to spread here in the U.S. And while there are some very early signs that all this social distancing may be dampening the spread, it’s obvious that we’re still in the thick of this outbreak with more challenges to overcome.

Given the rays of light in recent days, should we even talk about the monthly totals? Well, if it weren’t for last week’s three day rally that jump-started the Dow by more than 20%, it would’ve been a lot worse. So let’s just get it over with.

The Dow still plunged by 13.7% in March, while the S&P dipped 12.5% and the NASDAQ dropped a little over 10%. Yes, it could have been even worse!

The first-quarter numbers are just as grisly with the Dow and S&P both off by 20% and the NASDAQ down by a little over 14%.

What a horrible start to 2020. Fortunately, the year has just begun and there’s plenty of time to rebound once the coronavirus is under control.

Today's Portfolio Highlights:

Marijuana Innovators: Shares of Tilray (TLRY) were beaten up with everything else in the indiscriminate selling a couple weeks ago, but it has rebounded “spectacularly” since then. Dave decided to buy the stock on Tuesday, though he’ll go in relatively light as this one is still fairly speculative. TLRY is a pharmaceuticals company that develops cannabis=based medicines, drugs, drops and oil products. The editor explains why this name is a “compelling story” in the complete commentary. 

Counterstrike: As this rebound continues pushing the S&P toward 2700, Jeremy plans to get more neutral since we’re not out of the woods yet with the coronavirus. Therefore, the editor booked some profits today by selling Microsoft (MSFT, +12.9%), ProShares UltraPro QQQ (TQQQ, +6.3%) and SPDR S&P 500 ETF (SPY, +3.8%). 

Stocks Under $10: There aren’t that many Zacks Rank #1s (Strong Buys) or Zacks Rank #2s (Buys) that are also low in price, but Brian found one of Tuesday. A10 Networks (ATEN) provides software-based application networking solutions that help companies to enhance, secure and optimize the performance of their data center applications and networks. Get all of the editor’s details on this new addition in the complete commentary.

Zacks Short List: This week’s adjustment included only two swaps. The portfolio short-covered Mimecast (MIME) and Insulet (PODD), and then replaced those positions by adding Bright Horizons Family Solutions (BFAM) and Vail Resorts (MTN). Learn more about this emotion-free portfolio that takes advantage of falling and volatile markets by reading the Short List Trader Guide.

Insider Trader: "Stocks fell into the close today as the first quarter wound down. I'm sure you've all seen the headlines that it was the worst first quarter for stocks ever.

"January, February and March all finished in the red.

"That would usually mean that April could be the month things turn around, but we're in uncharted territory right now. Things will get worse, before they finally get better.

"For the second day in a row, the markets were more calm than we've seen for the past few weeks and that is good. It's giving Wall Street some time to catch its breath."
-- Tracey Ryniec


Have a Great Evening,
Jim Giaquinto

P.S. We’ve just released this quarter’s Ultimate Four report which includes four stocks our team believes have the greatest upside potential over the upcoming quarter. This latest report features favorite stocks from Kevin Cook, Jeremy Mullin, Neena Mishra, CFA, FRM, and Ben Rains. Log on to Zacks.com to see these stocks today.

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