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NASDAQ Rises More Than 1% to Begin October

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Nobody knows yet if October will look more like September or the positive five months that preceded it. But we DO know that it got off to a good start on Thursday.

Not only did the major indices all move higher to kick off the new month, but the NASDAQ led the way. The index saw the biggest drop in September by losing approximately 5.4% as technology fell out of a favor when uncertainty began to rise.

But today it was up 1.42% (or nearly 160 points) to 11,326.51. The FAANGs were all higher with Netflix (NFLX, +5.5%) out front and Apple (AAPL, +0.85%) lagging behind.

The index easily outperformed its counterparts. The S&P rose 0.53% to 3380.80, while the Dow advanced 0.13% (or about 35 points) to 27,816.90. The latter index had been higher by more than 200 points earlier in the day.

The S&P and Dow slipped approximately 4% and 2.3%, respectively, in September. However, all of the indices saved face with gains in four of the month’s final five sessions.

If there’s going to be some new stimulus before the election, then it would have to happen in the discussions between Speaker Pelosi and Treasury Secretary Mnuchin. So far there’s nothing… but they’re still talking!

All we’re hearing is that the talks have been somewhat productive, but they’re still far away from an agreement. The market will be paying close attention to these talks and hope the leaders can come up with some compromise to help the economy.

Speaking of the economy, it’s managing to hold up rather well all things considered. The ISM Manufacturing report came in at 55.4 for September, which is down a bit from the previous month’s 56 but remains solidly in expansion territory (over 50).

Meanwhile, jobless claims last week were still very high at 837,000, but that was an improvement on the previous week’s 850K and better than expectations. It was also the fifth straight month under 1 million.

We all know what happens tomorrow! It’s the Government Employment Situation report. Let’s see what happens… 

Today's Portfolio Highlights: 

Blockchain Innovators: Sometimes Dave has to explain how a certain company is involved with blockchain. But when the issue is wire transfers and other processing services, the use of this technology is rather obvious. Therefore, International Money Express (IMXI) is a pure blockchain play, especially considering its recent partnership with Ripple for use of its On-Demand Liquidity product. IMXI is a Zacks Rank #1 (Strong Buy) and usually rather expensive, but a recent secondary offering has taken a toll on shares. Dave jumped at this opportunity to buy the stock at an attractive price with plenty of running room ahead. Read the complete commentary for a lot more on today’s addition. In other news, this portfolio had two of the top performers among all ZU names today with Camtek (CAMT) jumping 17.6% and Exp World Holdings (EXPI) rising 13.1%. 

Technology Innovators: The plan for this portfolio is to be fully invested before the election, so Brian got started today by adding Jabil (JBL). This electronic manufacturer beat by 48% in its most recent report, which marked its third beat in the past four quarters and brought its average surprise over that time to 13%. Rising earnings estimates have made JBL a Zacks Rank #1 (Strong Buy). The editor “loves” its valuation. Not only does the stock have an 8.5x forward earnings multiple and a 2.8x book, but it also enjoys double-digit topline growth of 11%. If margins improve, then Brian thinks JBL’s EPS multiple could double. Read the full write-up for more on today’s addition.

Surprise Trader: Over the past 14 quarters, Helen of Troy (HELE) has beaten earnings expectations 13 times and matched once. In other words, it hasn’t missed in all that time… and Dave thinks that record will continue in the report coming before the bell on Thursday, October 8. The cosmetics company beat by more than 61% last time and has a positive Earnings ESP of 0.73% for the upcoming release. The editor added HELE on Thursday with a 12.5% allocation, while also selling H.B. Fuller (FUL). See the complete commentary for more on today’s moves.

Insider Trader: In addition to beating on the top and bottom lines in its second-quarter report, Bed Bath & Beyond (BBBY) also announced its first same-store sales growth since 2016. Comps were up 6%, while ecommerce growth surged nearly 90%! The home goods retailer soared more than 25% on Thursday, which means it was easily the best performer among all ZU services. Remember that Tracey once called BBBY the most poorly run retailer in the industry! It’s a good thing she gave the new management a chance, because this stock is now the best performer in the portfolio with a jump of more than 103% since being added on July 17.

Options Trader: "Stocks closed higher again today, making it now five up days out of six since the correction lows were put in last week.

"Stimulus hopes continue to underpin the market. Although, as of yet, there is still no official deal.

"Strong economic data however keeps rolling in. That was on full display all week. But the report everybody's waiting for is tomorrow morning’s Employment Situation report. The consensus is calling for 894K new jobs (900K in the private sector and -6K in the public), while the unemployment rate is expected to dip from 8.4% to 8.2%."
-- Kevin Matras

All the Best,
Jim Giaquinto

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