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New Week Begins With Third Straight Day of Gains

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It’s probably too late to save September, but stocks could still rally out this rough month. And they took a step in the right direction on Monday with a broad-based surge that saw each of the major indices jump by well over 1%.

Stocks have now put together three straight days of advances, and the NASDAQ led the way each session as tech attempts to recover from several weeks of pullbacks.

The index rose 1.87% (or nearly 204 points) today to 11,117.53. It had gained more than 2.2% on Friday.

The FAANGs were also up for a third straight day with Amazon (AMZN, +2.55%) and Apple (+2.39%) out front. The e-commerce giant has jumped nearly 6% during this winning streak, while the iPhone maker has soared more than 7%.

But technology wasn’t the only space moving higher. Recovery stocks also were up on Monday, including the beleaguered airlines and cruise companies. Banks had a solid session as well.

The S&P advanced 1.61% to 3351.60, while the Dow was up 1.51% (or about 410 points) to 27,584.06. These gains add onto Friday’s increases of 1.6% and 1.3%, respectively, and provided a good start in snapping these indices’ four-week losing skids.

Don’t hold your breath or anything, but it looks like the powers-that-be in Washington may give stimulus another try. The House Democrats have put forth a plan that’s less than what they originally wanted, but still more than what the Republicans had in mind.

Perhaps more importantly though, Treasury Secretary Mnuchin and Speaker Pelosi are getting together to discuss a possible deal.

Needless to say, the market loves the idea of some assistance from Capitol Hill almost as much as it loves hearing about progress on a vaccine.

So all skepticism aside, let’s hope these folks can reach some kind of compromise sooner rather than later. It would provide a great boost to the economy in the final three months of the year by getting help to people and businesses that are really struggling.

Today's Portfolio Highlights:

Income Investor: People are losing patience with that loud refrigerator or so-called dishwasher during this pandemic shutdown. What was tolerable in normal times can be nerve-wracking right now. Therefore, Whirlpool (WHR) had a strong second quarter thanks to a faster-than-expected rebound in demand as consumers bought new appliances to ride out this storm. Shares of this Zacks Rank #2 (Buy) are up 143% since the coronavirus low. However, Maddy is most impressed by its annual yield of 2.7% and solid liquidity, which is better than most in its industry and offers some breathing room as this shutdown lingers on. Read the complete commentary for more specifics on this new addition.

Insider Trader: Insider buys in the big tech companies are kind of rare since they receive so many shares as awards and gifts, so Tracey certainly noticed when a director bought TWICE last week at NVIDIA (NVDA). The graphics chip giant is up 41% in the past three months and even managed to gain 2.3% during the tech sell-off, so these buys are even more bullish considering the stock's big rally this year. The editor also picked up American Outdoor Brands (AOUT), which obviously sells products for outdoor excursions. The stock is down 24% over the past month, but last week the CEO, the CFO and two directors bought shares. Tracey considers this to be a confidence buy. She added NVDA and AOUT on Monday with 9% allocations each, which means the portfolio is now fully invested. Read more about these moves in the full write-up. 

Technology Innovators: The market has stopped selling all things tech (for now), so Brian thought this was a good opportunity to add a name from that space and bulk up this underweighted portfolio. On Monday, he added Arrow Electronics (ARW), a leading distributor of electronic components and enterprise computing products. The company has beaten the Zacks Consensus Estimate in three of the past four quarters and rising earnings estimates have made the stock a Zacks Rank #2 (Buy). The editor also likes the valuation, including a 12x forward PE and a 1.3x price-to-book multiple. ARW wasn’t punished as badly as others in the recent pullbacks, so it should hit the ground running if the market continues moving higher from here. See the complete commentary for more.  

Surprise Trader: The market hasn’t really made up its mind on Acuity Brands (AYI) just yet, which is why this manufacturer of lighting fixtures has a high Zacks VGM Score of “A” but a mediocre Zacks Rank of #3 (Hold). So there could be a BIG move higher for this name if it beats when reporting before the bell on Thursday, October 8. And it just so happens that the company has a positive Earnings ESP of 6.74% and is coming off an upside surprise of more than 50% last time. The portfolio added AYI on Monday with a 12.5% allocation, while also selling BJs Wholesale (BJ). Read the full write-up for more on today’s moves.

Black Box Trader: This week's adjustment replaced half of the portfolio. The stocks that were sold today included:

• Best Buy (BBY, +10.8%)
• Target (TGT, +5.3%)
• Costco (COST, +3.3%)
• At Home Group (HOME)
• BJ's Wholesale Club (BJ)

The new additions that replaced these names are:

• Big Lots (BIG)
• Lennar (LEN)
• Owens & Minor (OMI)
• Sealed Air (SEE)
• Tapestry (TPR)

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

All the Best,
Jim Giaquinto

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