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S&P Reaches Record Close in Another Low Volume Session

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We saw another low volume session on Wednesday, but this time one of the major indices gained enough to close at a new high. And the Fed let us know that this super accommodative monetary policy will be around for a while longer (as was widely expected).

The S&P gained a mighty six points today, which was enough to close at a new high for the third time in the past four days. It was up 0.15% to 4079.95. The Dow also closed positively by 0.05% (or about 16 points) to 33,446.26, but it’s still about 80 points shy of the record set on Monday.

The NASDAQ now has back-to-back losing sessions after slipping 0.07% (or just under 10 points) to 13,688.84. Interestingly, the FAANGs were all solidly higher on the day and the 10-year Treasury yield remained below 1.7%.

Stocks really hit the ground running this week with the major indices each jumping more than 1% on Monday. Everybody loved the Government Employment Situation report on Friday, which crushed expectations by nearly 250K.

However, investors have been yawning since then. The big economic data has been released and we’re still about a week away from the start of earnings season, which is leaving us with a rather slow trade now that the market has relaxed a bit when it comes to covid and the vaccine rollout.   

The market should also be encouraged by the Fed’s plans moving forward, which pretty much boil down to “more of the same”. According to the minutes from the last meeting, the economy remains far from the inflation and employment goals that the Committee would need to see before tightening things up. Therefore, the Fed will be taking things easy for a while longer.

The market didn’t have much of a reaction to the minutes since there were no surprises. Plus, many investors are still skeptical that this accommodative policy will remain as long as currently expected, especially if the recovery continues to gain steam.

Today's Portfolio Highlights:

Home Run Investor: The entire shipping sector is enjoying big estimate revisions to the upside these days, so Brian gained some exposure on Wednesday by adding Matson (MATX). The company operates as an ocean transportation and logistics company. MATX has beaten the Zacks Consensus Estimate for the past three quarters in a row, while rising earnings estimates have made the stock a Zacks Rank #1 (Strong Buy). Furthermore, the valuation looks good and improving margins suggests that earnings are poised to move much higher from here. The editor thinks MATX “could easily see a 10-point run in the coming weeks”. Read the full write-up for a lot more on this new addition.

Surprise Trader: Not every company that reports in the early days of earnings season is from the financials space. For example, Badger Meter (BMI) goes to the plate before the bell on Thursday, April 15. This company provides flow measurement, control and communications solutions for water and gas utilities, municipalities and industrial customers worldwide. That’s quite a different business than banking! BMI has a positive Earnings ESP heading into that report, so Dave added the stock on Wednesday with a 12.5% allocation. Meanwhile, the editor needs to free up some space with earnings season right around the corner, so he sold Barings BDC (BBDC) and Winnebago (WGO) today after moving sideways since being added. See the complete commentary for more on today’s moves.  

ETF Investor: Transportation ETFs have been outperforming lately since the space will “benefit immensely” from the end of this pandemic. Therefore, Neena made another re-opening trade on Wednesday by adding the SPDR S&P Transportation ETF (XTN). This equal-weighted fund has exposure to trucking (33%), airlines (26%) and air freight & logistics (23%). It has over $740 million in assets and is the cheapest fund in the space. To make room for the addition of XTN, the editor sold iShares Global 100 ETF (IOO) for an approximately 60% return in more than three years. Learn more about today’s action in the complete commentary.

Counterstrike: Our pets have been constant companions during this pandemic shutdown, so its not much of a surprise that online pet retailer Chewy (CHWY) recently reported a “phenomenal” quarter. It beat the Zacks Consensus Estimate by 155%! The stock soared after the report, but was subsequently sold aggressively. That’s exactly what Jeremy is looking for in this portfolio. On Wednesday, he bought CHWY with a 4% allocation in preparation for the bounce back. Read the full write-up for more specifics on this addition, including the editor’s two possible scenarios for adding more shares moving forward.  

Marijuana Innovators: We’re just one day away from the quarterly report from Constellation Brands (STZ), but Dave doesn’t want to hold this beer, wine and spirits name through tomorrow’s earnings announcement. Therefore, he sold STZ on Wednesday for a return of approximately 24% in more than a year. Read the full write-up to learn why the editor doesn’t want to hold this name through the report.

All the Best,
Jim Giaquinto

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