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NASDAQ Strikes Back with a New Closing High

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The NASDAQ was back in record territory on Wednesday, as tech once again took the market’s reins and helped the major indices recover a good amount of yesterday’s losses.

The index jumped 1.44% (or nearly 150 points) today to 10,492.50, which marks its fourth closing high in the past five days.

With coronavirus cases still on the rise, the FAANGs were all positive in the session. The biggest winners were Amazon (AMZN, +2.7%), Apple (AAPL, +2.33%) and Netflix (NFLX, +1.95%).

Meanwhile, the S&P rose 0.78% to 3169.94 and the Dow improved 0.68% (or around 177 points) to 26,067.28.

Stocks took a wild ride on Wednesday by losing the morning’s gains before a late rally helped the indices close at their highs of the session.

We’re coming off our first bump in the road for July. Stocks took a step back on Tuesday amid worries that rising cases will frustrate the country’s plans to reopen.

As a result, the NASDAQ and S&P snapped their five-day winning streaks, while the former index also saw its three straight days of closing highs come to an end.

But it didn’t last long.

Even stocks that are tied to the economy reopening participated in the late rally today. For example, cruise companies like Royal Caribbean (RCL) and Carnival (CCL) each advanced by more than 5%.

The big story continues to be the market’s resilience amid rising cases. In some ways, stocks may be more optimistic now than they were a few weeks back. It’s easy to rise when the curve is flattening, but it's tougher to advance when the reopenings are in jeopardy.

Hopefully, we’ll be rewarded for this strength in the days ahead with some good headlines on the spread, vaccines and/or the economic recovery. 

Today's Portfolio Highlights:

Options Trader: Housing starts are up, interest rates are down and mortgage demand is at an 11-year high. Given these characteristics, Kevin added exposure to the homebuilder space with a few bull call spreads in Lennar (LEN). Specifically, he bought to open 4 November 67.50 calls AND sold to open 4 November 72.50 calls. If LEN can climb about 10.5% from here and get to $72.50 by the mid-November expiration, then the portfolio will gain 150%. Read the complete commentary for more on today’s moves. 

Counterstrike: The hot stocks remained elevated this afternoon even though the market’s morning rally faded. Jeremy thought it was a good time to take profits on a couple of names that were coming into targets. On Wednesday, he sold Teladoc Health (TDOC) for a 22.4% return in under two months and Zscaler (ZS) for a 13.3% gain in less than one month.  

Surprise Trader: The portfolio hitched a ride with the transportation – truck industry on Wednesday by adding Heartland Express (HTLD). This leader in transportation and logistics is reporting sometime around Thursday, July 16th (not confirmed yet), which gives the stock plenty of time to runup into the announcement. It beat by more than 23% last time and has an Earnings ESP of 21.43% for the upcoming report. The editor added HTLD today with a 12.5% allocation. The portfolio also sold Levi Strauss (LEVI). See the full write-up for more. 

Home Run Investor: The portfolio added Chart Industries (GTLS) on Wednesday, which is a leading independent global manufacturer of highly engineered equipment servicing end market applications in energy, industry, life sciences and respiratory healthcare. Rising earnings estimates have made this company a Zacks Rank #2 (Buy). Brian also likes its good valuation and “decent” growth. Read the full write-up for a lot more on today’s addition.

Until Tomorrow,
Jim Giaquinto

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