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Pre-Deal Jitters Spoil Intraday Records

The major indices reached intraday records this afternoon, but couldn’t hold onto the milestones as trade jitters resurfaced on the eve of the Phase 1 signing.

As far as we know right now, the deal is all set to be finalized tomorrow. Vice Premier Liu He and a Chinese delegation are in Washington and will meet with President Trump to sign the first real agreement in this two-year long trade conflict.

Most investors won’t be able to relax until it’s all done, so they weren’t pleased with news reports that U.S. tariffs could stay on Chinese goods through the 2020 election. Stocks gave back midday gains in response.

"This wasn’t really big news; in fact, this was something that was agreed upon. So, to sell on the headline was rather silly," said Jeremy Mullin in Counterstrike.

"However, with a market that is grinding up on low volume, when big algo orders hit the market, the market is forced lower in a way until it finds a suitable number of buyers."

The Dow managed to advance 0.11% (or a little more than 32 points) to 28,939.67, though it did momentary cross over the 29,000-mark once again. 

The NASDAQ slipped 0.24% (or about 22 points) to 9251.33 and the S&P was off 0.15% to 3283.15. These indices both reached new all-time highs just yesterday.

The Dow received help on Tuesday from a strong start to earnings season, especially from JPMorgan. The bank advanced 1.17% on Tuesday after beating on both the top and bottom lines.

Citigroup also had a strong report and advanced 1.56%, though Wells Fargo disappointed and plunged more than 5%.

More financial heavy hitters are due tomorrow, including Bank of America, Goldman Sachs, PNC Financial and more.

Earnings season and a trade deal on the same day! If everything goes according to plan, then we could have a rollicking start to 2020…

Today's Portfolio Highlights:

Stocks Under $10:
Shares of Sportsman’s Warehouse (SPWH) dipped after the outdoor sporting goods retailer guided lower. The pullback began to eat into the portfolio’s profits in this position, so Brian decided to sell it on Tuesday while he could still bank a nice 24.7% return. Since the portfolio is fully invested, the editor wasted no time in replacing the name by adding Avid Technology (AVID). This Zacks Rank #2 (Buy) develops, markets, sells and supports a wide range of software and systems for creating and manipulating digital media content. Brian thinks the chart looks really good since November and believes the stock is headed for double digits in 2020. Read the full write-up for more on the addition of AVID and all of today’s moves.

Surprise Trader:
Its finally earnings season again with several big banks unofficially kicking things off today! Dave plans to add three to four names this week, and he began on Tuesday with Pinnacle Financial Partners (PNFP). This marks the editor’s second straight regional bank from the Southeast (Hancock Whitney was added on Friday). The stock has a “dramatic” streak of earnings surprises and goes into next Tuesday’s report with a positive Earnings ESP of 1.18%. PNFP was added with a 12.5% allocation. Read the full write-up for more.  

Insider Trader: The four-week run on the small E&Ps may be coming to an end, so Tracey decided to sell half of Matador (MTDR) on Tuesday for an 11.7% return in one month. She’s holding onto the other half just in case the recent softness is just a pause, though crude will have to get over $60 for another leg higher. The editor also sold Simply Good Foods (SMPL) for a slight loss. Meanwhile, Tracey used the portfolio’s ample cash to add (CRM) with a 10% allocation. Though this CRM software company is trading at new highs, a director recently bought 1100 shares after sitting out 2019 completely. She used the 10b5-1 plan, which allows insiders to buy or sell at designated times no matter what’s happening at the company. In other words, no quiet period! Read the complete commentary for a lot more on today’s moves.

Zacks Short List: In this week's adjustment, the portfolio short-covered Schlumberger (SLB, +3.4%) and iRobot (IRBT). These positions were immediately replaced with the additions of Shake Shack (SHAK) and Weyerhaeuser (WY). Learn more about this emotion-free portfolio that takes advantage of falling and volatile markets by reading the Short List Trader Guide.

Have a Good Evening,
Jim Giaquinto

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