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S&P and NASDAQ Begin December with Record Closing Highs

SPECIAL ALERT: The December episode of the Zacks Ultimate Strategy Session will be available for viewing no later than Wednesday, December 9. Kevin Matras, Sheraz Mian, Jeremy Mullin, Tracey Ryniec and Madeleine Johnson will cover the investment landscape from several angles in this popular event.

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▪ Tracey and Madeleine Agree to Disagree on whether Black Friday, when consumers rush to stores to get deals the day after Thanksgiving, is over in 2020 as online shopping takes precedence
▪ Kevin answers your questions in Zacks Mailbag
▪ Sheraz and Jeremy choose one portfolio to give feedback for improvement
▪ And much more

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December has big shoes to fill after last month’s double-digit gains, but it got a good start on Tuesday with a couple major indices jumping by more than 1% and reaching new highs.

The NASDAQ led the way with a rise of 1.28% (or about 156 points) to 12,355.11, while the S&P advanced 1.13% to 3662.45.

Both of these indices closed at record highs on Tuesday after taking a break with yesterday’s slight pullback.

The Dow reached a new closing high a week ago today, which you probably remember was the index’s first time ending above 30,000. It’s also the last time it closed over that mark.

However, it made a new intraday high in the session, which means it was momentarily above 30,100.

The Dow closed with a rise of 0.63% (or about 185 points) to 29,823.92.

The indices just completed an exceptional month with double-digit surges for all. The Dow and NASDAQ each jumped approximately 11.8% in November, while the S&P was up 10.8%.

It was the best monthly performance for the Dow this year, and the second best for the S&P and NASDAQ (after the rebound month of April).

The market continues to rally on the back of some encouraging vaccine news from the likes of Pfizer (PFE), Moderna (MRNA) and AstraZeneca (AZN).

It’s really amazing how far we’ve come in a month. When November began, we were coming off the market’s second straight monthly loss in October amid rising coronavirus cases.

But as December begins, there’s a real feeling in the market that the pandemic is near an end even if cases remain too high for comfort.

However, there’s other stuff happening out there besides vaccine news, whether or not investors pay attention.

For example, the ISM Manufacturing Index came in at 57.5 for November, which was actually below expectations and the previous month. But it remains well above 50 (expansion) and just marked the seventh straight month of growth.

There was also talk of a more than $900 billion, bipartisan stimulus plan, before being rejected by the Senate Majority Leader.

The biggest news outside of vaccines this week will probably be Friday’s Government Employment Situation report. The economy added 638K jobs in the previous reading, which easily beat expectations.

Today's Portfolio Highlights:

Stocks Under $10: With today’s addition of Rayonier Advanced Materials (RYAM), the portfolio is now filled up with a full roster of 15 names. The new buy is a global supplier of cellulose specialties products. In other words, it’s a chemicals name with products that are used for cell phones, computer screens, eyeglasses and medicines. The company beat the Zacks Consensus Estimate in each of the last three quarters with a positive surprise of 421% in the most recent report. Furthermore, rising earnings estimates have made RYAM a Zacks Rank #2 (Buy). Brian believes that topline growth should return “in a big way” next year and appreciates that the margins are “steadily improving”. Read the full write-up for more on this new addition, along with an outline on what to expect from this service heading into 2021. In other news, this portfolio had a top performer today with Diebold Nixdorf (DBD, +10%).

Surprise Trader: It’s not time for a New Year’s resolution just yet, but this portfolio got a head start on Tuesday by “freeing up some space and dropping some weight”. Dave sold half of Ternium (TX) and half of Vericel (VCEL) today for gains of 47.8% and 34.4%, respectively, in just under a month. The editor also sold all of Authohome (ATHM) for a loss after a disappointing reaction to earnings. Now that the portfolio has freed some space and removed some risk, get ready for possibly two more additions later this week. Read the full write-up for more. 

Insider Trader: Not only did Arlo Technologies (ARLO) easily become the top performer on Tuesday by soaring more than 31%, but this smart home technology company has also soared to the #1 spot in the portfolio. That’s quite an ascent for a company that was added less than two weeks ago. Apparently, the surge was due to a set of ARLO’s cameras being sold on Apple’s website under the description “Only at Apple”. Tracey picked up ARLO back on November 20 after a strong third-quarter and a “confidence buy” from the company’s CEO.

Zacks Short Sell List: This week's adjustment included only two swaps. The portfolio short-covered Elanco Animal Health (ELAN, +7.5%) and Ulta Beauty (ULTA, +1.9%), and then filled those positions by adding Aramark (ARMK) and ConocoPhillips (COP). Learn more about this emotion-free portfolio that takes advantage of falling and volatile markets by reading the Short Sell List Trader Guide.

All the Best,
Jim Giaquinto

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