Morning Rally Bends but Doesn't Break

Remember, the December episode of the Zacks Ultimate Strategy Session is now available for viewing! Don’t miss your chance to hear:

• Brian Bolan and Jeremy Mullin Agree to Disagree on whether it’s time to buy FANG stocks again
• Sheraz Mian answers your questions in Zacks Mailbag
• Sheraz and Brian choose one portfolio to give feedback for improvement
• Market conditions from both fundamental and technical views
• The full list of top-performing stocks over the past 30 days
• New stocks added to the ZU portfolio
• And much more

Simply log on to Zacks.com and view the December episode here. And please let us know what you think of these monthly episodes. Email all feedback to [email protected].


The major indices spent the whole session in positive territory on Wednesday, but we still saw a healthy dose of volatility as stocks came off their highs by the closing bell.

The NASDAQ was again the best performer with a rise of 0.95% to 7098.31, marking its third straight day in the green as tech has performed well of late. All the FAANGs were up today with Netflix (+3.6%) out front.

The Dow advanced 0.64% to 24,527.27 and the S&P was up 0.54% to 2651.07.

The market was strongest right at the open due to some positive trade news, including a Wall Street Journal report stating that China might allow greater access to foreign companies. Also, President Trump is open to the idea of intervening in the Huawei CFO situation, and said he would not raise tariffs on China until he was sure about a trade deal.

Investors are hungry for any positive movement on the trade front, so stocks soared at the open. But while these stories may be encouraging, there’s still no real movement toward a lasting resolution between the two countries. So the morning euphoria waned as the day progressed. The Dow was up by more than 450 points at its best on Wednesday, but closed with an advance of only 157 points.

No one knows what Thursday or Friday will bring. It’s shaping up to be a much better week than last, but the market could look very different from moment to moment and from day to day. Let’s hope stocks can stay pointed in the right direction until we get some actual news on trade or from the Fed.

Top Portfolio Highlights:

Momentum Trader: Its been a tough two-and-a-half months for the market… but not for Intec Pharma (NTEC)! Shares of this biopharma company have doubled to just under $8 since September 18 on increasing volume. Furthermore, this Zacks Rank #2 (Buy) is part of the medical – biomedical & genetics space, which is in the Top 26% of the Zacks Industry Rank. Dave would be interested in this action in any environment, but is all the more impressed that it came during a time of adversity in the market. He added NTEC on Wednesday with a 12.5% allocation. Read the full write-up for more on this buy.

Stocks Under $10: For his latest addition to the portfolio, Brian Bolan wanted to steer clear of tech, finance and biotech. In fact, he went really far from those areas by buying Great Lakes Dredge & Dock Corp. (GLDD), which is the largest provider of dredging services in the country. More specifically, it helps to maintain and deepen shipping channels, reclaim land from the ocean, and renourish storm-damaged coastline. Earnings estimates for GLDD have soared since reporting a strong quarter, which included a positive surprise of 500%! It has now beaten for four straight quarters and has an average surprise of 157% (thanks in large part to that impressive beat last quarter). But Brian really liked that GLDD was largely insulated from the recent sell-off, which means it should look even better when the market recovers. Read the full write-up for more.

Surprise Trader: Before the bell tomorrow, telecom equipment provider Ciena (CIEN) is scheduled to report. This Zacks Rank #2 (Buy) beat by more than 37% last time and has a positive Earnings ESP for the upcoming announcement. Dave thinks the stock is set for another solid performance, especially when considering that earnings growth next quarter is expected to soar 73% after growth of just 6.5% this quarter. The editor added CIEN on Wednesday with a 12.5% allocation. The full commentary has more on this new addition.

All the Best,
Jim Giaquinto