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That Pullback Didn't Last Long

After yesterday’s sharp downturn, the Dow and S&P were back to their winning ways thanks to solid earnings reports and this morning’s budget agreement passed by the House. The latter development is considered a big step toward passing tax cuts, since now it will only need a simple majority to pass the Senate. 

At the closing bell, the Dow was back on positive ground with a gain of 0.31% to 23,400.9 while the S&P gained 0.13% to 2560.4. The NASDAQ was much choppier than its counterparts and ultimately ended lower by 0.11% to 6556.8. But don’t worry about the NASDAQ. Some of the biggest and most influential technology companies reported solid performances after the bell on Thursday, including Amazon, Alphabet and Microsoft. Needless to say, the index should have a positive Friday. 

“Big-time tech earnings tonight should be enough to set the stage for a good day tomorrow. Eventually the time will come for some disappointment as these retailers come up. For the time being let’s enjoy the move and hope we get some tax reform timeline so the market can sustain its pace,” said Dave in Momentum Trader and Surprise Trader. 

Technology Innovators was back on Thursday with a new buy for a company that just reported a beat-and-raise quarter. Income Investor made its second buy in two days, but first it sold a name for a more than 70% profit. Finally, Momentum Trader got back into the oil space with its own addition. Read the highlights section below for a lot more on these moves. 

Today's Portfolio Highlights:

Technology Innovators: At the moment, Teradyne (TER) is a Zacks Rank #3 (Hold), but Brian Bolan expects that an upgrade is right around the corner. The semiconductor and component testing company just reported a beat and raise quarter, which should push its Zacks Rank higher any minute now. In addition to better-than-expected earnings and revenue, TER guided revenues for next quarter to between $420 million and $450 million. The consensus at present is only calling for $365 million, so that's a huge beat. The stock seems ready to ride higher, and Brian wants a seat. He bought TER for the portfolio on Thursday. Get a lot more detail on this new pick in the complete commentary. 

Income Investor: Brian Hamilton is really hitting the ground running as this portfolio’s new editor. On Thursday, he made two more moves, including the sale of Dr. Pepper Snapple Group (DPS). The company missed earnings and revenue expectations in its recent quarterly report, and has slipped to a Zacks Rank #4 (Sell). These are two things Brian doesn’t want in the portfolio, so it was time to sell DPS and bank a nice 73.2% return. 

But that’s not all. For the second day in a row, the portfolio also bought a position…and this one is a household name as well. McDonalds (MCD) is a Zacks Rank #2 (Buy) that’s been making big gains internationally of late. Same-store sales in China, Japan, Europe, Canada and here in the U.S. have all been solid. In fact, sales have beaten expectations in four of the past five years. MCD is also focused on long-term profitable growth through its “Velocity Growth Plan”. In addition to all this, the stock is a “dividend aristocrat” that currently has an annual dividend yield of 2.47%. Get more specifics on today’s moves in the complete commentary. 

Momentum Trader: Dave has been wary about getting back into oil stocks, but he finally made a move on Thursday with a 12.5% allocation in Ecopetrol (EC). This Zacks Rank #1 (Strong Buy) is a petroleum company based in Columbia. The editor really likes EC’s price, consensus and EPS surprise chart, which shows its turnaround in earnings expectations. Take a look at the chart in the complete commentary.

Value Investor: Did you hear the news? Apparently, CVS Health has made an offer to acquire Aetna (AET) in what would be a huge merger between one of the country’s largest pharmacy operators with one of its largest health insurers. A deal is far from final, but the scuttlebutt was enough to send AET shares soaring by 11.54% today. That surge gave Value Investor the best performing stock among all the portfolios on Thursday. By the way, AET was already the best-performing stock in the portfolio, having gained approximately 150% since its addition. 

Options Trader: "In other news, we saw plenty of bellwether stocks produce stellar earnings today with a diverse array of companies from Ford to Twitter to Comcast to UPS, beating their estimates. 

"Then after the close, we got several of the big tech companies to keep that momentum going with Alphabet (Google’s parent company), Amazon, and Microsoft all beating their estimates as well. That should help lead to another up day tomorrow, and another up week, making it seven weeks in a row! 

"I don’t want to sound like a broken record, but we are in the midst of an historic bull market." -- Kevin Matras 

Until Tomorrow, 
Jim Giaquinto

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