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A Seasonal Stress Test

The editors are in agreement that we’ve had a decent-to-good start to this earnings season. However, business is about to pick up in a big way this week with more than 1,000 companies reporting. It will be a great test to see if this season has what it takes to launch the market on its next leg higher. 

“(A)s I’ve mentioned before, over the last 8 ½ years, the average gain for the S&P during earnings season has been more than 2%. And I’m expecting more of the same again this year,” said Kevin Matras in Options Trader

This week began with a rather lackluster start, except for the good old NASDAQ. The index’s 10-session winning streak may have been snapped on Friday, but today it put together its 11th rise in 12 days with a gain of 0.36% to 6410.8. The other two indices tried to overcome early weakness, but both came up short. The S&P was down 0.11% today to 2469.9 and the Dow declined 0.31% to 21,513.2. 

The portfolios may not have made many moves today, but that will change as the reports start rolling in. There are other events this week that could have an impact as well, including an FOMC rate decision on Wednesday and a GDP report on Friday. For right now though, take a look at the highlights section below for a couple of swaps in Black Box Trader, a big winner for Momentum Trader and an area with exceptional growth potential that you may never have considered in Zacks Confidential

Today's Portfolio Highlights: 

Black Box Trader: This week’s adjustment involved two swaps. The portfolio got out of Vishay Intertechnology (VSH, +2.7%) and Deere & Co. (DE). The new buys that replaced those sells were Boeing Co. (BA) and Century Aluminum (CENX). Read the Black Box Trader’s Guide to learn more about this computer-driven service designed to take the emotion out of investing. 

Momentum Trader: Usually, Dave sells ahead of earnings reports, but he made an exception with PetMed Express (PETS) given the small exposure. And it’s a good thing he did! The pet pharmacy company recently beat on both the top and bottom lines in its fiscal first quarter, sending the stock higher by nearly 18.3% on Monday. Therefore, MT had the best-performing stock from all the portfolios today. 

Zacks Confidential: One area that provides investors with exceptional growth potential is...genome editing. Genome editing? If you’ve never heard of it, then you should really read this week’s Zacks Confidential. Not only does this science hold limitless possibilities to treat and maybe even cure diseases, but it also holds plenty of promise for investors. As editor of Healthcare Innovators, Kevin Cook is uniquely qualified to talk about this innovation, which is why Steve handed him the keys to ZC. Read his detailed analysis of this space and get four ideas with long-term promise by clicking: Gene Editing: How to Invest. 

Large-Cap Trader: "In the Global Week Ahead, pay attention to three U.S. catalysts.  

"First off, this will be the biggest earnings week of the Q2 season. There’s plenty of room for a lousy report. But there are so many, it may get washed out quickly.

"Second, on Wednesday, the latest FOMC statement hits the tape. Watch out for market-moving comments about recent weak inflation data.

"Third and finally, traders close out the week with a Friday 1st estimate of U.S. Q2 GDP growth. If Q2 doesn’t beat up on Q1, that would be considered a stumble." -- John Blank 

All the Best,
Jim Giaquinto


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