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Thanks Apple! Dow Reaches 22,000

The August episode of the Zacks Ultimate Strategy Session will be available for viewing no later than Wednesday, August 9th. Steve Reitmeister, Sheraz Mian, Dr. John Blank, David Bartosiak and Eric Dutram will cover the investment landscape from most every angle in this popular event. 

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It all worked out the way we hoped. Apple’s strong quarterly report did indeed provide the final boost to get the Dow past 22,000. The index has now put together seven straight sessions on positive ground with today’s increase of 0.24% to 22,016.2. 

The other two major indices didn’t come along for the ride, and it looked like there would be a major disparity between the Dow and its counterparts. However, the S&P spent most of the day recovering from the morning malaise and finished with an advance of 0.05% to 2477.6. The NASDAQ followed the same trajectory but couldn’t quite punch through to the green side, though it was only off 0.29 of a point to 6362.7 (which means it was breakeven on a percentage basis). 

But if you want to be picky, this would have been a very different session without Apple’s help. Several sectors were weak on Wednesday, including tech. The editors didn’t see any reasons for the slide, but will be watching the market closely as the Apple news subsides. 

“Just one of those itchy trigger finger kinds of days. No news to make it happen,” said Steve in RTA. “Just remember that a market making new highs will have moments of doubt before making the next move higher. Yet I have little doubt that new record highs at 2500 will be in hand shortly with small and midcaps participating nicely in the gains.” 

In other news, the ADP employment report was pretty solid at 178,000 jobs added for July, while also revising last month’s number upward to 191,000. Of course, the Government Employment Situation report comes on Friday. In the portfolios, TAZR added Apple as Kevin believes this company has a lot further to climb. He also halved two positions and got double-digit returns for each. And Momentum Trader finally added a solar company. Read more below: 

Today's Portfolio Highlights: 

TAZR Trader: If you doubt Apple (AAPL), then you do so at your own financial detriment. Yesterday’s quarterly report after the bell was just the latest example as the company laid waste to expectations on both the top and bottom lines. Kevin stated last night that he wants to be a buyer around $155 as he expects it to climb to around $170 in the next several months. So today, he added a 7% position in AAPL, and you can bet he’ll add more on any dips. Read the full write up for more on this move, including links to a video and a podcast with Kevin. 

The editor also took some profits on a couple of tech names today as the space is having a rough session. FireEye (FEYE) reported a solid quarter but the market’s reaction has been disappointing, so Kevin sold half of the position for a 27.4% return. Also, Lam Research (LRCX) has pulled back sharply from the $170 level twice now, so this looks like a good place to halve the position for an 18.4% profit just in case it continues to slip lower. 

Momentum Trader: Dave had been reluctant to add solar stocks to the portfolio, but he feels that First Solar (FSLR) has shown enough strength to warrant a 12.5% allocation. Shares of the stock were down today but had been breaking out. The editor feels that the earnings gap is about to be challenged...and supported. Read the complete commentary for more on this new addition. 

Surprise Trader: "U.S. stocks were breakeven in Wednesday trading, as consumer names and health care players dragged down the major indexes. However, Apple, the largest company by market cap, had a great day and helped to counteract much of the weakness in several sectors, and especially broad-based slumps in the rest of tech.

"It was another sluggish day of trading for the FANG group, but a great performance from Apple really dulled the impact for the overall tech sector. Perhaps some of the shine is starting to fade from the FANG group and go elsewhere in the tech market? Several of the top tech players—and not just FANGs but companies like ATVI (heading into earnings at least) too—have sputtered in recent weeks, so perhaps there is some industry rotation taking place.  

"While it might not be that dramatic just yet, it is clear at least that Apple’s recent malaise is at an end, and especially if recent guidance numbers turn into reality in the near future. And given Apple’s role as a giant and influence on retail investors, this is definitely a good thing for near term sentiment." -- Eric Dutram 

Until Tomorrow,
Jim Giaquinto

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