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No Swoon, Just Boom

July may have ended with a bit of a swoon on Monday, but the month in general was anything but. Each of the major indices put in gains of approximately 2% or more in July, led by the NASDAQ and its 3.4% jump. The Dow advanced 2.5% and the S&P chimed in with an increase of 1.9%. A big part of this strong month can be attributed to a solid earnings season so far. 

For Monday’s session, the Dow hit another new record with an increase of 0.28% to 21891.1, but its counterparts didn’t come along for the ride. The NASDAQ just didn’t try on Monday as it slipped 0.42% to 6348.1 without any attempt for a rebound, while a late-day dip by the S&P left it lower by 0.07% to 2470.3. In addition to the ongoing earnings season, the rest of this week will also see a lot of economic data as we enter August, including ISM Manufacturing tomorrow, ADP Employment on Wednesday, ISM Services on Thursday and then the all-important Government Employment Situation on Friday. 

You could really feel earnings season at work in the portfolios on Monday. Insider Trader and Options Trader both had double-digit winners as they sold shares ahead of upcoming reports. Zacks Counterstrike decided to pick on the biggest guy in the yard when it shorted Amazon, while also buying another position. There were also new additions by TAZR and Stocks Under $10, as well as six swaps for Black Box Trader. It was a very busy start to a very busy week, so let’s get to all the moves... 

Today's Portfolio Highlights: 

Insider Trader: Tracey is back from vacation and already making money. She sold half of Weight Watchers (WTW) on Monday as we draw closer to its earnings announcement later this week. No matter how good the report is, she’s concerned that the stock has run-up too far and is poised for a big sell-off. Tracey is holding onto half of the position on the off chance that the guidance defeats the bears, but for today she’ll take a nice 31%+ return in just about 2 months to capitalize on this “amazing run”. 

Zacks Counterstrike: It’s not easy being short in the market right now, but Jeremy found a good candidate to help the portfolio fight all the complacency out there. It just so happens that the new short is none other than Amazon (AMZN). The editor has a lot of good reasons for this move, including its recent EPS miss and its plunge to Zacks Rank #5 (Strong Sell) status due to lower earnings estimates. So he shorted AMZN on Monday with a 10% allocation. Read the full write up for all FOUR reasons why Jeremy thinks this is a good short. 

In more of a traditional “Counterstrike” move, Jeremy also added the well-known weight management company Nutrisystem (NTRI). Last week the company beat the Zacks Consensus Estimate for the second quarter by 31% for its 18th beat in 19 quarters. It even raised its guidance. And yet, high frequency traders pulled the stock down by 20%. The editor (along with long-time members of the portfolio) knows what's happening here, and so he added NTRI with an 11% allocation. 

TAZR Trader: We all know that there are victims of earnings season...and that these same victims can be big winners down the road for our portfolios. Kevin sees such a situation with Wix.com (WIX), a provider of cloud-based website services that had a mixed earnings report last week. For some reason, the market felt justified in tearing the stock down by nearly 20% in the aftermath. The editor believes that the plunge was completely unwarranted, since several analysts say the company’s business growth is entirely on track. Kevin decided to add a 5% allocation in WIX to take advantage of its eventual rebound, and would consider adding more under $60. The full write-up has more specifics. 

Black Box Trader: It was a big day for the portfolio as more than half of the positions were swapped out, and most of the stocks that left were profitable. The service got out of: 

• The Progressive Corp (PGR, +5.5%)
• CBRE Group (CBG, +3%)
• UnitedHealth Corp (UNH, +2.6%)
• CarMax (KMX, +2.5%)
• BGC Partners (BGCP)
• Century Aluminum Co (CENX) 


The new buys that replaced these names are: 

• Cigna Corp (CI)
• CNH Industrial (CNHI)
• Deere & Co (DE)
• Live Nation Entertainment (LYV)
• Terex Corp (TEX)
• Vishay Intertechnology (VSH) 


Read the Black Box Trader's Guide to learn more about this computer-driven service designed to take the emotion out of investing. 

Zacks Confidential: Don’t think of this as a “buy low, sell high”-type of market. Instead, you would probably make a lot more money if you thought of it as a “buy high, sell higher” type. Here at Zacks, we are always hearing concerns about the market tumbling after its epic run. So in this week’s Zacks Confidential, Steve paved the way for Dave Bartosiak to explain (bluntly) why you shouldn’t be afraid of new highs. Read his article and get three recommendations by clicking: Shut Up and Buy the Highs. 

Options Trader: The portfolio’s Oct 65.00 calls in Amdocs (DOX) have been very lucrative, and Kevin expects another good report on Wednesday. But you can never be sure what earnings season has in store, so he wants to reduce the risk profile before the big day. The editor sold to close the 2 Oct. 65.00 Calls for a 62% profit and then bought to open 2 October 67.50 calls in DOX. This move lowers the risk by 45% yet leaves the portfolio with ample opportunity to profit in the event of a strong report. Get more specifics in the complete commentary. 

Stocks Under $10: On Friday, Brian Bolan sold four names and took some profits, and today he’s filling in one of the open spots. The editor picked up Opko Health (OPK), a multinational biopharma and diagnostics company that seeks to establish industry-leading positions in rapidly-growing markets. The move will add some depth to the portfolio’s current healthcare holdings. Brian likes that the stock has been cut in half and is close to its 52-week low, since it is set to more than double once things turn around. The full write-up has more on this new addition, and make sure to get ready for another buy tomorrow. 

All the Best,
Jim Giaquinto

 

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