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All Together Now!

Each of the Big 3 indices have reached all-time highs over the past couple of weeks, but today they finally did it at the same time. The Dow was yesterday’s straggler and was pressured today by a bad session from IBM, but it managed to persevere and gain 0.31% to an all-time high of 21,640.8. (Remember , the Dow accomplished this feat for three days in a row last week.) 

The other two major indices put together their second consecutive day with new records. The S&P continued its march to 2500 with an advance of 0.54% to 2473.8. However, the NASDAQ is still the most interesting story. Having survived a “tech wreck” that really concerned the market, it has now completed its ninth session on positive ground with a rise of 0.64% to another peak of 6385. 

“(T)he message to all investors is that all is well with corporate earnings,” said Steve in RTA. “That has me waving a ‘2500 or Bust!’ banner for the market before the calendar flips to August.” 

As expected, activity is picking up in the portfolios thanks to earnings season. Surprise Trader has now added six stocks this week after buying two more today, while Dave bought a position for Momentum Trader and Home Run Investor each (the former portfolio also sold a stock for a nice return). On the big-profit front, Reitmeister Trading Alert is always careful about the unpredictability of earnings season, so Steve sold two names that are soon to report and banked double-digit gains for each. See below for more... 

Today's Portfolio Highlights: 

Reitmeister Trading Alert: Since earnings season is so unpredictable, it’s never a bad idea to take some profits off the table in the runup to the big day. Steve trimmed two positions on Wednesday that are scheduled to report next week…and both were double digit winners. Avery Dennison (AVY) is just too hot for comfort heading into earnings, and MKS Instruments (MKSI) is shedding some extra shares given the volatility in semiconductors. These shares of AVY and MKSI bring solid gains of 16.6% and 16.9%, respectively, to the portfolio, which will keep allocations of 6.8% and 6.3%. 

Surprise Trader: The portfolio adds positions quickly during earnings season. Eric bought four names on Monday (and already banked a double-digit profit from selling a third of one), and now has picked up two more today. The new buys are: 

• Caterpillar (CAT) has an Earnings ESP approaching 5% for the quarter being reported on July 25th (Tuesday). Earnings estimates are in an “incredible” upward trend right now, and its part of a space in the top 30% of the Zacks Industry Rank. 

• Dover (DOV) beat expectations by more than 12% last time, and its Earnings ESP of 4% suggests that tomorrow’s report will be positive as well. As with CAT, earnings estimates for DOV are impressive with no analysts cutting expectations. 

Both of these companies are Zacks Rank #2s (Buys). The editor is adding them with 12.5% allocations each. The complete commentary has more. 

Momentum Trader: Though basic materials can be risky, Dave is betting that dollar weakness will increase the prices for things like steel. Therefore, the editor bought Ternium (TX) on Wednesday with a 12.5% allocation. In addition to the weak dollar, this stock is also enjoying “fierce” earnings and price momentum right now, which is breaking this Zacks Rank #1 (Strong Buy) stock out to new highs. To make room for TX, Dave sold Penn Gaming (PENN) for a solid return of 10.4%. Get more specifics in the full write-up. 

Home Run Investor: One of the strongest spaces in the Zacks Industry Rank right now is semiconductor – discretes, which is in the top 3% with the 7th spot out of 256. The newest addition to Home Run Investor is from this space. Vishay Intertechnology (VSH) is a Zacks Rank #1 (Strong Buy) that is expected to grow earnings by more than 40% over the next couple of years. Dave was especially impressed with its price and consensus chart, which shows solid quarter-over-quarter EPS growth. The editor thinks this company could continue making new highs. The complete commentary has more on this new addition and a look at its chart. 

All the Best,
Jim Giaquinto

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