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Couldn't Stay Away Any Longer

The editors here at Zacks believe that the bull market is alive and well. So with that in mind, you just knew that this two-week, 2% drop in stocks wasn’t going to be unanswered for long. Investors came rushing back to the market on Tuesday with good old tech leading the way. 

“You gotta love the short-term memory of the market. One day we’re hurling towards certain doom and the next we’re in sight of the highs again,” said Dave in Momentum Trader. “I’m not saying we’re out of the woods by any stretch of the imagination, but I’m amazed by the calm that’s returned so quickly.” 

The market has been concerned with some BIG things over the past two weeks, including war with North Korea and civil unrest here at home. Thankfully, things have cooled off a bit for now, so the strength of this market was able to shine through today. As a result, the S&P climbed 0.99% to 2452.5, the Dow jumped 0.90% to 21899.9 and the NASDAQ surged 1.36% to 6297.5. 

In the portfolios, TAZR Trader added a stock and Short List swapped out two positions. Learn more in the highlights section below, along with some analysis. 

Today's Portfolio Highlights: 

TAZR Trader: Kevin thinks that the bears have Applied Optoelectronics (AAOI) mostly wrong. The editor recently read a research report that pokes holes in some of the concerns for this company. Briefly, the transition to 100G optical networking equipment will likely be a lot quicker than most expect. Also, demand for optical equipment will remain strong for the foreseeable future, which mitigates some of the concern for having a single customer as nearly 50% of sales. By the way, that single customer is Amazon! Kevin thinks there’s an opportunity here so he bought AAOI on Tuesday with a 7% allocation. Learn about the big funds that are buying AAOI in the complete commentary. 

Zacks Short List: This week's adjustment included only two swaps. Firstly, the portfolio shortcovered Charter Communications (CHTR) and National Oilwell (NOV). It replaced these names by buying Alere (ALR) and GoDaddy (GDDY). Learn more about this emotion-free portfolio that takes advantage of falling and volatile markets by reading the Short List Trader Guide. 

Options Trader: "Great day in the markets today with rallies in all of the major indexes with the Dow up 0.90%, the S&P up 0.99%, the Russell 2000 Small-Cap Index up 1.06%, and the Nasdaq up 1.36%. 

"The oversold conditions from last week, coupled with a successful test of support this week, and President Trump hitting all the right tones in yesterday's speech, sent the market soaring. 

"And of course, that was all amidst a solid economic and corporate earnings backdrop, which continues to support this market and projects even more gains to come." -- Kevin Matras 

All the Best,

Jim Giaquinto 

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