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Tech Takes the Lead...but for How Long?

The July episode of the Zacks Ultimate Strategy Session will be available for viewing next Wednesday, July 12th. Steve Reitmeister, Kevin Cook, Sheraz Mian, Tracey Ryniec and Brian Bolan will cover the investment landscape from most every angle in this "must-see-TV" event. 

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• Tracey and Brian Agree to Disagree on Value versus Growth 
• Steve's answers to your questions in Reity's Mailbag 
• Tips for improving your portfolio 
• And much more 

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The beleaguered NASDAQ has been getting the lion’s share of the attention recently since technology was SO important to the strong first half. Therefore, the big news on Wednesday was the index’s solid performance following its weak start to the second half on Monday. Today, it led the Big 3 indices with a gain of 0.67% to 6150.9. 

“The market is in a very interesting spot. If the NASDAQ just saw a bottom before new highs, watch out! The market is about to rip higher. However, if we see this morning’s lows again, the NASDAQ will continue to weaken,” said Jeremy in Counterstrike, who believes the positive scenario is more likely. 

The Dow was slightly lower on Wednesday by 0.01% to 21,478.2, while the S&P rose 0.15% to 2432.5. The indices will have a lot to watch the rest of this week, as we're set to receive ADP Employment and ISM Services tomorrow and then the Government Employment Situation report on Friday. 

The portfolios got right back to work on Wednesday with Zacks Counterstrike, Options Trader and Short List all adding positions in the session. Meanwhile, the Momentum Trader offered some analysis on the NASDAQ and where it could move from here. Give it all a look below: 

Today's Portfolio Highlights: 

Zacks Counterstrike: Shares of Regeneron Pharmaceuticals (REGN) broke out in mid-June, but those pesky high-frequency traders have recently pulled it back down. Jeremy thinks this is one of the best-performing biotech stocks out there and is especially excited about the Fibonacci long setup in its chart. The editor is confident that the stock will remain strong, so he picked up a 12% allocation in REGN on Wednesday. By the way, the portfolio also sold Luxoft Holding (LXFT) for a more than 7% return. Read the full commentary for more. 

Options Trader: After a six-month long consolidation, iShares Transportation ETF (IYT) has broken out to the upside. Since the transports are looking great right now, Kevin thought this would be a good way to take advantage. Therefore, he added a bull call spread in IYT on Wednesday by buying to open a Dec 175.00 Call AND selling to open a Dec 185.00 Call. If this fund could move just 6.2% from here by mid-December, the spread would generate a gain of more than 150%. Read the full write-up for more. 

Zacks Short List: The portfolio had a pair of swaps for this week’s adjustment, which started with short-covering Cheniere Energy (LNG, +3.2%) and Vertex Pharma (VRTX). The new additions that replaced these names are ConocoPhillips (COP) and Restoration Hardware (RH). Learn more about this emotion-free portfolio that takes advantage of falling and volatile markets by reading the Short List Trader Guide. 

Zacks Confidential: This is now the second-oldest bull market in history! With slowing earnings growth and overpriced stocks, you can’t invest the same way today that you did at the beginning of this epic run more than 8 years ago. John Blank knows how to make money at this very unique time, and Steve has given him free rein to explain how in this week’s Zacks Confidential. Read John’s detailed article and get 3 great Zacks Rank stock picks by clicking: My Late Stage Business Cycle Playbook. 

Momentum Trader: "The best way I can describe the NASDAQ is heavy. Over the last six trading days the NASDAQ has been under serious pressure. Even positive days rarely managed to eclipse the previous day’s high while nearly every day makes a new low. The composite has been flirting with the June lows for the last few days. I’m fairly certain that level is going to break eventually. The next leg down takes us to 6.000 even. Know the recent stop-grabbing that’s been taking place, I’d expect a dip below that level just to make things interesting.

"Buying the dip on the NASDAQ historically has worked out very well. Right now, this short-term consolidation isn’t rewarding bravery in tech. We should bide our time a bit here and wait for the trade develop. Those with long-term time horizons who don’t mind taking short-term drawdowns can load up at these levels as long as they have a little bit of patience. Quick pops are going to be tougher to come by." -- Dave Bartosiak

Have a Great Evening,
Jim Giaquinto

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