The Market Loved Powell's Speech!

Without a doubt, Jerome Powell is the most popular guy on Wall Street today. The Fed Chair’s speech this afternoon in New York was just what the market needed, as his dovish tone led to one of the best rallies we’ve seen all year.

The NASDAQ surged just under 3% (or about 208 points) to 7291.59, while the Dow jumped 2.5% (or around 617 points) to 25,366.43. The S&P rose 2.3% to 2743.79.

The major indices have now finished in the green each day so far this week. The Dow has surged over 1000 points in these past three sessions. More importantly, several of the editors believe that Powell’s comments and the subsequent rally raise the odds that we have put in the lows for the year (excluding any negative surprises).

The Chairman said that interest rates are “just below” neutral, which means that they are neither speeding up nor slowing down the economy’s growth. That’s quite the change from his previous statement that rates were a “long way to neutral”. A December rate hike remains nearly certain, but such comments have opened the possibility that the Fed may cancel further rate hikes in 2019 if that's what the data suggests.

And just like that, investors are feeling a whole lot better about one of the two big issues that this consequential week brings. The market wanted to hear that the Fed wasn’t hellbent on at least three more hikes in 2019. Check! Now all eyes move to Argentina where President Trump and China's President Xi will be meeting at the G-20 to discuss the trade issues between the world’s two largest economies.

If the market gets its way again, the two leaders will have a fantastic meeting that culminates in a big hug and the end to all these trade conflicts. But that’s not likely to happen. The market certainly isn’t expecting it. However, even if there aren’t any breakthroughs, it could still be a positive meeting that helps stocks begin the final month of the year on a high note. After all the tough times in this correction, we’re due for a few positive surprises...

Today's Portfolio Highlights:

Home Run Investor: The market is looking better after Powell’s speech and the consumer is still strong. Brian Bolan felt that this was a good backdrop to add Logitech (LOGI) on Wednesday, as computer gear will undoubtedly be under plenty of Christmas Trees again this year.. This stock was around $50 before the correction, but then slumped to a 52-week low at about $32. Today, it is bouncing off that level. The editor thinks it can continue rising as we move closer to the holidays. LOGI also has beaten the Zacks Consensus Estimate in the past four quarters with an average beat of nearly 18%. Read the full write-up for more on this new addition.

Momentum Trader: Shares of US Cellular (USM) have broken out to new 52-week highs since its quarterly report, which included a positive surprise of more than 70%. While its always great to see such momentum, it’s all the more impressive that it has taken off "like a rocket ship” during a weak market that’s in a correction. Earnings estimates for the current quarter and the current year have been on the rise recently. Dave likes the momentum he’s seeing in the face of market adversity, so he added USM on Wednesday with a 12.5% allocation. Read the full write-up for more.

Insider Trader: The portfolio is pretty close to full after Tracey bought three names on Wednesday. The new buys and their insider activity include:

• Home Depot (HD) – 3 directors
• Lakeland Bancorp (LBAI) – the CEO and 2 directors
• BOK Financial (BOKF) – the CIO and a director

The editor is allocating 8% of the portfolio to the retail giant HD. She’s allocating a smaller 5% each to LBAI and BOKF because smaller banks like these are going to be more volatile. The portfolio has enough cash after these moves for one more addition moving forward. Get specifics on each of these new buys in the complete commentary.

Technology Innovators: Solar stocks have been hot recently. Brian Bolan has a big winner with Vivint Solar (VSLR) in Stocks Under $10, and now he's looking for some solar exposure for this portfolio. On Wednesday, he picked up Canadian Solar (CSIQ), a Zacks Rank #1 (Strong Buy) solar module producer that posted a positive surprise of more than 100% in its recent quarterly report from November 15. Read the complete commentary for more on CSIQ.

Surprise Trader: It’s been less than a month since the portfolio added car rental staple Hertz Global Holdings (HTZ), and yet Dave sold it today for a nice return of 36.4%. The editor picked up this stock on November 5 right before its quarterly report. It ended up beating the Zacks Consensus Estimate by more than 20% for its second straight double-digit surprise.

Until Tomorrow,
Jim Giaquinto

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