Late Selloff Pulls Stocks Lower

That 3,000 mark on the S&P didn’t last long as the major indices each dipped lower in the afternoon and finished Tuesday’s session in the red.

The NASDAQ saw the steepest pullback with a loss of 0.72% (or more than 58 points) to 8104.3.

The S&P closed over 3,000 for the first time in over a month yesterday, but its quickly back below that mark after sliding 0.36% to 2995.99. However, it’s still only about 1% away from new highs.

These indices had each gained for the past three days, so it was time to take a breather amid another erratic earnings season.

After plunging about 10% over the previous two days, shares of Boeing advanced 1.8% on Tuesday. Therefore, it wasn’t weighing down the Dow anymore.  

However, the index was still off 0.15% (or nearly 40 points) to 26788.10, though it was up more than 100 points earlier in the day.

The market has been thrilled with earnings season being better than expected so far. But we know that this is a volatile time, and rougher reports from the likes of McDonalds and Travelers took a bite out of stocks today.

However, it should be noted that consumer staple Procter & Gamble rose 2.6% on a strong report.

The market may have also reacted negatively to another setback for Brexit, which may not be as close to being resolved as we had hoped the past few days.     

But the fun thing about earnings season is that every day is an adventure. The rest of this week will see reports from Amazon, Microsoft, Caterpillar, Tesla, 3M, Intel, Visa, and many more.  

More than 80% of S&P stocks that reported as of this morning have beaten earnings expectations. That’s above the average of around 77% over the past three years.

If that continues, then the index should be back above 3,000 in no time… and possibly at new highs!

Today's Portfolio Highlights:

Stocks Under $10: Want to hear a bunch a buzzwords all in one place? PowerFleet (PWFL) (formerly known as I.D. Systems) provides subscription-based wireless IoT and M2M solutions to the “super hot” transportation industry. More specifically, it secures, controls, tracks and manages enterprise assets like industrial trucks, tractor trailers containers cargo and truck fleets. Brian likes what this company does and appreciates that it’s a small yet profitable stock. He added it on Tuesday and looks for it to be in the double digits by early 2020. By the way, he also sold Cross Country Healthcare (CCRN) for an impressive 20.9% gain in about four months. Read the complete commentary for a lot more on today’s moves.

Surprise Trader: It’s almost time for Dril-Quip (DRQ) to report. Unfortunately, we don’t know exactly when because the company doesn’t give an official announcement, but Dave notes that the report usually comes on or around the 25th. What we DO know, however, is that this Zacks Rank #2 (Buy) offshore drilling and production equipment company has a positive Earnings ESP of 37.5% for the soon-to-be-released quarter. Last time, DRQ’s surprise doubled expectations. The stock was added on Tuesday with a 12.5% allocation. The editor also decided to sell United Airlines (UAL) ahead of the Hawaiian Holdings report, bringing a 3.6% profit in less than two weeks. Read the full write-up for more.

TAZR Trader: It appears the software bubble deflation has resumed, which will be a great buying opportunity down the road. However, Kevin noticed a stock that may have exhausted most of its decline after slipping 30% from all-time highs. The company is Elastic (ESTC), a Zacks Rank #1 (Strong Buy) big-data analytics provider that helps companies search and use all kinds of data. Already partnering with Microsoft Azure, today they announced an enhanced collaboration in Google Cloud Platform. ESTC trades at just 10X next year’s sales of $550 million with 50% sales growth into 2020. The editor decided to start a smaller 5% allocation in ESTC under $70 this week. Read the full write-up for more.

Large-Cap Trader: By far and away, this portfolio had the best performing stock of the day as Biogen (BIIB) soared 26.1%. The biotech company plans to apply for approval for an experimental Alzheimer’s drug that could be the first to treat the disease. In fact, this portfolio had three of the Top five performers of the day with Centene (CNC) up 6.5% after an earnings beat and National Steel Company (SID) rising 3.1%.

Zacks Short List: The portfolio cashed in a double-digit winner on Tuesday as part of three swaps in this week's adjustment. The short-covered positions include:

• ServiceNow (NOW, +19.3%)
• Grocery Outlet Holding (GO, +5.2%)
• Hess Corp. (HES)

The new buys that replaced these names are:

• Gardner Denver Holdings (GDI)
• QUALCOMM (QCOM)
• Tesla (TSLA)  

Learn more about this emotion-free portfolio that takes advantage of falling and volatile markets by reading the Short List Trader Guide.

All the Best,
Jim Giaquinto

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