Small Step Back Ahead of Fed, Apple

The S&P kept rising on Tuesday and touched another record high, but couldn’t hold onto the gain through the close as the market awaits tomorrow’s Fed announcement.

The index snapped a four-session winning streak today, but only slipped by 0.08% to 3036.89.

Just yesterday, a new record was reached for the first time since late July. And the S&P remains just a few points away from making history all over again after holding onto most of its recent advances.

The new intraday high is just below 3048.

The Dow followed the same trajectory and ended with a slide of only 0.07% (or around 19 points) to 27,071.46 after flirting with a positive close.

The NASDAQ, though, took much more of a beating than its counterparts on Tuesday. The index never saw the plus side in the session and snapped its own 4-day winning streak with a drop of 0.59% (or around 49 points) to 8276.85.

It was a rough day for tech as Alphabet slipped more than 2% after missing earnings in its quarterly report from yesterday. Also, Apple dipped about 2.3% on the eve of its own report coming after the bell tomorrow.

The market was most likely a bit nervous about Wednesday’s Fed statement, even though its widely expected that we’ll get another rate cut; the third of the year. Nevertheless, the Committee always carries the possibility of surprise, either in their actions or their language.

Assuming there are no shocks from Powell & Friends, the market will be paying close attention to the iPhone maker’s report to see if this better-than-feared earnings season continues.

So tomorrow is shaping up to be a pretty important day. Even though the major indices took a step back on Tuesday, they have retained most of the gains that have led to winning streaks of 4 weeks for the NASDAQ and 3 weeks for the S&P.

If everything keeps going our way (a rate cut, good earnings reports and no trade deal collapses), then we’ll be getting new highs from more than just one index.

Today's Portfolio Highlights:

Stocks Under $10: It’s understandable for a stock to pullback after issuing a soft guidance. But a 40% shellacking? That’s what happened to Quotient Technology (QUOT) in August, and Brian thinks the punishment was too severe. Now this Zacks Rank #2 (Buy) provider of digital promotion and media platforms could be headed back to double digits. The editor likes its valuation, so he added QUOT on Tuesday and plans to have some patience for its recovery. He also sold Energy Recovery (ERII) for a 2.3% return to keep the portfolio at 14 names, which means there’s space for another addition during this earnings season if something pops on the radar screen. Read the complete commentary for more on all of today’s moves.

Surprise Trader: For the first time in a while, the portfolio picked up a drug company on Tuesday. Dave added Jazz Pharmaceuticals (JAZZ), a Zacks Rank #2 (Buy) that focuses on the areas of sleep and hematology/oncology. The company has a positive Earnings ESP of 1.7% for the quarter being reported after the bell on Tuesday, November 5. The editor bought JAZZ with a usual 12.5% allocation. He also sold Meritage Homes (MTH). Read the full write-up for more.  

Zacks Short List: The portfolio cashed in a double-digit winner on Tuesday as part of its weekly adjustment, which included four swaps in total. The positions that were short-covered include:  

• Insulet Corp. (PODD, +10.8%)
• Cheniere Energy (LNG)
• Pacira Pharmaceuticals (PCRX)
• Tesla (TSLA)  

The new buys that filled these open positions are:  

• Amazon (AMZN)
• Baidu (BIDU)
• Occidental Petroleum (OXY)
• PTC, Inc. (PTC)  

By the way, shares of portfolio position Grubhub (GRUB) plunged on Tuesday after the food delivery company reported a soft third quarter, which included a weak fourth-quarter guidance. Since this portfolio makes money when stocks go down, GRUB was easily the best-performing name of the day among all ZU services with a surge of 43.3%!

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

Until Tomorrow,
Jim Giaquinto

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