Solid Earnings Boost S&P, NASDAQ to New Closing Highs

The S&P and NASDAQ completed their comebacks from the recent correction on Tuesday by finishing the session at new closing highs! It’s only been four months since the Christmas Eve low, which ruined the holidays for countless investors who believed the bull market’s days were numbered.

Well, that was 17% ago on the S&P! The NASDAQ is up even more year-to-date (+22.4%).

We’ve been hoping that this earnings season could be the long-awaited catalyst to get this market back to new highs. That’s exactly how it played out on Tuesday with strong reports from the likes of United Technologies, Coca-Cola, Lockheed Martin and Whirlpool, just to name a few.

The S&P had been lingering slightly above 2900 for days, but it finally took the turn higher and gained 0.88% to 2933.68. That result eclipses its closing high of 2930.75 set way back on September 20, 2018.

The NASDAQ was actually the best performer with a rally of 1.32% (or more than 105 points) to 8120.82. The index easily eclipsed the previous high of 8109.69 from late August. 

The Dow had a good session too, rising 0.55% (or about 145 points) to 26,656.39. However, it still has a little less than 200 points to go before joining its counterparts in record territory. 

Earnings season has been better than we thought so far, which is a great relief because it would have been disheartening if companies couldn’t hit their lowered expectations. And as far as catalysts are concerned, we’re tired of waiting around for a trade deal with China to be finalized. 

To keep this momentum going, we need technology to do its part. On Tuesday, Twitter reported a solid quarter that led to a 15.6% surge in the stock price. That’s certainly not going to happen every time. However, it’s not too much to ask that we get decent to solid reports from Microsoft, Amazon and Intel later this week.   

If tech joins the party, then we'd better fasten our seatbelts.

Today's Portfolio Highlights:

Surprise Trader: Last time Arconic (ARNC) reported earnings, shares of this Alcoa spinoff jumped past $20 from the low $17s. That’s a nice post-earnings drift that Dave hopes will be repeated when this Zacks Rank #2 (Buy) reports again before the bell on April 30. It’s positive Earnings ESP of 5.06% suggests that ARNC is on its way to another beat. Will it have another positive reaction? The editor thinks it will, so he added the stock on Tuesday with a 12.5% allocation. Read the full write-up for more.

Stocks Under $10: Tiger Woods is back! In addition to being one of the great comeback stories of all time, his 5th Masters win earlier this month is a big boon to the game of golf. Brian Bolan plans to capitalize on this momentum by adding Drive Shack (DS), a Zacks Rank #2 (Buy) owner and operator of golf-related leisure and entertainment businesses. The stock moved up sharply after the Tournament and its continuing to advance today. If Tiger keeps winning, then more and more people will be discovering or re-discovering golf. The editor believes that will be a big plus for DS, so he added the stock on Tuesday. Read the full write up for more.

Zacks Short List: Half of the portfolio was changed in this week's adjustment... and all of the stocks that left the service were positive! That includes a double-digit performer. The five names that were short-covered are:

• Ionis Pharma (IONS, +11%)
• Incyte Corp. (INCY, +5.6%)
• Baidu (BIDU, +5.3%)
• Cheniere Energy (LNG, +3.2%)
• Tesla (TSLA, +2.8%)

The new buys that filled these spots are:

• Advanced Disposal Services (ADSW)
• BioMarin Pharma (BMRN)
• Netflix (NFLX)
• Twitter (TWTR)
• Vertex Pharma (VRTX)

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

Counterstrike: "Stocks ripped to new highs, putting many a short seller in agony, as the final nail in the bear coffin has been hit down with authority. The S&P came just a few points away from all-time highs, while the Nasdaq has surpassed that level. With big tech earnings just a couple days away, is a blow-off top coming?

 

"Finally, we get some movement and it was to the upside, a move that should make us all very happy as traders. The reason being that maybe, just maybe, the volume will start to pick up.

 

"Is this breakout for real? It feels like it’s not going to be stopping anytime soon. And without a negative China trade headline, it looks like the markets will coast into the summer months. Earnings season will give us some opportunities, so keep an eye out over the next week as I intend to add anything that gets the algo beat down." -- Jeremy Mullin

Counterstrike: "Stocks ripped to new highs, putting many a short seller in agony, as the final nail in the bear coffin has been hit down with authority. The S&P came just a few points away from all-time highs, while the Nasdaq has surpassed that level. With big tech earnings just a couple days away, is a blow-off top coming?

"Finally, we get some movement and it was to the upside, a move that should make us all very happy as traders. The reason being that maybe, just maybe, the volume will start to pick up.

"Is this breakout for real? It feels like it’s not going to be stopping anytime soon. And without a negative China trade headline, it looks like the markets will coast into the summer months. Earnings season will give us some opportunities, so keep an eye out over the next week as I intend to add anything that gets the algo beat down." -- Jeremy Mullin

Have a Great Evening,
Jim Giaquinto

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