The final week of May kicked off with a solid rally for all major indices on Monday. However, the highlight was a strong session for tech that lifted the NASDAQ well over 1% for the second time in the past three sessions.
The index soared 1.4% today (or about 190 points) to 13,661.17. The NASDAQ was the only major index with a positive performance last week (+0.3%), which snapped a four-week losing streak as tech bounced back after getting pummeled amid inflation fears.
The FAANGs all had a fantastic session, especially Facebook (NASDAQ:FB) and Alphabet (NASDAQ:GOOGL) (GOOG) each rising by more than 2.5%. Furthermore, Apple (NASDAQ:AAPL), Amazon (NASDAQ:AMZN) and Netflix (NASDAQ:NFLX) advanced by more than 1% each. Microsoft (NASDAQ:MSFT) had a nice session too with a jump of 2.3%.
"The rotation out of tech and into Dow components seems to have taken a pause here. It should come as no surprise that this is happening after some really great reports out of chip stocks. The shortage is not hitting the bottom line like some folks had feared," said Surprise Trader editor Dave Bartosiak.
"The market is now already ahead of the commodity craze and looking to the next best thing. For so many quarters that has been the growth story and the tech story. Here we go again."
The S&P is now up for the month of May after climbing 0.99% on Monday to 4197.05. The Dow has gained for three consecutive days after rising 0.54% (or around 186 points) to 34,393.98… and is also in the green for the month. These indices declined 0.4% and 0.5%, respectively, last week.
The market’s performance was aided by a rebound in cryptocurrency. Yesterday, Bitcoin slipped almost as far as it did last Wednesday when the price dipped 50% from recent highs. However, it jumped nicely today by approximately 13%.
Today's Portfolio Highlights:
Technology Innovators: As you already know, Brian thinks this chip shortage is coming to an end and considers the chip suppliers to be a great way to capitalize on this change. So he started off the week by adding Camtek (NASDAQ:CAMT), a Zacks Rank #1 (Strong Buy) maker of automatic optical inspection systems. In other words, the company uses its scanning technology to help develop chips. CAMT has beaten the Zacks Consensus Estimate in the past two quarters, including a positive surprise of 22% most recently. Furthermore, the editor thinks estimates will continue moving higher due to the company’s rising margins and analysts’ topline growth forecast of 58% for this year. Read the full write-up for a lot more on this new addition.
Surprise Trader: With earnings season winding down, Dave plans to add only three names this week. The first is casual apparel & accessories company Guess (NYSE:GES), which is in the top 17% of the Zacks Industry Rank as part of the Textile – Apparel space. This Zacks Rank #1 (Strong Buy) has easily beaten the Zacks Consensus Estimate in the past three quarters with its most recent surprise being 107%. It now has a positive Earnings ESP of 20% heading into its next report after the bell on Thursday, May 27. The portfolio added GES on Monday with a 12.5% allocation, while also getting out of Flowers Foods (NYSE:FLO) because the position was a “dud”. Read the complete commentary for more on all of today’s action.
Black Box Trader: There were lots of changes in this week's adjustment as more than half of the portfolio was changed. The six stocks that were sold today included:
• Marathon Petroleum (NYSE:MPC, +1.37%)
• United Natural Foods (NYSE:UNFI, +1.11%)
• US Foods (USFD)
• Abercrombie & Fitch (ANF)
• U.S. Steel (X)
• Kohl's (NYSE:KSS)
The new buys that filled these spots were:
• Berry Global (BERY)
• Bloomin' Brands (NASDAQ:BLMN)
• CNH Industrial N.V. (NYSE:CNHI)
• Graphic Packaging (GPK)
• Oceaneering Int'l (OII)
• Tenneco (TEN)
Read the Black Box Trader’s Guide to learn more about this computer-driven service.
Counterstrike: "This market does not know how to sell off and there is one reason: There is no supply. Everybody that wanted to sell basically did just that over the last few weeks as we tested to 50-day MA in the SPX. That double test proved to be too much for the bears and since then, we have seen a slow grind higher as the sellers are gone
"So now, you can't be bearish. There was every reason to sell this market over the last few weeks and while we did see some weakness, it couldn't break. The up only crowd is too strong and even the crypto markets couldn't be broken.
"For our style the lack of a pullback is disappointing. However, we have changed that style a bit and found some success in the buys we had the last couple weeks. Going forward, I will be looking for more relative strength combined with technical levels to find our new positions." -- Jeremy Mullin, who had one of the top performers today as Grayscale Bitcoin Trust (GBTC) rose 10%.
All the Best,
Jim Giaquinto
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