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▪ Jeremy and Brian Agree to Disagree on Investing in SPACs versus traditional IPOs
▪ Kevin covers whether we should be worried about rising rates with all of the talk about inflation and rising treasury yields in Zacks Mailbag
▪ Sheraz and Daniel choose one portfolio to give feedback for improvement
▪ And much more
Simply log on to Zacks.com and view the March episode here. And please let us know what you think of this format. Email all feedback to mailbag@zacks.com.
It’s about time! The NASDAQ finally had a significant bounce on Tuesday with its best session of the year so far, as investors rediscovered tech stocks after several weeks of giving the cold shoulder.
The index soared 3.69% (or about 464 points) today to 13,073.82. It’s probably no coincidence that this epic gain comes just one day after the NASDAQ slipped into correction territory. This bounce was long overdue!
As you’d expect, the FAANGs were all solidly higher, especially gains of more than 4% for Facebook (NASDAQ:FB) and Apple (NASDAQ:AAPL) each. Amazon (NASDAQ:AMZN) advanced 3.8%. Meanwhile, Tesla (NASDAQ:TSLA) soared 19.6%, while Microsoft (NASDAQ:MSFT) improved 2.8%.
Elsewhere, the S&P rose 1.42% to 3875.44, while the Dow could only muster an advance of 0.10% (or about 30 points) to 31,832.74. The latter index has been the big beneficiary of the recent tech selloff. It even reached a new intraday high just yesterday and easily outperformed its counterparts in February with a rise of 3.2%.
However, the Dow and the NASDAQ just can’t be in the same room together right now, as recovery names and tech play tug-of-war with the market’s money while waiting for more stimulus and more vaccinations.
If you want a reason for today’s advance, it certainly helped that the 10-year Treasury yield pulled back after spiking on Monday. It’s still above the dreaded 1.5%, but that’s an improvement after crossing over 1.6% yesterday.
But another reason for the rally might have been that the NASDAQ entered this session lower by approximately 1500 points, or 10%, in less than a month! Something had to give, and today investors decided that enough was enough.
But the NASDAQ remains nearly 8% away from its highs. That’s a lot of ground to recover. Is this bounce a one-time thing... or just the beginning of something? Let’s see what happens tomorrow.
Today's Portfolio Highlights:
Options Trader: The portfolio pulled its profits in Lear (NYSE:LEA) and Snap-On (SNA) on Tuesday and then immediately repositioned into new, further out options. The sold positions were both March options, which brought returns of 50% and 251%, respectively. They expire next week and Kevin wants more time, so he reinvested by buying to open a June 195.00 Call in LEA and a June 230.00 Call in SNA. In other news, the service also bought to open a June 145.00 Call in Thor Industries (NYSE:THO), which is the world’s largest RV manufacturer. The editor thinks this Zacks Rank #2 (Buy) is breaking out of a bullish flagging pattern, and he loves its projected EPS growth of 70% and low P/S ratio of 0.84. Read the full write-up for specifics on all of these moves.
Stocks Under $10: It looks like the tech selloff may finally be over, so Brian decided to bring the portfolio back up to 15 names. On Tuesday, he added Extreme Networks (NASDAQ:EXTR) and Frank's International (NYSE:FI), which are both Zacks Rank #2s (Buys) due to rising earnings estimates. EXTR is a networking name that has been a big winner for this portfolio before. Despite a slight miss in its most recent report, there’s “a lot of optimism on Wall Street for this stock”. FI is an oil & gas name that beat by 77% in its most recent report. The editor really likes its growth story and valuation. Read the full write-up for more on these additions and Brian’s market outlook.
Counterstrike: The move into solar names yesterday came at the perfect time for this service, as Jeremy sold Invesco Solar ETF (TAN) on Tuesday for a 10.5% profit. That’s in just one day! And he still has exposure to solar through Enphase Energy (NASDAQ:ENPH). The editor also sold a third of The Trade Desk (NASDAQ:TTD) for a 2.1% return in just about a week. He would be willing to add again if the stock pulls back.
Zacks Short Sell List: This week's adjustment included only one change. The portfolio short-covered Intuit (NASDAQ:INTU) for a 3.7% return and replaced it by adding Autodesk (NASDAQ:ADSK). Learn more about this emotion-free portfolio that takes advantage of falling and volatile markets by reading the Short Sell List Trader Guide.
Have a Good Evening,
Jim Giaquinto
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