The major indices took very different paths on Wednesday. The Dow continued to rally and finished at another all-time high, but the NASDAQ was in full “tech wreck” mode with a sharp dip of more than 1%.
“Tech has been a great driver for the market and came through with some great earnings just about a month ago,” said Brian Bolan in Home Run Investor. “When you couple great earnings and a pullback a month later, you get one thing… a buying opportunity.”
The NASDAQ plunged by 1.27% today to 6824.4. However, the Dow advanced 0.44% to 23,940.7, thanks in part to optimism that the Senate will be able to pass tax reform this week (possibly as early as tomorrow). The S&P finished right in between its counterparts with a slight dip of 0.04% to 2626.1.
Brian wasn’t kidding when he said today’s tech slump was a buying opportunity. The editor bought a beaten down software company in Home Run Investor on Wednesday, but first he sold a position for a double-digit return. Surprise Trader added two companies that are both reporting one week from today, while Kevin added to one of his favorite positions in TAZR Trader . Learn about these moves and more in the highlights section below.
Today’s Portfolio Highlights:
Surprise Trader: The NASDAQ’s selloff today offered Dave a great opportunity to buy a 12.5% allocation in Broadcom (AVGO), which made big news recently with its unsolicited bid for Qualcomm. Meanwhile, the editor already proved that he’s not afraid of retail when he picked up Zumiez a little over a week ago. Today he went further still with a 12.5% allocation in American Eagle Outfitters (AEO), which is a high-risk/high-reward selection that’s been surging in November. Both of these companies report next Wednesday. Read the full write-up for more on these moves.
TAZR Trader: When Kevin sold half of NVIDIA (NVDA) earlier this month for a 19% return, he mentioned that he would be looking for a good reason to add those shares back. Well, today’s NASDAQ selloff pulled the stock beneath $200 and the SOX index gave him the “pause and refresh” to the 50-day he called for in last night’s commentary. For a NVDA superfan like Kevin, this was more than enough reason to add back to the position. Therefore, he sold some shares of AMD on Wednesday and used the proceeds to buy more NVDA. Read the full write-up for the specifics.
Home Run Investor: Today’s tech sell-off prompted Brian Bolan to make a move today. But first, he needed to raise some cash to make the purchase. Therefore, he sold Euronet (EEFT) for a more than 33% return. The profit was used to pick up Cloudera (CLDR), a business software developer that dropped more than 5% today. The stock is well off its highs and will be reporting on December 7. The editor thinks this stock will soon make up all of today’s losses and then some. Read the complete commentary for a lot more detail on this new buy.
Counterstrike: “What I thought was odd was the aggressive selling in the Nasdaq names off the open. I was long NFLX overnight so that really beat me up bad as the stock continued to fall all morning. However, the S&P held up, and retail was actually really strong. So there was very confusing price action that was focused on selling tech, but buying everything else. Retail was the strongest sector, but money was flowing into industrials, energy and financials as well. This was enough to support the market even with Nasdaq getting smashed.
“The aggressive selling today was not ideal if you were long a tech name or a crypto currency. However, nothing else was really hit that hard. My goal over the next two days is to find a couple tech stocks to jump into.
“I want to see if there is any follow through lower off the open . If the Nasdaq sells off like this again, there is a good chance that the rest of the market will follow. Patience is key as we don’t want to get stuck in the middle of a larger sell off.” — Jeremy Mullin
Recommendations from Zacks’ Private Portfolios:
Believe it or not, this article is not available on the Zacks.com website. The commentary is a partial overview of the daily activity from Zacks’ private recommendation services. If you would like to follow our Buy and Sell signals in real time, we’ve made a special arrangement for readers of this website. Starting today you can see all the recommendations from all of Zacks’ portfolios absolutely free for 7 days. Our services cover everything from value stocks and momentum trades to insider buying and positive earnings surprises (which we’ve predicted with an astonishing 80%+ accuracy). Click here to “test drive” Zacks Ultimate for FREE >>
Zacks Investment Research
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.