The major indices started Thursday on the right foot, but a fresh round of trade fears with China spoiled the solid morning. However, the Russell 2000 just kept on truckin’ higher to finish at a new record for the second consecutive day.
The small-cap index climbed 0.55% today to 1625.3. The editors often talk about the importance of small caps to a healthy market.
"As I’ve mentioned before, it’s always good to see the ‘riskier’ small-caps outperforming as it shows an appetite for risk and is a bullish sign for more gains to come," said Kevin in Options Trader.
The Big 3 are much more susceptible to trade issues than the Russell. So when President Trump seemed to lower expectations on new talks with China, the indices just gave up and sold off. Specifically, he said: “Will (the negotiations) be successful? I tend to doubt it.”
That’s not what the market wanted to hear. In the end, the Dow slipped 0.22% to 24,714 and the NASDAQ was off 0.21% to 7382.5. The S&P had the best session, but was still down by 0.09% to 2720.13.
In the portfolios, Healthcare Innovators added a biopharma company that's waiting on some data for a potential blockbuster drug, while Stocks Under $10 added a solar company that’s just loving California’s recent law requiring solar panels on new homes. Read more about these moves in the highlights section below, along with Jeremy Mullin’s take on the market’s reaction to China.
Today's Portfolio Highlights:
Healthcare Innovators: In his latest “highly speculative” play, Kevin added Global Blood Therapeutics (GBT) to the portfolio on Thursday. This $2.5 billion biopharma company is waiting for phase 3 data on its experimental drug Voxelotor for treatment of sickle cell disease. So the risk here is evident: disappointing data could pull the stock lower by 25% to 50%. But the reward for successful results are too lucrative for the editor to pass up. Not only does he see eventual sales of more than $1 billion if the drug is approved, but pipeline progress would make GBT an attractive M&A candidate. Get a lot more specifics on this new pick in the full commentary.
Stocks Under $10: You’ve probably heard of California’s recent law that requires all new houses to have solar panels. That was great news for SunPower (SPWR), which makes the solar cells and panels for power generation. Shares traded lower after its earnings report earlier this month, which included a much narrower-than-expected loss but a mixed guidance. However, the stock has been moving higher ever since the California law was announced. SPWR is over $9 but hasn’t made $10 yet, so Brian Bolan thought this was a great time to add the stock as he continues to push the portfolio in a more aggressive direction. Read a lot more on this new pick in the full write-up.
Counterstrike: "The headlines are back! Markets looked great early this morning, with the S&P looking like it would go for Mondays highs. Unfortunately, we saw multiple headlines about China that turned markets into the red.
"Around the lunch hour markets had pulled in a bit, but then President Trump made some comments that brought in more sellers. One particular comment sent market down towards yesterday’s lows:
“'Doubts China trade talks will be successful.'"
"That’s all it took. The VXX spiked and the S&P dropped. The selling didn’t last long, but its clear the algos are programed to sell on any kind of China trade headlines." — Jeremy Mullin
All the Best,
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