All Mixed Up

Talk about a mixed market! The major indices were all over the place this week. Of course, the big story was the ongoing tech troubles, which caused the NASDAQ to slip by 1% for the week. But amid all the concerns with the FANGs, the managed to finish the week not only with a 0.5% advance, but also at a new record. And the S&P slid right in between with a largely breakeven week.

For Friday’s session, the NASDAQ was off by 0.22% to 6151.8, but the Dow advanced by 0.11% to a new high of 21,384.3. The S&P worked all day to get on the plus side and finally managed to sneak in with a 0.03% increase to 2433.2.

The biggest news today, though, was Amazon (NASDAQ:) buying Whole Foods (WFM). The editors weren’t making a lot of buys and sells in the portfolios today, but they had plenty to say on this acquisition and what it means for the market. The highlights section below has a lot of analysis from the portfolios. Meanwhile, Insider Trader was the lone portfolio making moves today, as Tracey sold one name for nice profit and then bought another to stay full invested.

Today’s Portfolio Highlights:

Insider Trader: Only one director has bought shares of Keysight Technologies (KEYS) lately, but that was enough for Tracey to add this electronic measurement instruments maker to the portfolio. It’s important to note that this insider has never bought before, which the editor considers to be a very strong signal. The company is in a turnaround mode right now amid several acquisitions, and recently announced its best quarterly growth in three years. The addition of KEYS replaces the sale of Sally Beauty (SBH) today for an 8.7% return, and thereby keeps the portfolio fully invested. The full commentary has more on these moves.

Zacks Counterstrike:“The huge news today was that Amazon is buying Whole Foods for $13.7 billion. Whole Foods has been speculated as a takeover candidate for a while, but not many people expected Amazon to be the buyer.

“This acquisition is a market disrupter for the grocery chains. Amazon has eaten retail’s lunch and now they are going after the grocer. Stocks like Kroger (NYSE:), Target, Costco (NASDAQ:) and Walmart (NYSE:) all were sold aggressively in anticipation that Amazon will turn grocery shopping into a more efficient online platform. The future is now and Amazon is the leading the way forward.

“What was amazing was the market’s reaction to Amazon’s stock. It was up 3% and at one point, this eclipsed the buyout number with the amount of market cap added to the stock. Technically this means Amazon got Whole Foods for free.” — Jeremy Mullin

Reitmeister Trading Alert:“(A)ll those affected by Amazon acquisition of Whole Foods felt the world shake under their feet. Certainly you can understand the 9% “everything must go” sale for fellow grocer Kroger. Next in line was Costco, Target, and WalMart all getting heavily discounted. But even further out on the food chain you see convenience/drug stores like Walgreens taking a -5% markdown.

“This story is yet another prime example of why “buy and hold” investing continues to lose its luster. That is because the world moves too fast. And it is hard for companies to keep their competitive advantages for long as other firms will so quickly replicate or improve upon their methods.

“This is one of the main reasons that I love investing with the Zacks Rank. We all get into stocks with the best of intentions. That it could be a long term winner if everything goes right. But once it doesn’t go right and the odds stack up against us, it is best to sell and move on to the next top ranked stock where outperformance is more likely.” — Steve Reitmeister

Surprise Trader:“Big, bold moves like this are why Amazon is crushing the world of retail, and why everyone else is trying to catch up. In times like this, I’m reminded of a favorite Jeff Bezos quote of mine which really sums up the Amazon philosophy in making these moves too:

“‘We all know that if you swing for the fences, you’re going to strike out a lot, but you’re also going to hit some home runs. The difference between baseball and business, however, is that baseball has a truncated outcome distribution. When you swing, no matter how well you connect with the ball, the most runs you can get is four. In business, every once in a while, when you step up to the plate, you can score 1,000 runs. This long-tailed distribution of returns is why it’s important to be bold. Big winners pay for so many experiments.'”

–Eric Dutram

Have a Great Weekend!
Jim Giaquinto

One More Thing…

The weekend is a great time to head over to our Special Reports section, which recently released its latest offering – 5 Stocks to Double. Five of our stock strategists each picked a name that is set for enormous gains moving forward. Go to the Special Reports section now to download.

While you’re there, check out some of our other reports, such as:

• 7 Best Stocks for the Next 30 Days
• Invest Like Warren Buffett
• The 588% Revenue Explosion

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