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Thursday, September 24, 2020
Action Insight Daily Report 9-25-20
Relief Rally
| Thursday, September 24, 2020 Headlines 1. US markets manage relief rally on choppy day 2. 870,000 Americans filed for initial unemployment claims last week 3. Amazon rolls out new hardware 4. High-flyers that have fallen into the bear den 5. A few stocks making 30-day highs Markets Closed
 Image courtesy GettyImages/f00sion Markets Today U.S. markets managed a relief rally as tech stocks stepped back into the lead, driving all indexes higher during a very choppy day of trading. The DJIA made a 300-point swing from steep losses to modest gains while the S&P 500 dipped into a correction, before reversing higher towards the close.
Many stocks have tumbled from their recent highs, and quite a few have slipped into bear territory. That has all happened within a month, which tells you how wild investors' animal spirits are right now. Take precautions.
Another 870,000 Americans filed for first-time unemployment claims last week, which was slightly higher than last week and headed in the wrong direction. U.S. House Democrats are reportedly taking another pass at a new stimulus bill even though White House economic advisers are saying it might not be necessary.  PODCAST ALERT! The latest episode of The Investopedia Express is LIVE. On this week's podcast:
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Headlines:
 Photo courtesy: Amazon In the Bear Den We've talked a lot about the mega-cap technology stocks that have fallen into corrections since the beginning of September, but some have descended even further into bear territory — down 20% or more from their recent highs. Chart courtesy YCharts  The Heaviest Fruit Apple (AAPL) is the most notable and heaviest of these companies, but our friends at YCharts helped us pull five other companies from the Nasdaq 100 to see who else had fallen into the bear den.
Even though it is called the Nasdaq 100, it's not just made up of just tech stocks, by any means. It's just the top listed companies on the Nasdaq by market capitalization.
Y Tu, LULU? Among the notable decliners, Lululemon (LULU) was a surprise, as the stock had a string of record highs this summer. But how many pairs of yoga pants do we really need? We all know about Tesla and its ups and downs. Long-term investors know just how queasy that stock can make you as it has fallen 50% or more several times in the past ten years. Docusign (DOCU) has been one of the hottest work-from-home stocks, along with Zoom (ZM).
We had to look at Splunk (SPLK), having never heard of that company before, and it turns out that it is a software and data provider for cloud computing. The name gave it away.
Many of these stocks were arguably overvalued on the way up, and they'll likely be oversold on the way down. But anytime a stock goes from record highs into bear territory within a month, you know the market is being very temperamental.  Chart courtesy YCharts Stocks at One-Month Highs There are more than a handful of U.S. stocks making 30-day highs as well. That's a pretty short time frame to evaluate a stock's performance, but the last month has seen an abrupt shift in investor sentiment, and it's interesting to see which stocks are being favored by investors.
Three of the notable winners are Bed, Bath & Beyond (BBBY), Darden Restaurants (DRI), and Global Ship Lease (GSL). We know that consumers are spending a lot of money taking care of their homes, so BBBY makes sense. We know global shipping is coming back strong, so GSL makes sense. But Darden Restaurants, which owns Olive Garden, among other chains, has seen its business decimated in the last six months. It announced hundreds of layoffs and faces a very difficult rest of the year. But then we found out why the stock is heating up: It's reinstating its dividend.
I thought it was because Olive Garden might be bringing back the breadsticks. 
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(charts courtesy YCharts)  Shares of Darden Restaurants rose by over 8% after the restaurant operator posted Q1 EPS results that beat analyst estimates and announced a reinstatement of its dividend. Freeport-McMoRan's stock price rose by over 4% after a Morgan-Stanley analyst upgraded the mining company from "Equal-Weight" to "Overweight."  Shares of CarMax fell by nearly 11% amid growing investor concerns on the used-car retailer's rising online competitors. Accenture's stock price fell by 7% after the professional services company reported Q4 profit and revenue results that fell short of analyst estimates. Word of the Day A relief rally is a respite from market selling pressure that results in an increase in securities prices. Sometimes it happens when expected negative news ends up being positive, or it's less severe than expected.  Photo courtesy Vanguard Today in History Sept. 24, 1974: John C. Bogle incorporated the Vanguard Group of Investment Cos. to administer — and to be owned by — the Vanguard family of mutual funds. For the first time, large numbers of investors would be able to have their money professionally managed without having to pay exorbitant fees to the fund managers.
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