The market returned from the weekend on Monday and pulled back from all-time highs, as investors caught their breath amid a record-setting run to start the New Year.

The NASDAQ had the sharpest decline with a loss of 1.25% (or about 165 points) to 13,036.43, which makes complete sense since the index surged more than 3.5% on Thursday and Friday alone.

The S&P lost 0.66% to 3799.61 and the Dow was off 0.29% (or nearly 90 points) to 31,008.69. Both of these indices snapped four-day winning streaks.

Stocks are coming back from a strong first week of 2021. The NASDAQ jumped 2.4% over the five days, while the S&P rose 1.8% and the Dow advanced 1.6%. All three of the indices reached new all-time highs on Thursday and Friday.

In other words, it was about time for a breather! Stocks moved higher most of last week despite some negative developments, especially protestors temporarily shutting down the U.S. Capitol and a monthly jobs report that was much worse than expected.

Investors are excited that a Democrat-controlled Congress will infuse possibly trillions of dollars into the economy while we wait for the vaccines to make an impact. But sometimes you’ve just got take a break.

Meanwhile, there’s some big news starting this week that could have an impact on the market. It’s time for earnings season again! The banks unofficially kick things off later this week. On Friday, JPMorgan (JPM), Citigroup (C), Wells Fargo (WFC) and PNC Financial (PNC) all report.

So a rough start to the week. But remember that last Monday was an even worse performance for the market with all three indices plunging by more than 1%. Let’s see what the next few days have in store for us.

Today’s Portfolio Highlights:

Commodity Innovators: The portfolio added some silver and energy exposure on Monday by adding iShares Silver Trust (SLV) and Sunoco (SUN), respectively. SLV is in a “buy zone” after pulling back to the 50-day MA with support at the 200-day. This position should really pay off if the bullish narrative in metals returns. SUN is a Zacks Rank #2 (Buy) MLP that distributes motor fuel. It’s a play on the economy reopening and “people getting back on the road this summer”. While we’re waiting, there’s a nice 11% dividend to keep investors happy. Jeremy considers SLV to be a mid-term ETF, while SUN is a long-term stock. Read the full write-up for more on today’s moves.

Surprise Trader: The early part of earnings season is dominated by banks, so that’s where Dave went for his first buy of the week. The editor picked up Pinnacle Financial (PNFP), a Zacks Rank #2 (Buy) stock from the banks – southeast space, which is in the top 18% of the Zacks Industry Rank. The company beat by nearly 32% in its last quarter and now has a positive Earnings ESP of 3.03% for the report coming after the bell on Tuesday, January 19. One of the editor’s favorite aspects of PNFP is next year’s EPS growth forecast of 18.5%, which is pretty rare for the usually more conservative banking space. He added PNFP on Monday with a 12.5% allocation, while also selling MSC Industrial (MSM) for a slight loss. Read the full write-up for more on today’s moves.

Black Box Trader: It’s practically a whole new portfolio today as this week’s adjustment replaced eight positions. All the names leaving were positive, including five double-digit winners! The stocks sold this morning included:

• Cleveland-Cliffs (CLF, +27.3%)
• Fifth Third Bancorp (FITB, +15.9%)
• Goldman Sachs (GS, +11%)
• Citigroup (C, +10.1%)
• Builders FirstSource (BLDR, +10.1%)
• Ally Financial (ALLY, +5.3%)
• Fidelity National (FNF, +4.5%)
• Louisiana-Pacific (LPX, +1.6%)

The new buys that filled these spots were:

• Huntsman (HUN)
• Jabil (JBL)
• L Brands (LB)
• Olin Corp. (OLN)
• Owens & Minor (OMI)
• Target (TGT)
• Mosaic Co. (MOS)
• U.S. Steel (X)

All the Best,
Jim Giaquinto
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