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Plus 5 New Strong Buys for Today
Kevin Matras   
Profit from the Pros
By Kevin Matras
Executive Vice President
Zacks Investment Research

Stocks Soar For The Second Day In A Row

Stocks soared again yesterday with all of the major indexes up by nearly 3% or more. (The small-cap Russell 2000 led the way with 3.91%.)

Over the last 2 days, the Dow is up by 5.54%, the S&P by 5.73%, the Nasdaq by 5.68%, and the Russell 2000 by 6.67%.

Yesterday's JOLTS (Job Openings and Labor Turnover Survey) report, which showed a -1.117 million drop in job openings at 10.053M, was seemingly cheered by the market. That still leaves about 4 million more jobs available than there are unemployed people to fill them. But the softer job openings was looked at as a positive, i.e., the economy is starting to cool to where the labor market may not be so tight, and thus wage inflation may ease.

It's also looked at as a barometer for the larger economy as well. And any cooling suggests the Fed's interest rate moves are finally starting to have the desired impact.

We'll get another look at the jobs market today with the ADP Employment report, and then tomorrow's Weekly Jobless Claims, and Challenger Job-Cut Report.

But the report everybody is really waiting for is Friday's Employment Situation report.

In other news, yesterday's Factory Orders report was flat vs. last month's -1.0% and views for 0.2%.

In addition to today's ADP Employment report, we'll also get MBA Mortgage Applications, the International Trade in Goods and Services report, the PMI Composite report, and the ISM Services Index.

News that Elon Musk has agreed to close the deal with Twitter at the original price sent TWTR shares soaring by 22.2%. The broader market was already up prior to the announcement. But being up 22% only added to the bullish sentiment yesterday.

Yesterday's sharp rally (on top of Monday's sharp rally) was fantastic. But I'm still looking for our follow-through day, which ideally comes between days 4 and 7, as those have historically proven to be the strongest follow-through days in signaling that a trend change may truly be taking place. (Yesterday was day 2.)

Nonetheless, yesterday's move was great. And only underscores how oversold we were/are, and that the downside might have gotten too far ahead of itself given the positives in the market.

It's also great to have the seasonality in our favor.

Not only is Q4 typically the best quarter of the year for stocks. It's also a midterm year, and Q4 is typically up in midterm years.

Moreover, with Q1 (following a midterm year), historically being even stronger than Q4, we could be looking at even stronger tailwinds.

And lastly, when we factor in that the third year of the presidential cycle (that's what 2023 will be), has historically seen the best performance of all four years, the outlook for stocks looks even stronger.

For now, it's been a great 2 days.

Let's see if we get our follow-through day by week's end or early next week.

In the meantime, let's see how today goes.

See you tomorrow,

Kevin Matras

Executive Vice President, Zacks Investment Research


5 Top-Rated Stocks for October - Just Released

MarketBeat's analysts have just released their top five highest-rated stocks for October, 2022.

None of the usual suspects, including Apple and Tesla, made the cut.

Click the link below to see which stocks made the cut.

View MarketBeat's Top 5 Stocks for October

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