Blue-Chip Shakeup, OPEC Dominate Dismal Week for Dow

GE is being ousted from the DJI in favor of Walgreens

Jun 22, 2018 at 2:21 PM
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Trade war fears carried over into the latest trading week, punishing stocks yet again and sending the Dow Jones Industrial Average (DJI) to its longest losing streak in over a year. President Donald Trump early in the week threatened another round of tariffs on Chinese goods, and the losses continued to mount through Thursday's session, causing the Cboe Volatility Index (VIX) to spike. Moreover, the Nasdaq Composite (IXIC) and S&P 500 Index (SPX) are following the Dow to weekly losses, despite the best efforts of the tech sector, where a number of big names hit record highs, and a huge OPEC-inspired rise in oil prices to end the week

GE Booted For Walgreens; Best Stocks After a Dow Slump

But starting with the Dow, the big news of the week was General Electric (GE) getting replaced by Walgreens (WBA) in the index -- a move that could result in lackluster returns going forward. Walt Disney (DIS) also made headlines thanks to its revised bid for Twenty-First Century Fox (FOXA) assets. We took a hard look at a number of other Dow components, too, including Visa (V) and McDonald's (MCD), both of which are flashing buy signals, and some Wall Street firms are growing bullish on Verizon shares.

Meanwhile, don't miss this data on the best stocks to buy after a big Dow losing streak. Outside of the Dow, we also dug into how the latest SPX additions may perform in the near term.

Supreme Court Ruling Dings Amazon, E-Tailers

On Thursday, Wall Street reacted to the Supreme Court decision allowing states to collect taxes on online sales. While Amazon (AMZN) was one of the biggest losers on the news -- even after its Marriott partnership -- its sector peers also sank, including and eBay stock.

On the other hand, online fashion expert Stitch Fix (SFIX) extended its run up the charts thanks to Oprah rumors. As for potential options traders, history says to buy puts on this retail stock, ditto for Bed Bath & Beyond stock.

NFLX Shares Keep Rolling; Intel Gets Hit Hard

As alluded to earlier, a number of big-name tech stocks were able to reach new highs this week despite the broad-market headwinds. Maybe the most noteworthy gainer was FAANG stock Netflix (NFLX), thanks to a pair of $500 price targets. At the same time, an analyst said to buy calls on this FAANG competitor, and Apple (AAPL) rival Fossil (FOSL) has seen its stock surge. On the earnings front, call buyers were hitting up BlackBerry (BB) ahead of earnings, but a disappointing forecast ultimately buried the stock.

Staying in the tech space, a number of chip stocks were again in focus, especially blue chip Intel (INTC). The week started off bad enough with a bear note, but got much worse following the surprise resignation of CEO Brian Krzanich. Plus, analysts continue to call out the looming Advanced Micro Devices (AMD) threat. Elsewhere, chipmaker Nvidia (NVDA) saw call buying soar in recent weeks, while Micron puts have been unusually popular.

Top Medical Technology Stocks Named

Turning to the healthcare sector, one of the most interesting bull notes this week came from J.P. Morgan Securities, which highlighted its top picks among medical technology stocks. Another analyst touted this health insurer's turnaround efforts as a reason for an upgrade. Meanwhile, short sellers were rocked by one Food and Drug Administration (FDA) ruling, while these other two drug stocks fell on FDA setbacks. In other drug news, Catalyst Biosciences (CBIO) was cut in half after a trial was halted, but these three sector peers jumped to the top of the Nasdaq.

Other Weekly Winners and Losers

Rounding out this week's action, Square (SQ) shares kept rallying, hitting fresh highs thanks to a lofty price target from Normura. Analysts keep growing bullish on Chipotle (CMG), too, as the company announced it's testing new menu options. Restaurant sector peer Starbucks (SBUX) had a bad week, though, due to a weak sales outlook. Elsewhere, Kroger shares surged on the company's upbeat earnings report.

Nike Earnings on Tap

As for the upcoming trading week, traders will have a number of earnings releases to watch closely, most notably Nike's (NKE) quarterly update on Thursday. On the data front, the revised reading on first-quarter GDP will be released on the same day. In the meantime, bulls can take a look at these outperforming travel stocks with attractive options, though it may be hard to replicate the gains enjoyed by recent Dropbox call buyers.



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