Exiting 1 Position, Buying 4 More as Trump's Iran Update Sparks Market Whiplash

Trump

After you receive this alert, and when the stock market opens, the Portfolio will make the following trades:

Sell 3,225 shares of the ProShares Short S&P 500 ETF (SH)  at or near $37.70. This will close out the Portfolio’s SH position with a breakeven return.

Buy 15 shares of American Express (AXP)  at or near $302. Following the trade, the Portfolio will own 655 AXP shares, roughly 3.8% of the Portfolio.

Buy 282 shares of Applied Materials (AMAT)  at or near $366. This is a new position for the Portfolio, and AMAT shares will account for 2.0% of the Portfolio’s assets

Buy 70 shares of Arista Networks (ANET)  at or near $135. Following the trade, the Portfolio will own 1,395 ANET shares, roughly 3.65% of the Portfolio.

Buy 475 shares of Netflix (NFLX)  at or near $92. Following the trade, the Portfolio will own 1,120 NFLX shares, roughly 2.0% of the Portfolio.

Normally, we would have started Monday off with "8 Key Items Driving the Stock Market," but equity futures have snapped back significantly on the morning following multiple reports that President Trump said the U.S. and Iran had "very good and productive conversations regarding a complete and total resolutions of our hostilities in the Middle East.”

So far, Iran has yet to comment on that statement from Trump and, as we tend to say, follow through details surrounding these potential conversations will matter. That’s especially true about the Strait of Hormuz. For now, oil prices are falling but, in our view, where they settle out will be another item to track.

However, with a market that, by several accounts, has become extremely oversold and due for a bounce, we are opting to, at least for now, exit the Portfolio’s position in SH shares lest they start to work against us. We will, however, reserve the right to call the shares back into the Portfolio as warranted and should U.S.-Iran developments call for renewed protection.

At the same time, we will call up new Bullpen candidate Applied Materials to the Portfolio. We laid out our reasons for adding the shares to the Bullpen in an alert last week, and as we add AMAT shares, we’ll establish an initial $425 price target with an initial Two rating. If AMAT shares fall back closer to key support near $338, we’d be inclined to scoop up more shares provided that support holds. Because this is a new position, we’ll set a wide panic point at $290 and seek to lift it as AMAT shares move higher.

In Friday’s video, we discussed several Portfolio holdings, and we are following up by adding some additional shares of American Express, Arista Networks and Netflix. We will reset our AXP panic point to $270, maintain our existing $110 point for ANET shares for now, and add one at $78 for NFLX shares. Similar to our panic point comments above for AMAT, as NFLX shares rebound, we’ll revisit that panic point. Should we see NFLX pullback further but deliver a positive test of the 50-day moving average near $87, we would be interested in adding further to the Portfolio’s position.

Related: Wall Street Turns on India as Oil Shock Drives 'Unprecedented Crisis'

More Pro Portfolio

• We're Adding to Two Financial Holdings, While Upgrading One
• We're Tracking 24 Portfolio Signals Across 9 of Our Investing Themes
• Weekly Roundup: Iran and Energy Worries Take Their Toll on the Market

(Please note that we are looking to execute these trades at or near the share price mentioned above. Once the trade is completed, subscribers can see the trade's executed price here. Be sure to toggle the chart to sort by Purchase Date.)

At the time of publication, TheStreet Pro Portfolio was long AXP, AMAT, ANET and NFLX.