With the broad market making new highs in the face of renewed tariff threats, it seems investors are willing to shrug off macro concerns, at least for now.

We’ll heed the bullish action by stepping into three new positions this month, but hedge our bets by making one of them a half-sized position. We also add two new names to our Watch List.

One common market saying is that rotation is the lifeblood of a bull market, but that’s only partly true: If the rotation sees leaders pull in normally while buying pressures broaden out, that is a good thing, giving the market a stronger foundation for future gains. But if the leaders crack intermediate-term support while money chases beaten-down titles, that can lead to trouble as the market (and those laggards) often end up following the leaders lower. Happily, so far, the rotation that began in late June and has carried on since has been more in the former camp. While we’ve pulled in our horns a bit, we remain overall bullish. We’ll move our Market Monitor to a level 7 and see how things go from here.

This week’s list definitely has a value and turnaround flavor, following along with some of the rotation seen in recent weeks. Our Top Pick reacted well to earnings last week (heaviest daily volume since 2020!) after management reinstated bullish guidance. Start small and add on the way up.

The market’s big-picture outlook remains excellent, and we’re keeping most of our focus on that. However, there’s no doubt that we’re starting to see some growth stock wobbles, as today was the 3rd day of distribution in the group while money rotates into the broader market. That’s no reason to be defensive, but we are selling one name tonight that flashed abnormal action and holding a bit more than 30% cash on the sideline for now. Our goal is to ditch any laggards or names that crack and eventually replace them with big leaders, some of which are in a rest phase that should result in higher-odds entries.

Nothing’s changed with the market from a top-down point of view: It’s bullish, with the intermediate-term trend pointed up, and now we’re seeing new highs expanding as more stocks join the parade. Individual stocks remain trickier, as we saw some rotation out of growth and into some other areas last week—if leaders decisively crack, that could be bearish, but to this point, the action has mostly served to broaden the advance, which is a good thing. We wouldn’t go wild on the buy side right here, but we continue to advise following the positive evidence—we’ll leave our Market Monitor at a level 8.

This week’s list is definitely broader than it has been in recent weeks. Our Top Pick is helping to lead what looks like a fresh group move.

Today’s addition is a small-cap networking company on the cusp of a potential multi-year growth cycle.

The big-picture growth catalyst? Emerging AI and cloud computing technologies that place new strategic importance on network infrastructure and security for data centers, hyperscalers and global enterprises.

All the details are inside this month’s Issue.

Enjoy!

Even as worries fade over the recent Middle East flare-up, new tariff-related headlines have lately crept back into the news. However, stocks have taken it in stride by ignoring what would normally be “bad” news. In view of this, we’re pleased with the market’s resilience—and it’s also welcome that it hasn’t become overheated with too much enthusiasm yet. We’re still seeing a few flies here and there, with some stocks having trouble breaking above resistance, but a growing number of stocks are joining the parade, with a nice mixture of growthy and cyclical names getting into sync with the general march forward. All told, we like what we’re seeing, and in view of the continued strength, we’re raising our Market Monitor to a level 8.

This week’s list features names across multiple industries, which we view as a sign that categorical strength is building. Our Top Pick is a sporting goods giant that has multiple growth tailwinds and is tightening up as the 25-day line has caught up. We’re fine entering here or (preferably) on a dip.

As we wind up the first half of the year, the market has a great setup in place—in fact, it’s looking like that’s what’s been going on for the past six or seven months, with the big-cap indexes etching their own launching pads. Combined with some big-picture positives (like still-dour sentiment), we continue to think the next big move is up. And, while it’s not completely decisive, we’re finally starting to see some growth stocks perk up, too. Thus, we’re taking another step into the market’s waters tonight, adding one new small position and averaging up on a current holding.

Cannabis stocks remain out of favor. It has been a long wait, but it is still too soon to give up on key federal reform that could help the sector and boost stocks. That’s the view of a top-five cannabis company CEO.

Meanwhile, states continue to make steady progress on legalization.

None of this should be a surprise. Polls consistently show that a majority of voters favor legalization. Many politicians at both the state and national levels are responding. Beyond polls, we see growing support for cannabis in consumer spending trends. Wallet share continues to rise. I provide more details on these trends below in the news roundup section.

The Middle East uncertainties came to the forefront just over a week ago, and that uncertainty flared up further this weekend with the U.S. joining the fray on Saturday night. Even so, stocks have remained resilient, with all of the indexes remaining in intermediate-term uptrends and not far from their recent highs, and there’s been very little abnormal action among individual stocks even after their big runs in May. That’s all to the good—but, at the same time, nothing has changed for the better, as very few stocks are reaching new high ground and there hasn’t been much net progress for the past month, even in many leaders. We’ll leave our Market Monitor at a level 7.

This week’s list has names from every nook and cranny in the market, which is a good sign. Our Top Pick is a real leader but has rested a bit during the past couple of weeks as the 25-day line has caught up. We’re OK entering here or (preferably) on dips.

Despite a number of domestic and international geopolitical concerns, the market continues to act well. The S&P 500 is within a stone’s throw of its February all-time high.

This month, we add two high-growth tech names and place three additional compelling opportunities on our Watch List.

We had written lately that the market had been extremely quiet in recent weeks ... possibly a bit too quiet, as the market has a way of hitting a pothole after a period of calm. Sure enough, we saw some growth stocks ease early last week, and then the Middle East attacks and counterattacks caused selling on Friday. Even so, it’s been a normal wobble so far, and while things are likely to be tricky and news-driven in the near term based on the happenings in the Middle East, just about all of the intermediate-term evidence remains bullish. We’ll leave our Market Monitor at a level 7 today.

This week’s list is surprisingly growth-y, with many names from different sectors at or threatening new high ground. Our Top Pick looks to be near a decent entry after a humongous rally from early April to late May.

The top-down evidence couldn’t be much better, with our Cabot Trend Lines joining our intermediate-term measures on the bullish side of the fence, while the market’s action over the past two months portends big gains down the road. That said, we’re still waiting for more growth names to liftoff--so far, growth is up but at a moderate pace, and many names are still battling with old resistance. Not to repeat ourselves, but we’re optimistic more names will kick into gear, but we don’t want to get too far in front of our skis before then. We’re doing a tiny add-on buy tonight, but will still be holding 28% in cash and looking for new leaders to hop on board.

The market had another generally positive week, though it was more muted—the broader indexes came into Friday mostly flat and the S&P was up less than a percent, with the Nasdaq doing a bit better.

WHAT TO DO NOW: We remain overall bullish, but fewer growth stocks and sectors are making headway of late, and with earnings season revving up, we’re becoming more selective on the buy side while tightening stops on some laggards. In the Model Portfolio tonight, we’re going to sell our stake in Take-Two Interactive (TTWO), start a half-sized position in Life360 (LIF) and place Uber (UBER) back on Hold. Our cash position will remain around 32%.

After hitting multi-month highs last Thursday, the S&P 600 SmallCap Index has since pulled back modestly.

Given all the talk of tariffs and Trump firing Powell, and the beginning of earnings season (so far so good), I’d say a modest pullback is a win.

We added a half position in Freshworks (FRSH) back in March and another half in May.

The major indexes have been relatively quiet this week, with most flat-ish after this morning’s pullback. That keeps the intermediate-term, top-down evidence positive. And the big-picture setup that’s in place from the first of the year continues to portend higher prices when looking months down the road.

Note: Due to a technical issue, publication of your Cabot Cannabis Investor update has been delayed by one day. We apologize for any inconvenience; future updates and issues will be delivered per the normal publishing schedule.

If you have been steadily averaging down in cannabis stocks during the sector’s dark days all year, well done.

You are finally being rewarded.

Sell Palomar (PLMR)

Heading into mid-day shares of BYRN are down about 20%, canceling out our paper gain that accumulated over the last five weeks. Here are a few thoughts after digesting commentary on this morning’s conference call.

Action in the small-cap indices continues to be very encouraging.

Since the beginning of June, both the S&P 600 SmallCap Index and Russell 2000 have outperformed the S&P 500 and the Nasdaq.

The management team at Enovix (ENVX) has been busy.


Late last week, the company announced a $60 million share buyback program. Then yesterday, the company released preliminary Q2 results that came in slightly better than management guidance.

Note: We’re sending this out a day early as our offices are closed for Independence Day tomorrow. We’ll be back at it again on Monday (July 7) with your regular issue. Have a great long weekend!

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Most of June saw quiet action, with the market doing little despite good or bad news. But the last two weeks have seen a change in that—first, in a good way last week, with the major indexes and most everything rallying to new highs, but second, this week saw a good-sized rotation out of all things growth and into other areas, with the Dow Industrials and even defensive sectors (consumer staples) leading while most growth titles softened.

NOTE: A couple of things. First, we’re sending this update a day early, as the Friday holiday is pushing up our publishing schedule by a day. And second, I’m actually out of town on vacation, so while we’re sending this update this morning, we’ll follow up with a bulletin tomorrow morning if need be. If we’re not in touch, have a great holiday weekend!

WHAT TO DO NOW: Remain bullish but take things on a stock-by-stock basis. The overall market is in fine shape, but Tuesday saw a lot of selling in growth stocks as investors rotated into stodgy areas (Dow Industrials and defensive stocks). For now, the action is broadly acceptable, but the next few days will be key. Today, we are making some small changes: We’ll place Axon (AXON) and Rubrik (RBRK) on Hold and we’re going to sell one-third of our remaining position of Palantir (PLTR), leaving us with around 23% in cash.

Coming into Monday, it looked like the market might finally take a hit, as the U.S.’s bombing of Iran threatened to widen the Middle East conflict. Instead, the market quickly found support and it’s been a dandy week, with all the indexes up in the 2.5% to 4% range and with the big-cap measures cozying up to all-time highs.

The S&P 600 Small Cap Index rose modestly this week but not quite to the 1,340 level the index reached on June 11.

We’re seeing what could be an early pattern of higher highs and higher lows for the index, though for that trend to firm up we need to see the index get closer to its 200-day line (currently at 1,367) in the next week or two, and not fall below 1,284.

The Middle East flare-up started a week ago today, but so far, the market has been very calm, cool and collected despite differing headlines and rumors. As of this morning, most indexes are green on the week, though by a bit less than 1%.

NOTE: We’re publishing this update a day early as our offices (along with the overall market) will be closed tomorrow for Juneteenth.

WHAT TO DO NOW: Continue to lean bullish but stand pat for now. Overall, the market is handling the Middle East uncertainties well, with the major indexes and most stocks holding up well and most of the intermediate-term evidence in good shape. Still, with most stocks and indexes in holding patterns, we’ll follow along tonight—holding our 28% cash position and our current positions as we wait to see if more stocks can eventually lift out of their recent tight ranges.

With the stock market and Cabot’s office closed tomorrow for the Juneteenth federal holiday, this week’s update is coming your way a day early.

The market’s biggest concern at the moment is, of course, the conflict between Israel and Iran. I think it’s impressive how resilient the market has been given these developments in the Middle East.

Sell Apple (AAPL) and LandBridge (LB)

The major indexes were having another very quiet (and modestly positive) week before last night, with the Israeli strikes against Iran causing oil prices to spike and the market to take on some water. When looking at the week as a whole, the damage hasn’t been bad (most major indexes are flat to down a bit as of this morning), though obviously what happens from here will be key.

The S&P 600 SmallCap Index hit a multi-week high on Tuesday before giving a little back yesterday.

There’s some interesting data that suggests small-cap stocks could be in for a run starting now.

According to data from Evercore ISI, small-cap stocks have done better than large caps 60% of the time in June, dating back to 1990. The odds are even better when small caps enter June underperforming, as they have for a while now.

Cannabis companies remain in hunker-down mode as challenges persist. Those include price compression, competition from hemp-based THC product sales, and uncertainty about potential federal reform.

Not all cannabis companies are going to survive. Ayr Wellness (AYRWF) looks like it is about to go under. I’ve only ever kept a very small position in that name, so the company’s demise did not cause too much damage.

It was another positive week for the market, with some major indexes nosing to new highs, and while it’s far from 1999 out there, individual stocks are seeing very few breakdowns while the leadership ranks gradually expand. Of course, there remain some headwinds out there, but the intermediate-term evidence remains positive, and we’re now even seeing some longer-term evidence start to point up. Thus, we’ll nudge our Market Monitor up another notch to a level 8.

This week’s list has something for everyone, with some zingers, some steady Eddies and more than a few recent earnings winners. Our Top Pick looks like an emerging blue chip in the cloud software field, and shares emerged from a big consolidation after earnings last week.

Right on the heels of yesterday’s Issue featuring new addition Byrna Technologies (BYRN) management released preliminary Q2 revenue. The press release came just after the closing bell yesterday.

We’re now three weeks into this general market consolidation, and from a top-down perspective, it’s been according to plan, with very little giveback (and even some upside testing from the big-cap indexes) even as the market has been hit with some uncertainties (on-again, off-again U.S.-China trade, U.S. debt downgrade, Russia-Ukraine tensions).