With the market showing plenty of stress and volatility, and with the headlines moving prices around by the hour, we thought now was a good time to check in with Mike Cintolo, Cabot’s Chief Investment Officer and head honcho for Cabot Growth Investor and Cabot Top Ten Trader, to get his latest thoughts on what’s going on and, more important, where he thinks we go from here.
Brad: While we did have you on the podcast last Friday, we haven’t done this sort of thing in print for many months—and besides, Friday was a few days ago, which feels like a lifetime given how hectic the environment is. So, first, give us your high-level thoughts as to what you’re thinking.
Mike: Hi Brad—yes days can feel like weeks in this market. So, overall, I’m advising a cautious stance and, really, have been for weeks—from a growth investor’s point of view, there have been many yellow flags over time, with growth funds and indexes lagging and some of our own measures like the Aggression Index (which looks at growth stocks vs. defensive, safe stocks) turned negative weeks ago. And now, despite some support, we’ve seen the intermediate-term trend turn down as the broader market hit an air pocket. As I like to say, we continue to remain close to shore as everyone else fights it out based on the headlines of the day.
Brad: All of that makes sense, but digging a bit deeper, most are wondering if, from a market timing perspective, this is a shorter-term dip, or do you think it’s the start of something that could last many months?
Mike: So, I admit we did see a couple of eyebrow-raisers during the recent stalling-out period, coming before the latest dip. One was from our Two-Second Indicator, which simply measures the number of stocks hitting new 52-week lows—and when those figures were elevated even as the indexes are tickling new high ground (as they were through February), it can be an early warning sign of a bigger issue.
That said, when looking at the whole ball of wax, I see the odds still strongly favoring this being a cooling-off period in a bull market: The long-term trend is still up, the big-cap indexes have “corrected” mostly through time by going sideways, rather than through price, at least so far. And frankly, I still see more than a few leading stocks that are acting just fine, all while near-term sentiment has been dented.
I think we’re likely to have another good run with real leadership after this finishes up, but obviously, I can’t conclude it’s over just yet. In fact, it’s fair to say the odds also favor some more ups and downs in the near term as the market figures out what’s what and as institutions reposition their portfolios.
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Brad: Ok that’s encouraging. I want to get into potential leaders in a minute—but first, you mentioned sentiment. Is the dip mainly just from the negative headlines? And how do you read that?
Mike: First, sentiment is secondary, so I almost never tell people to start buying or selling because sentiment is extreme—because it can always get more extreme. But to answer your question, what’s interesting is that many began hedging more and more in the month prior to the initial Iran attacks. I showed something similar in last week’s issue of Cabot Growth Investor, but take a look here at the 21-day moving average of the equity put-call ratio—basically, up means more puts are being traded (mostly for protection or betting on the downside) and fear. As you can see, the 21-day line is actually up near the highs from April 2025 and in the vicinity of the tough summer 2024 correction.
Obviously, that figure can keep getting more pessimistic from here, but the point is that bullishness has been fading for a few weeks, which is a small contrary positive.
Brad: That’s interesting, especially as it seemed like most news was good of late. Any other subtle positives emerging, or is it too early in general?
Mike: As I alluded to above, it has been less than two weeks since the missiles started to fly, and generally speaking, these things do take some time to play out as the market seeks clarity—just on Tuesday we saw the market spike on reports U.S. ships were helping get oil through the strait, and then it got hit after that tweet was deleted. I wouldn’t be surprised to see sloppiness for another two to four weeks, even if we have hit (or come close to) the lows, and of course, there’s no guarantee we can’t see another leg down. Hence the cautious stance.
To your point, though, I like the fact that consumer staples stocks (XLP), which to me is the ultimate defensive sector—we’re talking toothpaste and toilet paper here—have actually been dented since the attacks began, versus going straight up in January and February. In fact, the Nasdaq (and equal-weight Nasdaq 100) has actually outperformed these defensive names since the start of the month. That doesn’t change the intermediate-term trend of this measure, but it’s a first step.
Brad: OK, let’s get into the meatier stuff—potential leadership. You mentioned you’re already seeing some? Do share.
Mike: So, again, it’s early, but the one thing I’d say to this point is that many of the AI infrastructure stocks really haven’t acted abnormally. Remember, this group basically topped with the Nasdaq in October and spent three-plus-months doing nothing, so some weak hands were worn out, and many resumed their advances in February. So far, they’ve pulled back sharply but normally, with many bouncing well.
Even outside of AI, I’m seeing a decent number of setups considering the Nasdaq has done zilch for 19 weeks—not saying there are 100 names I’m ready to buy tomorrow, but despite the grind, it’s far from barren out there.
Brad: Care to share two or three names?
Mike: Sure. One is Nebius (NBIS), a little-known stock that had a big run this year, but it’s been base-building since October; the firm is one of the newer “neocloud” firms that’s building comprehensive compute-heavy data centers specifically for AI users that ink big, longer-term deals. Microsoft is a big client, and a deal with Nvidia (NVDA) helped the stock this week—overall, it sees its recurring revenue rising from $1.25 billion at year-end 2025 to $8-ish billion by the end of this year. It looks to me like it’s rounding out its launching pad.
On the larger side is GE Vernova (GEV), which quacks like the liquid leader in the power space, with its gas turbines sold out for years and many other products (power transmission, nuclear, etc.) and services in huge demand. You can see on the chart that shares are acting normally after a solid breakout.
Outside of AI, check out Clear Secure (YOU), which was in Cabot Top Ten Trader recently. The company’s biometric ID systems are increasingly popular at airports, producing huge free cash flow, and now it’s working with agencies and enterprises to help secure their infrastructure and assets. The stock soared after Q4 earnings and is holding well.
Of course, the caveat here is that, with the correction still ongoing, I’m not saying to run out and load up on these names here, but they’re on my watch list, and I’m not opposed to a nibble or two if you’re relatively defensive already.
Brad: Anything else I missed you want to touch on?
Mike: No, we basically covered it. Right now, it’s pretty straightforward: With the market at best going sideways and with things very news-driven, it’s best to mostly sit on your hands and remain patient. But every day that goes by is etching the groundwork for the next advance—and my bet is this process, which has already been going on for months, will lead to a lucrative, sustained advance. So if you can get through whatever comes in one piece, there should be lots of opportunities on the other side.
Brad: Great, a good note to end on. Thanks, Mike.
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