When looking at the overall market, there’s more good than bad out there, which is the reason we think extending your line a bit has made sense this month. With that said, we still want to see more strength develop—so far, some leaders have moved up, but now the question is whether upside follow-through is coming, or whether we see another bout of rotation. Simply put, we’re optimistic, but want to see some confirmation before flooring the accelerator. We’ll leave our Market Monitor at a level 7.

This week’s list has a wide array of names to consider, including many that have come alive in recent weeks (often on earnings). For our Top Pick, we’re going with a flash memory provider that lagged the AI buildout early on but is now seeing growth pickup as it signs some hyperscaler deals. Try to buy on a shakeout.

Stocks have stagnated again after a fast start to the month. It’s possible late-summer malaise has set in now that second-quarter earnings season is mostly over and half of Wall Street is in the Hamptons soaking up the last couple weeks of vacation time before Labor Day. But it’s most definitely a bull market, and stocks “merely” hovering near record highs means it’s still a good time to buy.

So today, we add a mid-cap industrial name recommended by Tyler Laundon last month to his Cabot Early Opportunities audience. After a down July, the stock has recaptured momentum – and could have immense upside.

Details inside.

Wall Street kept its record-setting summer alive last week, with the S&P 500 and Nasdaq both stringing together a third straight winning week as cooling inflation data eased worries the Fed might need to hike rates again. For the week, the S&P 500 gained 0.4%, the Nasdaq added 0.1%, the Dow slipped 0.6%, and the Russell 2000 was the standout, rising roughly 1.1% to fresh record territory.

Wall Street kept its record-setting summer alive last week, with the S&P 500 and Nasdaq both stringing together a third straight winning week as cooling inflation data eased worries the Fed might need to hike rates again. For the week, the S&P 500 gained 0.4%, the Nasdaq added 0.1%, the Dow slipped 0.6%, and the Russell 2000 was the standout, rising roughly 1.1% to fresh record territory.

Wall Street kept its record-setting summer alive last week, with the S&P 500 and Nasdaq both stringing together a third straight winning week as cooling inflation data eased worries the Fed might need to hike rates again. For the week, the S&P 500 gained 0.4%, the Nasdaq added 0.1%, the Dow slipped 0.6%, and the Russell 2000 was the standout, rising roughly 1.1% to fresh record territory.

Healthcare is a basic need for all Americans. And now that the Baby Boom generation has reached retirement age, the need has never been greater.

In this month’s issue of Cabot Value Investor, we add a high-profile healthcare stock that’s fallen sharply for no good reason of late and peaked in 2015. And yet, prior to its recent drop-off, the stock had real momentum. I see better than 30% upside – perhaps quite quickly – in a stock that fits our growth-at-value-prices mandate to a T.

Details inside.

Today’s inflation report is boosting the futures markets. Inflation eased back to 3.4% in July, down from 3.5% the prior month. The CPI rose 0.1%, with food and shelter and new auto prices increasing by 0.1%, used cars and trucks prices rising 0.4%, medical care up 0.4%, and airline fares rose by 2.2%.

The unemployment rate declined to 4.1%.

Real estate remains weak, with existing home sales up 0.7% in July, after decreasing by 1.7% in June, as high mortgage rates continue to pressure the industry.

AI-fueled tech stocks are supporting a bull run with the MSCI All Country World Index – a broad gauge of global equities – moving closer to an all-time high as muted inflation reassured investors about interest-rate concerns in the U.S. In Japan, the concern about bond interest rates is causing even the U.S. Treasury to get involved in supporting the yen.

Artificial intelligence (AI) is a once-in-a-generation catalyst that has driven this market higher for most of the decade. And it is still likely to be in the early stages.

But those stocks haven’t gone straight up. There have been several pullbacks and consolidations over the past few years. Those stocks most recently pulled back in July and information technology isn’t even the top-performing S&P stock sector year to date. In fact, six of the “Magnificent 7” stocks had underperformed the S&P in 2026 as of the end of July.

But a new bull run in AI may already be starting.

Microsoft (MSFT) soared 16% higher in one day after reporting last quarter’s earnings. Amazon (AMZN) had a huge gain after earnings too. After floundering in July, the AI trade is getting hot in spots. Technology ETF State Street Technology Select (XLK) is up 12% in just the past couple of weeks.

AI is regaining upward momentum while several of the very best stocks are still selling well below the highs. The two companies highlighted in this issue have huge potential.

A continued strong earnings season helped push the S&P 500 and Dow to fresh record highs by midweek last week. Then Friday’s softer-than-expected July Jobs Report all but erased the odds of a September rate hike, which helped propel stocks to their best week since April. For the week, the S&P 500 surged 3.6%, the Dow gained 3.0%, the Nasdaq led with a jump of 5.2%, and the Russell 2000 tacked on 3.5%.

With the earnings season in its final stretch, a number of names have benefited from (mostly sanguine) Q2 results, making for a better environment for momentum traders. The intermediate-term trend has returned to positive across the main indexes, with several major stocks in the lagging tech sector getting back above their 50-day lines—and with even some beleaguered semiconductor names snapping back of late. Importantly, the financial sector remains solid. We’ll put the Market Monitor at level 7.

This week’s list has a fair number of stocks that are benefiting from the sanguine earnings season. Our Top Pick is showing solid momentum and has excellent potential with some promising—and innovative—new financial products.

The bull market is back on, thanks to mind-bending second-quarter earnings growth (50%!) and dwindling chances of a Fed rate hike next month. The renewed rally is only about 10 days old, but – as in April and May – it makes sense to strike while the iron is hot. Today that means taking a big swing on a drone maker that grew revenues by 133% last year. The stock is the newest recommendation from Carl Delfeld in his Cabot Explorer advisory. After a huge decline in the first half of the year, the stock is showing major signs of life.

Details inside.

All is fine in the market at this point. The S&P 500 is within a whisker of the all-time high and up 13.7% YTD. But where do we go from here?

Earnings have certainly been a powerful force in lifting stocks recently. It’s been a spectacular quarter for corporate profits. According to FactSet, with more than 80% of S&P 500 companies having reported, second-quarter earnings growth for the average company is on pace to rise 50% over last year’s second quarter. It’s the highest earnings growth since 2021 and virtually unprecedented outside of recessionary rebounds.

If you get the feeling that more people are talking about the potential for a coming stock market crash, you’re not imagining it.

As it turns out, there has lately been a discernible increase in news sites and blog posts talking about a possible bearish turn for stocks in the coming weeks and months.

WHAT TO DO NOW: The market rally is in good shape, with our trend-following measures positive and more growth stocks acting well. That said, our Aggression Index is still neutral, and most indexes are moving sideways after the initial late-July/early-August rush higher, so we’re not flooring the accelerator quite yet. In Monday’s bulletin, we sold Clear Secure (YOU) while adding half-sized stakes in Hinge Health (HNGE) and Cloudflare (NET), and tonight we’ll make one small move, averaging up in Snowflake (SNOW) by adding another 3% stake. That will leave us with around 45% in cash. Details below.

As earnings season begins to wind down, the main takeaway is that it’s been an excellent reporting season and, by and large, companies that are executing well are being rewarded.

In a post yesterday, Ed Yardeni described the season as “fabulous,” noting that with 90% of S&P 500 companies reporting, earnings and profit margins have broadly exceeded analyst forecasts. He also raised his 2026 and 2027 S&P 500 earnings estimates, citing what he calls “Fabulous Earnings Momentum,” or FEMO.

The market is still dealing with plenty of crosscurrents, from elevated rates and lingering inflation concerns to geopolitical uncertainty in the Middle East.

But the biggest takeaway from the last few weeks is straightforward: Fantastic earnings results are pushing the market higher.

Our Cabot Insider Edge Portfolio is vastly outperforming the market.

As of the close on August 10, it was up 11% since I began building it on June 10. That is twice the performance of the S&P 500.

Meanwhile, two psychedelics names I introduced on July 29 were up 19.7%, compared to a 5.9% gain for the iShares Biotechnology ETF (IBB).

There’s more detail on this performance below.

It’s another new high! The S&P 500 closed last week at an all-time closing high amidst unbelievably strong earnings.

Despite high oil prices, corporate profits are booming. According to FactSet, second-quarter earnings growth for the average S&P 500 company is on pace to rise 50% over last year’s second quarter. It’s the highest earnings growth since 2021 and unprecedented outside of recessionary rebounds.

Barron’s recently published a thoughtful interview with Samantha Dart, the co-head of global commodities research at Goldman Sachs. I think it’s worth mentioning here since she touched on several of the themes that we’ve repeatedly discussed this year.

As an analyst who is heavily focused on the resources sector, Dart’s views on commodities will obviously carry a degree of professional bias. But a lot of what she said in the interview makes sense from both a current event and secular trend perspective.

Interest rates continue to edge up, and I’m closely watching 10-year Treasury bond yields. If they go from the current rate of 4.7% to the 5% level, stock markets will take a hit. This would also likely push mortgage rates way past 7%.

Explorer stocks had a good week. Microsoft (MSFT) shares were up 24.8% this week as its cloud services soar. AeroVironment Inc. (AVAV) shares jumped 18.2% in its first week as an Explorer stock. Coeur Mining (CDE) shares surged 19.3% this week ahead of today’s quarterly earnings and a weaker dollar.

It’s a new high! Last time the S&P hit a new high was June 1^st. For the next two months, the market bounced around en route to nowhere. What’s changed?

Technology has changed. It’s earnings season. And earnings have been spectacular this quarter. The average S&P 500 company earnings growth after most companies have reported is around 26%. That’s phenomenal for a quarter not following a recession. But earnings grew by over 20% last quarter. And investors are expecting it this time.

Lots of things are happening. But the market remains in the sideways funk it’s been in for the past two months.

The S&P is within less than 1% of the all-time high set on June 2. Stock prices are hanging tough. The market hasn’t been going up, but it’s not down either. It has spiked higher over the last week on better news in the technology sector. This could be a breakout. We’ll see.

I don’t normally discuss the market’s sentiment profile in depth, especially since sentiment is more a concern for short-term traders than for long-term investors. But I think the present case provides for an exception.

Now, to an extent, sentiment is a concern for even long-term-oriented turnaround investors like us. After all, we like to know when a particularly attractive company is so undervalued and overlooked that it merits our attention; hence, the sentiment angle. But what I’m referring to here are various bull/bear ratios and other indicators that concern broad market sentiment.

Astronics (ATRO) Delivers Another Outstanding Quarter

Helios (HLIO) Delivers Strong Quarter & Raises Outlook

CECO Environmental (CECO) and ASTS SpaceMobile (ASTS) Report

WHAT TO DO NOW: We’re making three moves in the Model Portfolio today, increasing our overall exposure a bit and positioning in stronger names. We’re going to cut our modest loss in Clear Secure (YOU) while also buying half-sized positions in both Hinge Health (HNGE) and Cloudflare (NET). Our cash position will still be around 50% after these moves, which gives us cushion should the sellers re-appear, though we’re looking to add more exposure (either through new names or averaging up in current names) should the market continue to improve.

National Energy (NESR) Crushes Expectations, Again

Sell Three Quarters of Avita Medical (RCEL)

A few Cabot Options Trader subscribers have asked me about ways to protect gains in their portfolios, so I thought I would write to everyone with a couple of strategies using options to hedge your portfolio.

A subscriber recently asked me if I keep a journal of my trades. Many traders keep journals so they can look back at their trades and evaluate what they did right and what they did wrong.

Want to know how the big institutional investors use options? Here is an example of how one trader spent $132 million on three technology stocks.

Options trading has its own vernacular. To know how to do it, you need to know what every options term means. Here are some of the basics.

Our Cabot Momentum Trader’s market timing system consists of two parts—one based on the action of three select, growth-oriented market indexes, and the other based on the action of the fast-moving stocks Cabot Momentum Trader features.