Under the surface, there does remain some encouraging signs for the overall market, which is a good reason to keep your antennae up for a change in character. But at the end of the day, what counts most is the action of the market and potential leading growth stocks, and on that front, there’s no question the trends are down and the sellers are in control. Thus, we remain cautious, holding 60% of the Model Portfolio in cash, and while we’re not anxious to sell wholesale, we won’t hesitate to sell more if stocks continue to crack.


In tonight’s issue, we review some key measures that show just how severe this selling wave has been in recent months--and why, once it’s over, it should lead to a fresh bull market in growth stocks. We also highlight some new ideas in commodities and elsewhere while we continue to fine tune our watch list.

This issue we examine two unique companies. The first is the only one of its kind making high-value products, including food and fuel, from what others consider waste products. The second is a large clean energy producer that offers a combination of utility-like stability and growth from ESG macro trends in the U.S.

We also tweak our Real Money Portfolio in light of performance and conditions, review the Excelsior portfolio, the Greentech Timer and suggest three additional ESG stocks to consider.

While the majority of Mike Cintolo’s Top Ten Trader is focused on commodity stocks this week, we already have exposure to this group via CLF and MRO. Because of that exposure, I am going to add Box Inc. (BOX) which develops and markets cloud-based content management, collaboration, and file sharing tools for businesses.

We want to take a moment to highlight breadth across the overall markets. Many individual stocks are down well over 50%, while indices have remained more stable. Why? The composition of the S&P 500 is weighted heavily towards mega-cap technology companies. Stocks like Apple, Amazon, and Google remain near all-time highs, bolstered by the overall current flight to quality. Investors remain enticed by buybacks, splits, and fundamental cash flow generation.

Many investors are simply asking themselves: what do I buy right now if anything at all?



Demand for unprofitable assets has fallen off precipitously.

With the market becoming less supportive, I’m dialing back the aggression, so this week’s recommendation is a lower-risk company in the pharmaceutical sector that pays a solid dividend.
As for the current portfolio, our three energy stocks remain very strong, and there are no changes.


Details inside.

The environment remains essentially the same this week, as we have a broad market that continues to struggle, major indexes that are back in intermediate-term downtrends and commodity and defensive stocks about the only two areas that are doing decently. We continue to see secondary signs that are encouraging, including many measures that tell us selling pressures are gradually easing, but as always, we need to see the market and individual stocks prove themselves before changing our stance in any real way. It’s best to remain mostly cautious until the buyers return. Our Market Monitor will remain at a level 5.

Explorer recommendations were pretty flat this week but demonstrated some strength as well. JPMorgan led the banks, reporting a first quarter with a net profit of $8 billion on over $32 billion of revenue. Keep your perspective and play defense and offense. Emerging markets offer you both and we will be adding to the portfolio selectively. This week I highlight a defensive healthcare play of the highest quality.

See-sawing—that’s what these markets bring to mind. And I think we can expect more of the same, due to three factors:

1. The war in Ukraine2. Rising inflation—up about 8.4% last month3. Increasing interest rates. Economists now expect the Federal Reserve to raise rates by one-half a percent, in both May and June

The market situation is changing. Amidst persistent high inflation and concerns about future economic and earnings growth, investors are adjusting. Energy is up nearly 40% YTD as that sector benefits from inflation. Utilities and Consumer Staples are also thriving as investors focus on value, defense, and income in the market uncertainty.
Many stocks in the CDI portfolio have performed well and are likely to continue doing so. But because of the high prices they are rated a HOLD. However, there are two standout positions. In this month’s issue, I highlight two stocks that have what it takes in this market. They both benefit in the current environment, sell at reasonable valuations, and pay sky-high yields.


The market situation is changing for the worse overall. But there are still great opportunities if you know where to look.

Today, I’m recommending a company that provides the “picks and shovels” to the massive Alzheimer’s market.
Other key points:

•High insider ownership (30% of the company).•45%+ revenue growth this year.•Secular winner trading at P/E of 33x.

All the details are inside this month’s Issue. Enjoy!

In this month’s issue, we focus on the smaller, and lesser known ETFs featured in the undiscovered portfolio.

While asset allocation is a tried-and-true method for longer-term investing, you can boost your return with ETF trading. That’s what the undiscovered portfolio is designed to do.



With market volatility remaining, this portfolio gives you an opportunity to capture excess returns from asset classes outperforming the broader market.

With commodities and energy stocks still holding up, though, today I’m adding an American company engaged in hydrocarbon exploration: Marathon Oil (MRO).

After crashing 34% into bear market territory in record time, it has come almost all the way back in record time. The S&P 500 closed Monday less than 5% from the all time high and in positive territory for 2020.

From an investor’s point of view, I will be cautious about owning P&C insurance stocks. We won’t know the cost of all the damage until second and third quarter earnings reports, but you can be sure that profits will suffer.

Why are markets continuing to move upward in the midst of economic and political upheaval? The short answer is don’t fight the Fed, which has made it abundantly clear that it will do anything necessary to keep this economy and market moving.

The S&P 500 is now up over 40% from the bottom in March and less than 10% from the all time high. Forget about a bear market. It’s not even a correction any more.

Remain optimistic. Growth stocks have had a tough week, but the selling hasn’t been abnormal, few (if any) have broken down and today’s stabilization for many is a good sign.

In the market, there seems to be some rotation going on. Or at least that was my sense of things over the first two and a half trading days of the week.

The stock market rally is now more than two months old. The S&P 500 has rallied 35% since March 23 and is now just about 10% below the all-time high.

The S&P 500 Index and the Dow Jones Industrial Average began new run-ups yesterday, while the NASDAQ Composite Index continues its uptrend. I’m glad that investors are continuing to make money during this market rebound.

Enjoy the current strength but be aware of the environment we’re in, and why. Accept that we could see a significant retreat in the prices of many of our stocks in the near term, but that the fundamental reasons behind their current strength should persist despite a retreat, and drive them higher over the coming years.

Despite a Chinese economy that has grown three times faster than America’s every year over the past three decades, it has been a bit of a challenge to consistently make money in Chinese stocks.

We are in the midst of a rally that has continued for about two months. This market seems to want to go higher. While the rally has slowed significantly from the initial bounce off the lows in March, the overall market is still in an uptrend.

One of the market truisms that I learned long ago concerns selling stocks near the end of a strong run-up—and because the odds are growing stronger that we’re nearing such a situation now, I bring it up today.

This portfolio stock reported Q2 results that came in better than expected on the top and bottom lines. Another stock moves to Hold.

The worm continues to turn for growth stocks, which are mostly lagging (at best) or cracking uptrends (at worst) after huge runs.

This electronics company beat analysts’ EPS estimates by $0.72 last quarter.

This asset manager saw its revenues increase 90%, to $28.3 million in the latest quarter.

Growth stocks continue to look iffy, with selling pressure becoming more persistent while money flows into other areas.

This lawn, garden, and pet supply company had a great third quarter.

This week has been good for the overall market, but for the leading growth titles, we’re seeing more abnormal selling than we have in a while.

This portfolio stock reported yesterday that Q2 revenue grew by 35% to $65.4 million (beating by $2.4 million) while adjusted EPS of $0.06 beat by $0.27.

I have a number of notes and recommended actions regarding several of our stocks that have made earnings-related moves recently.

This tobacco company is making waves, with its’ ‘heat-not-burn’ tobacco platform.

As you know if you’ve read anything about this deal, these two companies are the “it” players in digital health. Both have business-to-business-to-consumer (B2B2C) business models, meaning they sell to companies, but solutions are used by consumers like you and me.

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 Top Ten 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 Top Ten features.