Issues
Current Market OutlookLast week was definitely a good one for the bulls, with the indexes acting well but also many individual growth stocks scoring some great gains (and most of those came after tests of support earlier this month). Interestingly, the strength didn’t come at the expense of the rest of the market, either, which is a pleasant change from the rotational wars of late. If this strength can be sustained, it’ll be time to get more aggressive, but to us, the market still has some proving to do, especially with the chop factor, which continues to lead to some dramatic pullbacks in stocks that have recently pushed higher. All in all, we’re encouraged by what we see, including an increasing number of setups and breakouts—we’re OK putting money to work, but buying dips and starting small continue to mostly be your best bet, along with banging out partial profits on the way up.
This week’s list has a bunch of solid actors, including some that are putting the finishing touches on multi-month launching pads. But for our Top Pick, we’re going with an earnings winner—Palo Alto Networks (PANW) is part of the strong cybersecurity group and just leapt out of its own long rest. Try to buy on dips.
| Stock Name | Price | ||
|---|---|---|---|
| Alkermes (ALKS) | 31 | ||
| Continental Resources (CLR) | 38 | ||
| Horizon Therapeutics (HZNP) | 109 | ||
| Inspire Medical Systems (INSP) | 222 | ||
| Kulicke and Soffa Industries (KLIC) | 70 | ||
| MRVI (MRVI) | 60 | ||
| MercadoLibre, Inc. (MELI) | 1879 | ||
| NVIDIA Corporation (NVDA) | 227 | ||
| Palo Alto Networks (PANW) | 459 | ||
| Sonos (SONO) | 39 |
Growth stocks went through the wringer for a bit but have again found support and bounced back in recent days. We’ll certainly take it, and we like the way most of our stocks are acting, but it’s too soon to conclude growth stocks have completely escaped the chop that we’ve seen in recent months.
Thus, we’re still going slow, but we are putting a little money to work tonight, filling out our position in one of our holdings.
Elsewhere in tonight’s issue, we write about some of the mixed evidence out there, including divergences (negative) and the recent plunge in rates (a type of blastoff indicator), as well as review all of our stocks and updated watch list.
Thus, we’re still going slow, but we are putting a little money to work tonight, filling out our position in one of our holdings.
Elsewhere in tonight’s issue, we write about some of the mixed evidence out there, including divergences (negative) and the recent plunge in rates (a type of blastoff indicator), as well as review all of our stocks and updated watch list.
The marijuana sector peaked in February, bottomed from late March to mid-April, and since then has been building a base, preparing for a resumption of the big advance.
Fundamentals in the industry remain terrific, as second quarter results have recently revealed, and the trend toward legalization in the U.S. continues, so it’s only a matter of time before these stocks enjoy their next upwave.
In the portfolio today the one small change is that I’ll downgrade Columbia Care (CCHWF), our biggest loser, to Hold.
Full details in the issue.
Fundamentals in the industry remain terrific, as second quarter results have recently revealed, and the trend toward legalization in the U.S. continues, so it’s only a matter of time before these stocks enjoy their next upwave.
In the portfolio today the one small change is that I’ll downgrade Columbia Care (CCHWF), our biggest loser, to Hold.
Full details in the issue.
The S&P 500 and the Nasdaq just made new all-time highs. Strong earnings and a booming economy are outweighing concerns about the delta variant, the Chinese slowdown, inflation and a Fed tapering of bond purchases.
It’s difficult to say what narrative will be dominant after the summer. The cyclical slump could gain traction or turn around. Much will depend on the headlines, which are unpredictable. While I like the way the current portfolio is positioned, it needs more stocks with momentum that generate high call premiums.
In this issue I highlight for purchase one of the very best financial stocks on the market. Prospects are dazzling over the rest of this year. But the stock is also moving right now. It should offer a quick opportunity to ring the income register with a covered call.
It’s difficult to say what narrative will be dominant after the summer. The cyclical slump could gain traction or turn around. Much will depend on the headlines, which are unpredictable. While I like the way the current portfolio is positioned, it needs more stocks with momentum that generate high call premiums.
In this issue I highlight for purchase one of the very best financial stocks on the market. Prospects are dazzling over the rest of this year. But the stock is also moving right now. It should offer a quick opportunity to ring the income register with a covered call.
The recent August expiration cycle was our second disappointing month in a row. And while 18 wildly successful months of trading out of 20 is a truly spectacular track record, when trades go wrong there is little doubt it’s painful in the moment. However, trading/investing isn’t about being a prisoner of the moment. It’s about building wealth over time, which the Cabot Profit Booster has been very successful at since its inception in early 2020.
The bull market remains intact, so I continue to recommend that you be heavily invested in stocks that help achieve your investing goals.
Today’s featured stock is a solid grower whose products help millions of people with diabetes manage their condition in increasingly efficient ways.
As for the current portfolio, most of our stocks look good, and some are hitting new highs, but one has to go and the victim this time is Driven Brands (DRVN).
Details inside.
Today’s featured stock is a solid grower whose products help millions of people with diabetes manage their condition in increasingly efficient ways.
As for the current portfolio, most of our stocks look good, and some are hitting new highs, but one has to go and the victim this time is Driven Brands (DRVN).
Details inside.
Current Market OutlookThe selling in growth stocks spread to the rest of the market last week, with most major indexes finishing lower, led again by growth-y indexes and funds. The good news is that, for now, the worst-case scenario has been avoided—many growth stocks tested key support in recent days (50-day lines, etc.) and almost all held up, with Friday and today seeing some solid bounces. Cyclical stocks have done a similar dance, with many pulling in, but few really cracking, and now the bounce is underway. Ideally, this rebound will develop some power—strong bounces off support often provide low-risk entry points—but, while we won’t wait weeks to see how it plays out, it’s too soon to conclude the recent selling wave is over. We remain more optimistic than not, and the past couple of days are certainly encouraging, but let’s see if some new and potential leaders lift off in classic fashion.
This week’s list is a mix of various different stocks, including a number of names we haven’t written up before. Our Top Pick is Chart Industries (GTLS), an under-the-radar name that’s set to see earnings soar as demand for its various energy infrastructure items (including many that play into the clean energy space) takes off.
| Stock Name | Price | ||
|---|---|---|---|
| Axon Enterprise, Inc. (AXON) | 187 | ||
| Builders FirstSource (BLDR) | 50 | ||
| Chart Industries (GTLS) | 178 | ||
| Elastic (ESTC) | 157 | ||
| PKI (PKI) | 182 | ||
| Rapid7 (RPD) | 113 | ||
| Regeneron Pharmaceuticals (REGN) | 667 | ||
| UPST (UPST) | 203 | ||
| WK (WK) | 137 | ||
| Zscaler (ZS) | 251 |
In the August Issue of Cabot Early Opportunities we (mostly) return to our roots, focusing on technology and MedTech growth stocks, while adding a little flavor with a consumer stock we’ve been keeping an eye on.
Enjoy!
Enjoy!
Updates
Lean bullish. The market’s evidence remains mostly positive, though the action of growth stocks over the past two weeks has been less than stellar. But when looking at the overall market, we see more positive vibes than negative ones.
Last week’s much-awaited pronouncement by the Federal Open Market Committee (FOMC) turned out to be a big “nothing burger.” I did not personally expect a cut in the fed funds rate.
This was another one of those weeks where you look at what the S&P 500 did—up 1.5% to a 52-week high—and you look at what the S&P 600 Small Cap Index did—up 1% to 945 and back above its 50-day line, but well off its 2019 high of 994 (let alone its 52-week high of 1,100) and you think the big picture is pretty good, but this still isn’t a broad-based market rally.
Emerging markets got a boost this week as it appears that there will be a high level meeting between the U.S. and China at the upcoming G-20 meeting.
The FOMC is meeting this week and investors can hardly contain their euphoric bliss. In-the-know pundits are already factoring in a rate cut next month and more before the end of the year. The market rallied strongly yesterday as it salivated over the prospect.
All across America, but especially in the Northeast and the Midwest, Boomers will be putting their homes up for sale, and often leaving those areas for warmer climates.
With the market having come back strong since its swift retreat in early June the immediate threat of a larger correction has diminished. The S&P 500 index is back above its 50-day line and within a couple percentage points of its all-time high.
Our Cabot Tides are yet to flash a green light, and thus we’re content to hold our strong, profitable stocks, but also to keep a chunk of cash on the sideline.
The market found its mojo after the Fed vaguely insinuated that it could conceivably consider cutting rates before the end of the year. But it looks like the momentum is gone.
We’re looking at economic data that could push interest rates upward (rising food price inflation and business expansion) and we’re also looking at economic data that could push rates downward (GDP potentially falling due to China tariffs, and slowing employment numbers).
Emerging markets (EEM) and Chinese stocks in particular continue to struggle a bit this week. The EEM is trading right at its 200-day moving average and below its 50-day moving average so the portfolio remains in a defensive stance.
Alerts
Because of all the craziness out there I’m pushing back the stock section of this week’s update to tomorrow.
With the market down more than 30% since it peaked a month ago, it’s worth reviewing the reasons for the quick crash.
The quarter’s revenue surged in their Europe and licensing businesses, and lagged in their Americas Retail, Americas Wholesale and Asia businesses.
Shares of this conglomerate have declined to a very discounted value, but once the current volatility lessens, a case for a turnaround will be likely.
Remain defensive. The market took another leg lower today, though our four remaining stocks in the Model Portfolio hung in there.
This eyecare company is forecasted to grow by 16% next year.
We’re taking another incremental step to focus our portfolio today by selling one more stock.
We’re taking another step to adjust our market exposure today.
This streaming company is looking like a bargain at these prices.
The market continued its crash today, with the major indexes losing a bunch more ground on virus-related economic fears.
The rolling market crash of the past three weeks is continuing today.
In the largest insider purchase of this year, the Non-Executive Chairman of the Board, John Gibson, recently bought US$497k worth of stock, paying US$39.11 for each share.
Portfolios
Strategy
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.