This is a short week, with my last update just a few days ago, but our Explorer portfolio is doing well. In the last few days, Sea (SE), NovoCure (NVCR) and Alibaba (BABA) are each up 10 points and ElectraMeccanica (SOLO) has increased 20%. As the clouds lift with the flurry of positive vaccine announcements and election uncertainty gone, markets will go into December with more confidence but with lingering doubts about the strength of the economy. Our new recommendation is a leader in critical cancer diagnostics highlighting the benefits of a sharp focus on one market.

Last Friday all three of our November covered calls expired for full profits.

Current Market Outlook


First off, a heads up: Our offices will be closed Thursday and Friday, and next week is one of the two scheduled weeks that we take a break from Top Ten all year. We’re likely to send a brief update this Wednesday with updated stops, but after that, your next update will come Friday, December 4. Have a great long weekend!

As for the market, there remain a couple of flies in the ointment (the Nasdaq still hasn’t reached a new high; sentiment is a bit bubbly), but it’s fair to say the recent action has been constructive, with leading stocks avoiding another bout of selling so far and more individual names perking up. You should still go slow, but we’re increasingly optimistic.

This week’s list has a wide variety of names (big, small, growth, cyclical) that are all finding strength, another good sign for the market. Our Top Pick is Halozyme (HALO), which acts powerfully and has terrific metrics. Try to buy on dips.

Stock Name	Price	Buy Range	Loss Limit
Alcoa (AA)	19.82	18.3-19.7	15.2-16.2
Bilibili (BILI)	63.31	57.5-60.5	51-53
Celsius Holdings (CELH)	33.73	31.5-34	25.5-27.5
Halozyme Therapeutics (HALO)	40.00	38.5-41	33.5-35
Huazhu Group (HTHT)	51.33	49.5-51	44.5-45.5
II-VI Incorporated (IIVI)	66.45	61-64	54-56
Inspire Medical Systems (INSP)	183.30	172-182	150-155
Moderna (MRNA)	100.92	95-98	84-86
Omnicell (OMCL)	106.80	100-104	90-92
Sonos (SONO)	21.41	20.5-22	17-18

The bull market remains alive and well, and I continue to recommend that you be heavily invested in a diversified portfolio of stocks.

Last week’s recommendation was well-known Coca-Cola (a true value stock) while this week’s is a fast-growing company that’s never made a profit, but is expected to make bundles, someday. You know its name too!



As for our current portfolio, most trends are good, but we do need to sell one stock, just to keep the portfolio at twenty stocks. That’s a process that ensures we always own the best!

October was a surprisingly good month for the markets, until the very end, when investors took a rest. But since the election, they’ve come in off the sidelines and the markets are now close to all-time highs. Investors love the idea of a divided Congress.

As well, the unemployment picture continues to improve, although with the coronavirus causing more widespread shutdowns, we may see a temporary rise—at least until the vaccinations begin distribution. And that certainly looks promising, with both Pfizer and Moderna sharing terrific stats this past week.

Housing continues to be a mixed report. Inventories continue to decline, down 38.3% in October, and prices rose 12.2%. Mortgage rates are at a 5-year low. Once the pandemic eases, I expect the number of listed houses to rebound and sales to rise precipitously, at least until inventory is normalized.

Our issue this month, is focused primarily on growth companies, although we certainly offer plenty of dividend opportunities. We begin with our Spotlight Stock, a provider of technology, primarily to the U.S. Defense Department. This company is right on the cutting-edge of advanced technologies—the future of defense. In my Feature article, I discuss the coming technologies and CACI’s potential to harness and profit from them.

Moving on, our Growth stocks include companies from the payments, construction, and virtual healthcare arenas. In Growth & Income, we offer ideas in the equipment, tools, building products, toys, consumer goods, e-tail, and media sectors.

Our Financial picks are both from the insurance industry, and our Healthcare offerings include a contract research organization, a testing business, and biopharma. In Technology, you’ll find ideas from the cloud, cybersecurity, CRM, e-commerce, hardware, and streaming industries.

We have one Low-Priced Stock—a hybrid trading or emerging biotech, and a couple of banking ideas, as well as a company that serves the marijuana industry, in Preferred Stocks & REITs.

Our contributors still like High Yield, and here, we add companies from the insurance, banking, pest control, hardware, and communication sectors. And this month, we also feature a Short-Sale opportunity.

Lastly, our Funds & ETFs focus on growth, banking, energy MLP’s, and marijuana.

I wish you and your families a healthy and happy Thanksgiving, and look forward to hearing from you. Please don’t hesitate to email me with your feedback and questions.My address is nancy@financialfreedomfederation.com.

There remain a ton of crosscurrents and news-driven action out there, but after a vicious rotation a week and a half ago, growth stocks have firmed up and the overall market is in good shape. Thus, we’re starting to put some money to work, averaging up in one of our stocks and starting a half-sized position in another. And if the good vibes continue, it shouldn’t take us long to get heavily invested.
In tonight’s issue, we review all of our stocks, talk about a couple of rare, blastoff-type measures that flashed that bode well for the major indexes and highlight a couple of smaller names in one growth sector that have great stories, numbers and charts.

Our issue this month, is focused primarily on growth companies, although we certainly offer plenty of dividend opportunities. We begin with our Spotlight Stock, a provider of technology, primarily to the U.S. Defense Department. This company is right on the cutting-edge of advanced technologies—the future of defense. In my Feature article, I discuss the coming technologies and CACI’s potential to harness and profit from them.

In November’s Issue of Cabot Early Opportunities we discuss the supposed rotation from growth stocks into value stocks and the underlying reasons, which we think could drive erratic market action in the coming weeks. Despite the somewhat conflicting trends out there, we serve up a menu of compelling opportunities spanning Medtech, manufacturing, software and even health and beauty products, which we can all use a little of these days!

This Friday is the expiration of November options, and I’m happy to report that our three covered call positions expiring this week are in great shape. As is always the case, on Thursday afternoon or Friday morning, I will send a detailed breakdown of those positions expiring Friday breaking down our profits, and if we need to make any adjustments. Be on the on the lookout for that email.

Current Market Outlook


If you look at the weekly charts, the trends of the major indexes and most stocks are pointed up—i.e., this is still a bull market, and the trends and other factors (such as the unusual strength seen two weeks ago) portend higher prices down the road. That said, there’s no question the environment remains extremely news-driven (mostly with vaccine news, but also economic reports and government policy outlooks), with plenty of crosscurrents depending on the day. Encouragingly, today’s vaccine news didn’t dent the growth leaders like it did a week ago, which is a step in the right direction. Net-net, we remain optimistic, but the details remain vital; getting decent entry points and position sizing correctly (not too big so you can handle the swings) is key, as is focusing on stocks (cyclical or growth) that have shown good-volume support of late.

This week’s list has something for everyone, including stocks with fresh growth stories as well as some stodgy, cyclical names. Our Top Pick is Lam Research (LRCX), which looks like a leader in the resilient chip equipment sectors.

Stock Name	Price	Buy Range	Loss Limit
Albemarle Corporation (ALB)	128.90	121-126	106-109
Canopy Growth (CGC)	24.77	23.5-25	19-20
Lam Research (LRCX)	439.40	415-435	375-385
Marvell Technology Group (MRVL)	43.29	41.5-43.5	37.5-38.5
Norfolk Southern (NSC)	247.09	235-245	215-220
ShockWave Medical, Inc. (SWAV)	94.95	87.5-91	75.5-78
Snap Inc. (SNAP)	39.08	37.5-39.5	31.5-33
STAAR Surgical (STAA)	79.31	76-79.5	67-69
The Timken Company (TKR)	73.04	69-72	61-62.5
Upwork (UPWK)	33.08	29.5-31	24-25

In this Weekly Update, I summarize the latest news for three companies that reported earnings in the past week.

The S&P 500 rose 15% year-to-date through October 20, and the Dow Jones Industrial Average rose 18% year-to-date. Those achievements are not remotely unusual when stocks are having a good year. However, it would be normal to expect price corrections along the way—corrections which have been curiously absent this year.

Even though the Dow, S&P 500 and Nasdaq hit all-time highs this week, news flow felt a little more negative, and the small-cap indices all moved slightly lower.

One major news item that hit one of our stocks.

Remain bullish, but be selective on new buys as earnings season revs up. The overall market remains in great shape, with all our market timing indicators solidly bullish. Short-term, a pullback wouldn’t be surprising, but the odds remain in favor of higher prices down the road.

Interest rates fell back this week after the odds of a December rate hike briefly fell below 90% (they’ve since rebounded). The trigger was a September inflation data release that showed consumer prices excluding food and energy rising just 1.7% year-over-year, and only 0.1% since August.

All investors should be aware of the quality-control scandal emanating from Kobe Steel, in which the company admitted falsifying data on its steel products for a currently-vague amount of time between one and 10 years. On October 11, I predicted that the scandal would be more extensive in reach than initially reported.

The past week was relatively subdued in small-cap land; the asset class, as measured by the S&P 600 Small Cap Index, dropped a modest 0.8%. The biggest declines were seen in the energy, consumer discretionary and healthcare sectors. The latter is likely due to disruption from Hurricane Maria and renewed chatter about reducing federal subsidies that were part of the Affordable Care Act (ACA).

The iShares EM Fund (EEM) has been trending up, keeping the Cabot Emerging Markets Timer a bright green. Our stocks are generally doing well, and we have no changes to the portfolio tonight.

The stock market’s advance slowed a little this week, but the major indexes are still at all-time highs. Strangely enough, after declining for most of September, utilities have been one of the best-performing sectors over the past five days. Technology and real estate are also outperforming.

Notice that the S&P 500 has a very specific pattern this year: advance-rest-pullback-recover, then repeat the cycle, continuing to rise as months pass. The market just completed another advance. Therefore, odds are strong that the market’s now ready for some sideways trading.

After weeks of consultation with Roy Ward, I’ve decided to make the following changes to the Cabot Benjamin Graham Value Investor. I also include updates on two of our stocks.

This railroad company beat analysts’ estimates by $0.11 last quarter, and 26 analysts have raised their EPS forecasts for the company in the past 30 days.

This Indian bank is expected to grow at an annual rate of 37.6% over the next five years.

This semiconductor industry supplier is forecasted to grow at an annual rate of 115.28% over the next five years.

The earnings estimates for this wireless tower REIT were recently raised by 13 analysts.

The market’s larger, longer-term trend remains up, and the odds are that the market will be higher later this year. But short-term, the market remains in a correction, and marijuana stocks, as a whole, are not fighting the trend.

This health insurer beat analysts’ earnings estimates by $0.22 last quarter.

Selling two previous ideas.

Selling two previous ideas.

Today, we are recommending the purchase of a semiconductor equipment company and selling two previous ideas.

This global technology fund is benefiting from doubled-digit returns in many of its holdings.

This real estate software/analytics company is setting a pace for double-digit earnings (estimated at 24.11% annually) for the next five years.

Today, I’m creating a fourth portfolio category within Cabot Undervalued Stocks Advisor: Special Situations. This will be a portfolio for capital gain opportunities that do not conveniently fit into the other three portfolios.

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.