The evidence for the overall market continues to improve; over the past week, two blastoff indicators have turned green, which should bode well when looking out over the next few months. Growth stocks, however, remain in a consolidation phase following some huge runs, with many (not all) stocks sagging back during the past week or two. Overall, though, the pullbacks have been normal, so we remain optimistic, though we’re still stepping slowly and looking for decent entry points.

In tonight’s issue, we’re doing a touch more buying, filling out a position in one of our stocks, following the addition of a full position last week. That will leave us with around 18% in cash.

Today we’re breaking into a familiar market by going back to the insurance industry.

But today’s addition is very different from our other rapid growth insurance companies in a major way (as you’ll soon see!).



The stock is acting strong and the fundamentals remain great, despite COVID-19.



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

Three of today’s featured companies seem most obviously ready to begin or continue run-ups in the coming days. The fourth featured company is sitting at the bottom of a steady trading range, offering attractive opportunities for growth investors, dividend investors and traders.

U.S. stock markets are rising again. At some point in the coming months, the sober reality of the country’s economic situation will impact the stock market, but for now, there’s money to be made. Energy stocks and stocks within the investment, life insurance and annuity industry look especially bullish right now.

Precious metal stocks have become mixed of late as economic optimism has increased, but some are still strong, and today’s recommendation is one of them.

Current Market Outlook


Last week saw some vicious rotation early in the week, with the super-strong growth names coming down to earth while money gushed into cyclical sectors, but the leaders stabilized as the week wore on and the broad market remains positive, too. From a big-picture perspective, the 90% Blastoff signal last week (90% of NYSE stocks above their 50-day lines) bodes well for the overall market, and the fact that few (if any) leading stocks have cracked is a good sign. All in all, further potholes, rotations and shakeouts are relatively likely given the big run over the past two months and the divergent environment, but until proven otherwise, we continue to think the path of least resistance is pointed up. We’re moving our Market Monitor up another notch to a level 8.

This week’s list has a good mix of setups, with some recent earnings winners, some that have pulled back and others that are in persistent uptrends. Our Top Pick is Arconic (ARNC), which is one of the few cyclical stocks to appear in Top Ten since the uptrend got underway.

Stock Name	Price	Buy Range	Loss Limit
Adaptive Biotechnologies Corporation (ADPT)	39.41	37.5-39.5	34-35
Arconic (ARNC)	17.00	14-15	11.7-12.2
Bill.com Holdings (BILL)	88.76	69-73	60-62.5
Dynatrace (DT)	36.59	35-37	31-32.5
II-VI Incorporated (IIVI)	48.64	45.5-48	40-41.5
LiveRamp Holdings (RAMP)	46.54	48-50	43-44
Pan American Silver (PAAS)	27.28	27-29	24-25
Seattle Genetics (SGEN)	150.85	156-160	140-143
Tractor Supply Company (TSCO)	122.24	115-119	103-105
Zscaler (ZS)	126.22	103-108	89-92

The overall market remains healthy, and while we still haven’t received an “all-clear” signal from our long-term timing indicator, we do have a positive signal from the 90% Blastoff Indicator, and that’s good!

Overall, our portfolio stocks are behaving quite well, with none disappointing today. In fact, many are so strong that I expect pullbacks in the future. The only sale today is of a stock that has given us a quick 30% profit. Otherwise, I’m sitting tight.



As for today’s recommendation, it’s a company in the online education industry, where demand is booming thanks to COVID-19.



Full details in the issue.

Fortunately, most banks entered the current downturn in much better condition than when they entered the 2009 financial crisis. Meaningfully higher capital levels, stronger loan reserves, more stringent risk controls and tighter cost structures will all help support banks’ financial health in the difficult period ahead.

In this issue, we recommend six banks whose weak share prices imply an overly dour economic outlook.

U.S. and international markets staged a rally this week alongside momentous events in Asia as China imposes its will on Hong Kong through the passage of national security law. America indicates it will withdraw trade preferences for Hong Kong, viewing it as indistinguishable from China. China cracks down on Hong Kong as legislation advances in the U.S. to potentially delist international and Chinese companies that do not meet U.S. disclosure standards. Meanwhile, we have a new recommendation this week that has been in the news regarding Covid-19 and how we should all look at the economics of discovering new drugs.

Since the COVID-19 crash ended just over weeks ago, the market has been impressively strong, with marijuana stocks some of the strongest, as they left behind a two-year bear market.

So even though some of these stocks seem a bit over-extended today, short-term, they still have enormous upside potential in the long-term.



Full details in the issue.

Most of the outperformers of the last two months—including financials, energy stocks and industrials—are consolidating, but we haven’t seen significant pullbacks.

Here are a few things that I’m noticing among various stock sectors. Semiconductor stocks look extremely bullish. Make sure you have one of those in your portfolios! Good choices today include Applied Materials (AMAT) and ASML Holdings (ASML).

No Cabot Benjamin Graham Value Investor companies reported quarterly financial results or other noteworthy news during the past week. However, I recommend that two companies be sold: Gildan Activewear (GIL) and Team Health (TMH). I also include questions from subscribers along with my answers.

The Emerging Markets Timer is now flashing a new buy signal, as the iShares Emerging Markets Fund (EEM) has risen above both its 25- and 50-day moving averages and the lower (25-day) has turned up. Our only portfolio move today is to return TAL Education (TAL) to a Buy rating.

Stock markets started the New Year with a nice pop yesterday, after closing out the last week of 2016 marginally lower. While one day of action isn’t enough to indicate a trend, we’re optimistic that 2017 could bring a strong market rally.

Remain optimistic, but for growth stocks, you should wait for your pitch. The market is consolidating normally following its heady post-election run, and with our market timing indicators positive, we expect higher prices ahead. Tonight, though, we’ll stand pat, with the Model Portfolio 70% invested.

With this week’s light trading volume, most of our holdings have been treading water, so we’ll keep this week’s update short and focused on stocks that reported some news over the past week.

The price charts on the S&P 500 and the Dow Jones Industrial Average are looking more and more like they’re just resting before beginning another run-up. Insurance and bank stocks’ price charts look identical, while energy stocks’ charts are more actively bullish.

On average, our portfolio is outperforming the Russell 2000 Small Cap Index (the most common benchmark for small caps) in 2016. We have a few stocks lagging the index, largely because of a drop in a few stocks over the past few days.

In this Weekly Update, I summarize information for four Cabot Benjamin Graham Value Investor companies that reported quarterly financial results or other noteworthy news during the past week. I also include questions from subscribers along with my answers.

The Emerging Markets Timer is now fully negative, as the iShares Emerging Markets Fund (EEM) has gapped down to near its November lows. Our only additional move today is to move Pampa Energia (PAM) to a Hold.

This weekly update takes a look at how to handle bond investments when interest rates are rising. Bond prices and interest rates work like a seesaw: when interest rates rise, bond prices fall, and vice versa.

Profits from our sell recommendation.

This homebuilder will announce earnings on February 26.

One of our stocks reported a strong earnings beat and another joins the Buy Low Opportunities Portfolio as a Strong Buy.

A sell recommendation.

Our first idea today is taking advantage of the low-P/E bank stocks, and our second idea is a sell recommendation.

Marijuana is still far from universally accepted, and until it is, the sector will continue to have great growth potential. That’s how investing works.

As I mentioned in yesterday’s Weekly Update, I am generally waiting for the stock market’s first pullback, during this recovery from the fourth-quarter 2018 stock market correction, before moving many good stocks from Hold to Buy recommendations. However, today’s news on this stock is so good that the odds of a significant pullback have all but disappeared.

Coverage of the shares of this software company have recently been initiated at Deutsche Bank and Stifel Nicolaus, with a ‘Buy’ rating.

Shares of this apparel company were recently upgraded to ‘Buy’ at Stifel Nicolaus.

Crista is making several rating changes today.

Coverage of the shares of this cloud company was recently initiated by Atlantic Equities with an ‘Overweight’ rating.

This medical device company is due to report earnings on January 24, and recently reported that its revenue would be up about 17%, which is higher than analysts expected.

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.