The good news is that four weeks of upside action has brought a new buy signal from Cabot’s intermediate-term market timing indicator. But this doesn’t mean you can jump in with both feet yet; there’s still reason for caution.

One way Cabot Stock of the Week exercises caution is by diversifying widely, not only among industries but also among investment strategies. Today’s recommendation, a big undervalued robotics company in Japan, is an excellent example.



As for the rest of the portfolio, it’s acting well and thus the only change today is a downgrade of one stock—which has got a bit high—from buy to hold.



Full details in the issue.

Current Market Outlook


While the day to day volatility remains extreme, the market’s intermediate-term trend has turned up (according to our measures), which argues for a more constructive stance toward stocks. Of course, that doesn’t mean you should dive in headfirst—there remain plenty of headwinds, including the fact that most stocks are still below their 50-day and 200-day moving averages (i.e., plenty of potential selling to chew through on the upside). But there’s no question the evidence has improved, so it’s a good idea to slowly put money to work, and then use the market for feedback; If you develop some solid profits, you can become more aggressive, but if the uptrend decisively cracks (would take a 6% to 7% drop from here), you want to hold off further buying and honor your stops.

This week’s list continues the trend we’ve seen of many high-potential stocks spiking back toward their old highs. Our Top Pick is Okta (OKTA), which has rejoined the leadership ranks after nine-months of correcting and consolidating.

Stock Name	Price	Buy Range	Loss Limit
ACADIA Pharmaceuticals (ACAD)	47.84	48-50.5	42-44
Advanced Micro Devices (AMD)	82.24	53-56	47-49
ASML Holding (ASML)	350.01	285-295	257-263
CrowdStrike (CRWD)	105.02	65-67.5	56-58
Franco-Nevada (FNV)	125.51	122-126	109-111
Immunomedics (IMMU)	34.23	20.5-22	16.5-17.5
Okta, Inc. (OKTA)	148.41	146-152	127-130
Sea Limited (SE)	132.86	51-53	46-47
Shopify (SHOP)	585.00	575-615	510-525
Tradeweb Markets (TW)	51.44	50-52	45-46

Finally, the coronavirus news is improving, and so is the market. We’re now up about 12% on the Dow since our issue last month. Our Adviser Sentiment Barometer is mixed; still mostly bearish, but our contributors—as well as our analysts here at Cabot Wealth feel we are near a bottom on the markets. That, of course, is dependent upon how well we do when our economy begins to reopen.

So far, around 17 million unemployment claims have been filed, and it will take awhile for the unemployment number to recover. But, as you know, the markets generally move ahead of the economy, gathering the good news in first, so we are feeling optimistic.



As you know, I’ve been adding a lot of dividend stocks to my newsletter in the past month or so, so that you could, at least, enjoy some cash flow while we await the recovery. I’m beginning to go back to growth, so you’ll see more of those recommendations in the next few weeks.



And our Spotlight Stock this month, certainly fits the growth category.



Full details in the Issue.

The market rebound from its lows has been impressive as the unprecedented amount of stimulus injected by the Fed and Congress has overwhelmed any forward-looking concerns about the real economy.

The key now is to build, day by day, a more normal trading pattern. Cabot Global Stocks Explorer positions have kept pace with the market with outlier Virgin Galactic (SPCE) coming back 75% in two weeks. Our emerging markets (EEM) timer needs a bit more time to come out of its negative position. Today’s new recommendation is a high-quality, debt-free robot maker that is trading at close to a 10-year low.

inally, the coronavirus news is improving, and so is the market. We’re now up about 12% on the Dow since our issue last month. Our Adviser Sentiment Barometer is mixed; still mostly bearish, but our contributors—as well as our analysts here at Cabot Wealth feel we are near a bottom on the markets. That, of course, is dependent upon how well we do when our economy begins to reopen.

So far, around 17 million unemployment claims have been filed, and it will take awhile for the unemployment number to recover. But, as you know, the markets generally move ahead of the economy, gathering the good news in first, so we are feeling optimistic.

As you know, I’ve been adding a lot of dividend stocks to my newsletter in the past month or so, so that you could, at least, enjoy some cash flow while we await the recovery. I’m beginning to go back to growth, so you’ll see more of those recommendations in the next few weeks.

And our Spotlight Stock this month, certainly fits the growth category.

While the market has rallied roughly 25% off its closing low from March it’s not exactly a roaring bull market. We are where we are because the Fed and Treasury are lobbing money-filled grenades in all directions. Near-term market fundamentals are weak, but looking out a few quarters (or more) things should improve drastically, and that’s what the market is trying to factor in. On balance, it’s time to be conservative, but to take shots here and there. This month’s Issue of Cabot Early Opportunities offers up five options that look good right now.

This industry is very recession-resistant (sales grew steadily even through 2008-2009) and this stock is leading the charge to its move online (25% of sales online by 2022, up from 14% in 2017) thanks to its product selection (45,000 of them!) and fulfillment (can reach all of the U.S. within two days).

Current Market Outlook


Our thought that March 23 would prove to be a workable low was correct, and the past three weeks have seen the major indexes recoup 40% to 55% of their crash declines (depend on the index). It’s obviously been good to see, as is the continued constructive action in many stocks; it appears the wheat is separating from the chaff. Still, we think the next week or two will be the key juncture—if the major indexes can ramp from here, the intermediate-term trend would turn up and could coincide with some powerful breakouts. On the flip side, if the sellers reappear, a deeper pullback or a retest of the lows could be on tap. Right now, we’re optimistic, but we never anticipate signals; today, with the trend still down, you should remain defensive.

Happily, we continue to see a lot of stocks that want to go higher if bulls do retake control. Our Top Pick this week is Inphi (IPHI), which is already at new closing highs as demand for its high-speed goods improves. Start small and/or aim for dips.

Stock Name	Price	Buy Range	Loss Limit
Amazon.com (AMZN)	2.00	2070-2130	1890-1920
American Tower Corporation (AMT)	252.32	238-248	220-225
Bilibili (BILI)	28.71	25-27	21-22.5
Chewy (CHWY)	43.92	37.5-40.5	32-33.5
Ciena (CIEN)	44.25	42.5-44	38.5-39.5
Inphi (IPHI)	120.16	87-91	77-79
Veeva Systems (VEEV)	180.23	159-163	144-146
Wheaton Precious Metals (WPM)	34.43	31-32.5	27.5-28.5
Wingstop (WING)	121.52	92-96	81-83
ZTO Express (ZTO)	28.84	26-27.5	23.5-24.5

Market volatility remains high, and the good news is that since the bottom three weeks ago, most of the volatility has been to the upside. But don’t get complacent; conditions remain ripe for a substantial pullback as the market works to raise the fear level among investors.
In the meantime, the action of the best growth stocks remains impressive, and one of the leaders, with a great story about internet security, is today’s recommendation.


As for the rest of the portfolio, it’s acting well (with a couple of very strong stocks in the mix), and thus I have no changes today.



Full details in the issue.

I’m changing my recommendations on Dollar Tree (DLTR) to Hold; and on Big Lots (BIG), Kraft Heinz (KHC) and WellCare (WCG) to Buy.

Remain bullish. The overall market remains in great shape, and while a pullback of some sort is possible after a nice run during the past few weeks, the evidence points to higher prices in the weeks and months ahead. In the Model Portfolio, we sold Ligand Pharmaceuticals (LGND) on a special bulletin Monday, replacing it with Amazon (AMZN). We’ll stand pat tonight, though with two open slots (cash position near 16%), we’re aiming to do some new buying in the days ahead.

Very conservative stocks like utilities have weakened. The utility sector is still up 17% year-to-date, but what goes up must come down, and we’ll be selling half our position in Xcel Energy (XEL) today. I encourage you to reinvest the profits in stocks with stronger growth potential, like fellow Safe Income tier holdings Home Depot (HD), J.M. Smucker (SJM) or UPS (UPS).

Nobody has missed their chance to buy low and catch a long overdue run-up in some great stocks. There are lots of great opportunities listed in this week’s update.

Sixteen Cabot Benjamin Graham Value Investor companies reported quarterly financial results or other noteworthy news. I include one sell recommendation in today’s update: AMC Networks (AMCX).

The Emerging Markets Timer is still pointed up, despite the market’s recent consolidation. Our only move tonight is shifting our position in TAL Education (XRS) to a Hold rating.

Many of our stocks are following the market’s lead and trading sideways. I have no rating changes in today’s update, but several of our holdings reported earnings over the past week.

The bull is back! The recent breakout of stock market indexes above their two-year trading range clearly signals that a new bull market is at hand.

We had a terrific week with the vast majority of our stocks, supported by a 0.8% rise in the S&P 600 Small Cap Index. That’s not a big move, but given the recent break-out to all-time highs, a little follow-on strength across the board suggests the market could be setting up for another run higher.

Remain bullish. We’ve seen some wiggles from individual stocks during the past two weeks, and more are likely as earnings season progresses. But the major trends of the market and most stocks are up, so we advise you to remain heavily invested. There are no changes in the Model Portfolio tonight.

Many of our portfolio stocks either just completed a run-up or they’re trading sideways in synch with the S&P 500 index. A couple of them look capable of continuing their run-ups this week, and cruise company stocks also appear ready to climb. However, the stock that seems most obviously ready to rise is Johnson Controls (JCI) in the Buy Low Opportunities Portfolio.

Eighteen Cabot Benjamin Graham Value Investor companies reported quarterly financial results or other noteworthy news. I have one new sell recommendation: Fortive (FTV).

Four stocks in our portfolio’s have reported earnings.

This consumer finance company beat EPS estimates by $0.04 last quarter, and is expected to grow at a 13% annual rate over the next five years.

Three stocks in our portfolio’s have reported earnings beats.

The shares of this music streaming service were just upgraded to ‘Buy’ at Redfern.

This airline beat Wall Street’s estimates by $0.03 last quarter.

Tomorrow’s the day that stores across Canada begin selling marijuana legally, and as I’ve said several times before, I believe the odds are that this will mark an intermediate-term top for many of the stocks in the sector.

This trucking company beat analysts’ estimates by $0.11 last quarter and three analysts have increased their EPS estimates for the company in the past 30 days.

The second previous idea we are selling.

Next, we are cleaning house a bit by selling two previous ideas.

Our first pick today is an Indian IT company who beat EPS estimates by $0.08 last quarter.

This oil company is expected to grow at an annual rate of 30% over the next five years.

Yesterday brought widespread carnage to the markets, which has carried on to today, but some tech stocks have found support. For now we are going to be watching and waiting, but I want to comment on three current holdings.

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.