This has been a busy week with earnings reports—the bulk of them on the positive side. China and other emerging and international companies seem to be posting good numbers but macro headwinds are weighing on markets for now.

The Hong Kong situation is one issue causing concern so this week we head back to Singapore for a high quality financial play on Asia

The market has been all over the place so far in August, with some huge daily declines and advances depending on the news of the day. While the continued rebounds are a good sign buyers are lurking out there, the fact is the intermediate-term trend isn’t up, so we think it’s best to stick with a cautious stance—jettisoning your portfolio of losers and laggards (as we’ve done in recent weeks) while looking for either undervalued or resilient stocks to take their place. Our choice this week is a blue chip that’s cheap, near support, pays a nice dividend and is in position to benefit from any bounce in interest rates.

Current Market Outlook


The good news is that the general market has been whacked two or three times during the past couple of weeks, but each time has staged a strong rally, including today’s spirited advance. That said, despite the nice Friday/Monday rebound, the intermediate-term trend is still iffy (most indexes are sitting at or below their 50-day lines and below their highs from last week), so our overall stance hasn’t changed much—you should remain cautious, limiting new buying and holding some cash, though we’re also fine sticking with your strong, profitable names, giving them a chance to resume their uptrends down the road. The game plan from here is simple: If the market fades again, we’ll remain cautious, but should the recent strength continue, we’ll gradually turn more constructive and put money to work.
This week’s list (and the past couple of weeks) are great for getting your ducks in a row should the bulls decisively retake control. Our Top Pick is Appian (APPN), which looks like a new small/mid-cap leader following a massive breakout. Try to buy on dips.

Stock Name	Price	Buy Range	Loss Limit
ACADIA Pharmaceuticals (ACAD)	47.84	28.5-30	25.5-26.5
AngloGold Ashanti (AU)	20.45	19.5-20.5	17-17.5
Appian (APPN)	46.48	55.5-58.5	48-49.5
Dexcom (DXCM)	421.36	160-164	148-150
eHealth (EHTH)	122.74	103-107	91-93
Five9 (FIVN)	78.35	60.5-63	54.5-56
JD.com (JD)	39.58	30-31.5	27-28
KLA Corp. (KLAC)	158.80	135-138	124-126
Q2 Holdings (QTWO)	80.81	87-90	78-80
Universal Display (OLED)	187.54	208-216	182-186

This week’s Cabot Growth Investor issue is two days early, because the rest of the week is filled by the Cabot Wealth Summit, which brings all our analysts to Salem to meet subscribers face-to-face and fix all the world’s problems—or at least help them become better investors.

The market remains news driven, with some soothing U.S.-China trade news sending the major indexes back up. Even so, the intermediate-term trend remains unsupportive, so we’re still playing some defense—we’ve pruned our worst performers and losers, but are also holding our resilient performers. From here, we’re just taking it day to day, willing to buy some fresh leadership if the bulls retake control, but content to sit tight with some cash until that happens.
In tonight’s letter, we write a bit about the type of stocks we’re honing in on for the next sustained advance (early stage), touch on the bottom dropping out of investor sentiment (good for the longer-term outlook) and dive into all our stocks and plenty of new ideas as well.

This week’s update is a day early, because the rest of the week is filled by the Cabot Wealth Summit, which brings all our analysts to Salem to meet subscribers face-to-face and fix all the world’s problems—or at least help them become better investors.

In the meantime, the market remains under pressure, with our intermediate-term market timing now negative. Thus I’m continuing to raise cash, by selling our worst performers, and you should too, so you’ll have ammunition to use on the new leaders when the market turns up again. This week that means selling four stocks.

As for the new recommendation, it’s a small-cap stock in the communications software industry that you probably haven’t heard of, but it’s shrugged off the market volatility lately, trending slowly higher, and its long-term prospects are great.

Current Market Outlook


Last week’s action was encouraging, with the major indexes snapping back decently from Monday’s selloff and with many individual growth stocks either acting resiliently and/or reacting well to earnings. That said, three up days (Tuesday-Thursday last week) are not enough to reverse the prior meltdown—right now, all major indexes are below their 50-day moving averages and, generally speaking, the overall intermediate-term trend is neutral-to-negative. We’re not advising you to hole up in your bunker, but the onus is on the bulls to prove that the tariff-induced decline was a shakeout; until then, it’s best to remain cautious by holding some cash, keeping new buys small and making sure your losers and laggards don’t slip much further.

Going along with the action in growth stocks, this week’s list is chock-full of recent earnings winners. Our Top Pick is TransDigm (TDG), a solid 20%-ish grower in the aerospace field that gapped on earnings and is set to pay a huge one-time dividend.

Stock Name	Price	Buy Range	Loss Limit
Carvana (CVNA)	82.90	75-78.5	64-66
Insulet (PODD)	175.69	144-147	128-131
Lattice Semi (LSCC)	23.92	17.5-18.5	15.5-16.2
Martin Marietta Materials (MLM)	261.52	243-250	218-222
Medpace (MEDP)	76.28	75.5-78.5	67.5-69.5
Roku, Inc. (ROKU)	150.46	124-130	107-110
Shake Shack (SHAK)	92.08	85-88	75-77
SolarEdge Technologies Inc. (SEDG)	124.37	80-84	70-72
TransDigm (TDG)	599.41	525-545	475-485
Wingstop (WING)	121.52	95-98	88-90

What a difference a month can make! What an April! The S&P rose 9.6% in April, making it the best single month for the market in six years. It hit an all-time high on Friday.

Sure, the war isn’t over. But the market doesn’t really seem to regard it as a war anymore, more like a blockade situation with the possibility of some skirmishes. While there is still headline risk, investors have moved beyond this war and are focusing on earnings. And for good reasons.

The results are in for the month of April. It was fabulous. The S&P rose 9.6%, making it the best single month for the market in six years. It hit an all-time high on Friday.

Sure, the war isn’t over. But the market doesn’t really seem to regard it as a war anymore, more like a blockade situation with the possibility of minor skirmishes. While there is still headline risk, investors have moved beyond this war and are focusing on earnings.

Now before you call me crazy concerning today’s newsletter headline, hear me out.

Even though large-cap names have garnered more than a fair share of attention among investors this year, I think a case can be made that companies with big capitalizations have a lot more room to run higher before they can be truly regarded as “overbought” or “played out.”

The market is digesting the push and pull of higher oil prices, a deeply divided Federal Reserve, prospects for a prolonged blockade of the Strait of Hormuz and fading momentum from the AI trade that helped push markets to all‑time highs earlier this month.

Despite the crosscurrents, the overall tone still tilts bullish, supported by investor comfort (for the time being) with the geopolitical tension, resilience in the U.S. economy, and improving visibility into earnings growth over the coming quarters.

Yesterday, four tech giants, Alphabet, Amazon, Meta and Microsoft, representing 22% of the S&P 500’s market value, reported strong quarterly earnings that highlighted the importance of AI.

You might think the above companies and their AI brethren are “asset light” companies but you would be very wrong.

It’s been a glorious April following a miserable March for the market. What happens in May may determine which direction stocks are headed for the rest of the year.

That’s probably overstating things a bit, but May should be crucial for the reasons we discussed last week: namely, the fate of the Iran war, but also the bulk of first-quarter earnings season and the introduction of a new Fed chair.

What war? This market is moving on. We may not be out of the woods yet, but investors are looking beyond the Iran war.

Stocks have already made up all losses from a rough March and then some. The S&P 500 had fallen 7.7% in the month of March by the 30^th. Since then, the index has rallied over 13%. The S&P is now at a higher level than before the war began and is hitting new all-time highs.

The other day I was paid a visit by a roving ISP salesman who was pitching his company’s fledgling internet service over the local monopoly’s. We struck up a conversation and he asked what I did for a living. When I told him, his eyes lit up and he asked, “Got any good stocks you can recommend?”

Without thinking I blurted out, “Anything AI-related. You can’t go wrong.” The advice was only semi-facetious, for there’s undeniably a degree of truth behind it. My instinctive response to that question also prompted me to consider the question: just how long can the broad market continue its “all things AI” run without broader sector participation

Note: I’m out of town this week, so I’ll be a bit briefer on the update today—but I’m still checking my laptop a couple of times a day if you have any questions or comments. I’ll be back at my desk come Monday. Cheers.

WHAT TO DO NOW: Remain optimistic. The market and some leaders have hesitated, but all of our market timing indicators are bullish, and most stocks we own or are watching are working. Last Friday, we bought a half-sized stake in Nebius (NBIS) and added a 3% additional stake in ProShares S&P 500 Fund (SSO); earlier this week, we sold our small remaining position in GE Aerospace (GE); and tonight, we’ll buy a half-sized position (5% of the portfolio ) in Cava (CAVA). We’ll still have 46% in cash or so after these moves.

Despite all the headline noise lately we’re marching deeper into first‑quarter earnings season with the market’s path of least resistance still pointing higher.

Optimism around the extension of the tentative ceasefire in the Middle East has reduced geopolitical anxiety to a seemingly manageable level. The U.S. economy continues to show resilience, and the corporate earnings outlook points toward meaningful growth in the coming quarters and years.

The old saying, “History doesn’t repeat itself, but it rhymes,” is an apt one for the stock market these last two years.

In early 2025, the S&P 500 raced to new all-time highs before peaking in late January/early February, only to get dragged down in March and April by a geopolitical crisis (tariffs/Liberation Day), before rallying in a V-shaped pattern as the severity of the crisis abated.

The market turned on the afterburners. The S&P 500 made up all the March losses and catapulted to a brand new high in a remarkably short time. It’s a market that sure looks like it wants to go higher. But stocks are being held back this week by more war uncertainty.

The current ceasefire with Iran expires on Wenesday night. Talks may not happen, and war talk is growing. The resumption of the war will almost certainly prompt a decline in the market. Aside from that near-term threat, investors are clearly looking past this war. Hopefully, it won’t last much longer.

At this point it seems prudent to trim three underperforming positions that haven’t been working well for us—especially since all three are at, or just below, the pivotal points I’ve been monitoring for several weeks.

The shares of this brokerage company were recently upgraded by Keefe Bruyette & Woods, to ‘Outperform’, and by Barclays to ‘Overweight’.

The market and especially growth stocks fell sharply today, with the Dow losing 345 points and the Nasdaq falling 212 points, giving back all of yesterday’s bounce.

Wall Street expects this gaming company to grow at more than 15% annually, over the next five years.

Markets ended last week on a sour note as the U.S. and China imposed tit-for-tat tariffs and Facebook continued to drag tech stocks lower. The major indexes all declined more than 5% for the week, their worst weekly performance in over two years. I’m moving two of our most affected stocks to Hold today.

This insurance company beat analysts’ estimates by $0.05 last quarter.

In light of all this week’s “Trump trade war” headlines, let’s review the U.S.-China trade news so that you can quickly grasp the facts of the situation. It’s also important to understand that as much as the media might try to portray announcements about trade problems as sudden, whimsical and dangerous, they are in fact long-studied, methodical, and inclusive of a huge variety of government, industry, academic and citizen input.

The market was crushed yesterday as fears of a trade war with China picked up. At the close, the Dow had lost 724 points while the Nasdaq had fallen 179 points.

This animal health company was just recommended by Zack’s, who cited its earnings growth and positive estimate revisions.

One stock reports second quarter results and three more are rising this week.

This aerospace services company beat analysts’ earnings estimates by $.20 per share last quarter, and nine analysts have increased their forecasts for the company in the past 30 days.

If you own shares of this stock in our portfolio you were very pleased when shares rallied 28% yesterday.

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.