The market remains in good health, though selectivity remains important.
For today’s recommendation we swing back to the more conservative side of the market with a very big, very well known company whose stock has just begun a new uptrend.
As for the current portfolio, we have five stocks hitting new highs in recent days, and none doing poorly, so overall, progress is being made! There are no sells today. Details in the issue.

Current Market Outlook


Last week saw a continuation of the market’s rally, with most major indexes (save small caps) lifting to new recovery highs, led by many “old world” sectors like financials, mining, transports and the like. Meanwhile, many hot growth stocks (mostly technology) lagged, with a bunch falling to key intermediate-term support. What does it mean? As we wrote in Friday’s update, you should take things on a stock-by-stock basis—most stocks still look great, and if you have some winners, you should continue giving them a chance to crank higher. But it’s important not to be complacent, either, so be sure to honor your loss limits and stops in case the selling in growth stocks continues and/or the selling spreads to other corners of the market. Overall, we remain mostly bullish as most of the evidence continues to point up.
Not surprisingly, this week’s list has many newer names to the publication as the buying power rotates to other areas. Our Top Pick is Wynn Resorts (WYNN), which, along with many gaming peers, looks to have changed character last week. Try to buy on dips.

Stock Name	Price	Buy Range	Loss Limit
Acacia Communications (ACIA)	51.83	55.5-58	50-52
Advanced Micro Devices (AMD)	82.24	26.5-28	24-25
Amphenol (APH)	91.75	99-102	92-93
Autohome (ATHM)	98.65	103-108	94-96
Cabot Microelectronics (CCMP)	156.17	118-123	107-110
Delta Air Lines (DAL)	54.28	56-58	52-53.5
Lennox International (LII)	270.56	260-268	242-247
Lululemon Athletica (LULU)	304.69	166-171	150-153
Rio Tinto plc (RIO)	57.05	58-60	53.5-54.5
Wynn Resorts (WYNN)	121.08	136-142	122-125

This month we’re wading deeper into the MedTech space with a life sciences company that’s commercializing a disruptive technology that could diagnose disease in seemingly healthy people.
It’s an exciting story of a young company that appears to be in the early innings of its growth curve, but has made it far enough with respect to technology development, customers and strategic partnerships to attract attention from larger investors.
Revenue was up 60% in 2018, and is projected to keep growing at a rapid rate. All the details are inside this month’s Issue.

After a fairly quiet March, emerging markets came to life this week after the revelation of unexpectedly strong manufacturing growth in China, progress on trade talks and lower interest rates—which always help emerging markets.

This week we have a new recommendation that helps power emerging market consumer spending, a key driver as these markets transition from exports to consumer spending to fuel their growth.

Here in Tennessee, the Bradford pears, forsythia, and daffodils are in bloom. And so is the market! We had a good market month, with the Dow Jones Industrial Average gaining more than 500 points since our last issue.

The economy continues to be strong, with unemployment low and housing still favorable. And sentiment, as you’ll see in our Market Views, remains bullish overall.

Various portfolio companies are in the midst of changes and volatility related to a spin-off, a name change, the Boeing Max 737 problem and the ongoing effects of Midwest flooding. In addition, U.S. stock markets decided that they’re ready to rise again, so I itemized several opportunities in this issue ranging from blue chip stocks to a microcap stock.

I expect 2019 to continue being a year that offers great opportunities for stock traders. While my investment style of identifying undervalued growth stocks is not conducive to day trading, investors will likely find lots of opportunities to achieve capital gains of 10% or more over several-month periods.

The market’s weakness didn’t last long; the indexes snapped quickly back, though breadth is not quite as good as previously. Still, the market strength restores my confidence that we’ll see higher highs in the months ahead, and I recommend that you invest accordingly.
For today’s recommendation we swing back to the aggressive side. Remember those promises of DNA-based personalized medical treatments from a decade ago? We’re getting closer and today’s recommendation is a leading force in the field.

Current Market Outlook


The major indexes have scored a couple of solid gains, though we’re seeing plenty of crosscurrents underneath the surface; this could be the start of a rotation out of growth, but it may just be normal action that’s often seen around quarter-end (as hedge funds, most of which get paid quarterly, book profits and reposition themselves). Just looking at the evidence, the push higher has kept the intermediate-term trend pointed up, and while some leaders have hit potholes, most remain in uptrends and have avoided abnormal action. Overall, then, we remain mostly bullish, though we’ll keep our Market Monitor at a level 7 for a bit longer to see if this recent push (a) continues and (b) is led by leading, Top Ten-style stocks.

This week’s list has many familiar names from earlier this year—a good sign, in our view, that leading stocks are continuing their uptrends. Our Top Pick is Ionis Pharmaceuticals (IONS), a unique drug firm with a powerful chart. Try to buy on dips.

Stock Name	Price	Buy Range	Loss Limit
Armstrong World (AWI)	88.01	77-79	70.5-72
Array Biopharma (ARRY)	46.35	23-24.5	20.5-21.5
Carvana (CVNA)	82.90	56-59	48-50
Ionis Pharmaceuticals (IONS)	73.34	77-80	69-71.5
Paylocity (PCTY)	97.34	87-90	79-81
ServiceNow (NOW)	341.86	240-248	220-223
Survey Monkey (SVMK)	19.97	17-18	15.3-16
TAL Education (TAL)	50.49	34-36.5	31.5-32.5
TransDigm (TDG)	599.41	443-458	415-425
Universal Display (OLED)	187.54	150-155	134-137

While it may seem that all the stocks in the Dow Jones Industrial Average may move together, there are always those laggards that can’t catch up. This creates opportunity for the turnaround investor.

In this issue, we provide our thoughts on the laggards, highlighting those with promising appeal as well as some that might best be left alone for now.

For value-focused investors, this year’s prologue has been a welcome change from the turmoil experienced in early 2025.

In just the past few weeks, some of last year’s most ignored or underappreciated laggards have posted outsized gains, with rallies that have made even momentum-driven tech stock traders envious. Even more remarkable is the fact that much of that strength has been concentrated in ultra-defensive areas of the market like consumer staples, utilities and healthcare.

The market rotation continues to be the main story out there this week, though rumblings of a potential strike on Iran, an update from the January FOMC meeting, and a slew of earnings reports and economic data releases have been giving investors plenty to think about.

In terms of the rotation, the equal‑weight S&P 500 ETF (RSP) is up 5.5% so far this year, illustrating that leadership is broadening beyond the narrow group of mega‑cap stocks that drove much of last year’s performance.

Year to date, the S&P 600 SmallCap Index is up 8.3% and the S&P 400 Mid‑Cap Index is up 7.9%. Both are comfortably outperforming the S&P 500, which is up just 0.1%, and the Nasdaq, which is down 2.1%.

Happy Chinese New Year! The year of the horse is upon us.

China is expecting an incredible 9.5 billion trips to be made during the 40-day Lunar New Year travel period. Chinese automakers are also on the move as the country’s numerous brands sold nearly 200,000 vehicles in Britain last year, doubling their market share to almost 10%.

As U.S. investors have shifted from risk-on to risk-off mode in recent months, a clear disparity between the “haves” and the “have-nots” has materialized.

Let’s start with the “have-nots.” Financials have fared the worst so far this year (-4.7%), followed by technology (-3.1%), communication services and consumer discretionary (-2.8% each). The downturn in the two tech-related sectors in particular is a stark departure from recent years, when technology led the charge of the current bull market.

Cyclical stocks are soaring and technology is floundering in the transformed market.

The bull market is turned upside down. For most of the first three years, technology, and particularly AI stocks, soared while most other stocks did very little. Now, previously meandering stocks are killing it while technology sinks.

Strong fourth-quarter earnings are confirming what the market was already doing.

Current estimates based on earnings reported so far are for 13.2% overall S&P earnings growth for the quarter. It’s a solid quarter and the fifth straight quarter of double-digit earnings growth. In terms of sector performance, cyclical companies are killing it, and technology is floundering, just like before earnings.

Like many coffee aficionados, I have something of a love/hate relationship with Starbucks (SBUX). My main gripe is that the company’s food and beverage offerings have always been pricey compared to the fare served in most fast-food restaurants and run-of-the-mill coffee houses.

The outperformance of small caps continues.

Through Tuesday’s close, the S&P 600 is up 10% year to date versus just 1.6% for the S&P 500.

All but three small-cap sectors are outperforming their large-cap counterpart. The strongest small-cap sectors are materials (+20%), energy (+23%), industrials (+17%), and tech (+11.4%).

Let’s talk about the power of staying invested.

Sure, when the market turns south – and I’m not even sure last week’s mini-dip qualifies – it makes sense to pare back on your weakest stocks and put a larger portion of your portfolio in cash. But taking your ball and going home – selling out of all of your stocks when times are tough – is not a winning strategy. Here’s why.

NOTE: We’re sending this a day early as I’m soon to embark on a trip with the kiddos over the next week. I will be working a good amount from the road, though, and will have updates if need be. Also, next week’s issue will be published as scheduled.

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WHAT TO DO NOW: The market remains very mixed, with growth measures still generally pointed sideways to down, while the broad market remains in solid shape. What’s interesting, though, is that we’re seeing more growth stocks kick into gear, along with some huge buying action in a few “cyclical growth” names. Tonight we’re making one move—adding a half-sized stake in Macom Tech (MTSI)—but are keeping our eyes open for a broader character change among growth stocks. Our cash position will be around 53%.

Today could be a big day for cannabis stocks.

The reason: We may get an important update on the rescheduling timeline.

Cannabis investors will be watching closely today to see whether Attorney General Pam Bondi offers a rescheduling update when she appears before the House Judiciary Committee. Upbeat comments could spark a sharp cannabis sector rally. The hearing starts at 10 a.m. EST.

I’m excited to share a couple of enhancements to Cabot Early Opportunities —improvements designed to sharpen our focus and better help you stay on top of the stocks we own.

I expect the S&P 500 index to trade between the recent high and low for a while, several weeks or months, before attempting new highs again. Start investing your cash. Lots of the portfolio stocks are down, and I encourage you to buy any of the buy-rated stocks this week. We’re moving one stock from Hold to Strong Buy.

Analysts expect this potash company to grow by triple-digits next year.

An update on a previous recommendation.

This food production technology company beat analysts’ earnings estimates by $0.04 last quarter and is forecast to grow by double-digits annually for the next five years.

Analysts expect this childcare provider to grow at more than 15% annually over the next five years.

The major indexes suffered another huge wave of selling today, with the Dow cascading 1175 points and the Nasdaq losing 273 points.

The recent wave of selling has taken a bite out of the major indexes, and has undercut most of the stocks in our portfolio.

The major indexes collapsed on Friday, with the Dow plunging 666 points and the Nasdaq losing 145 points, capping off the index’s worst week in a couple of years.

Our latest recommendation, pulled back sharply after reporting earnings Friday morning.

Citigroup recently upgraded this medical device company’s shares to ‘Buy”.

One stock moves from Hold to Buy, one moves from Hold to Sell, and we have earnings reports on five stocks.

Emerging from a scandal, this energy stock is still somewhat speculative, but two analysts have recently increased their EPS estimates, and most industry specialists expect the dividend to return.

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.