With today’s recommendation, I leave the U.S. to return to the fast-growing giant that China has become, with a company that will join Tesla in the fast-growing electric car industry. It’s a low-priced stock, so it’s not for everyone, but it does have enormous growth potential.

Current Market Outlook


The overall action from the major indexes and leading stocks remains about as good as you could hope for considering we’re two months off a major bottom—we’re nudging up our Market Monitor another notch (to 8) in this issue to respect the continued improvement in the overall evidence. That said, after a strong eight-week run, we’re starting to see a bit of greed set in, as well as a bit of rotation, with some left-behind areas (like energy and regional banks) perking up. To be clear, such action is not negative—if anything, it’s probably a good thing—but it could lead to some ups and downs among individual stocks and sectors, especially those that have had good runs. Overall, though, you should continue to put money to work as opportunities arise.
This week’s list is still heavy on growth, though with a couple of new areas popping up, too. Our Top Pick is Chart Industries (GTLS), a little-known name that looks like a great way to play the booming LNG infrastructure area.

Stock Name	Price	Buy Range	Loss Limit
Chart Industries (GTLS)	72.05	83-87	72-75
Chegg (CHGG)	74.21	36-38	33-34
CyberArk (CYBR)	111.74	96-101	85.5-88
Guardant Health (GH)	88.34	47-50	41.5-43.5
Incyte Corporation (INCY)	76.98	81-84	74-76
iRobot (IRBT)	103.17	114-120	101-104
Netflix, Inc. (NFLX)	423.92	340-355	320-330
Okta, Inc. (OKTA)	148.41	81-84.5	72-74
Trade Desk (TTD)	468.02	152-160	135-140
TransDigm (TDG)	599.41	420-435	385-395

The market remains in good shape, generally shrugging off a stream of bad news by marching higher. Pullbacks are certainly possible, but most investors are positioned cautiously, which is another arrow in the bulls’ quiver when looking down the road.
In tonight’s issue, we’re putting another chunk of money to work by adding two half-sized positions (one in a stock we already own). That will leave us with 25% in cash.
Elsewhere in the issue, we write about a couple of additional positive longer-term signs for the market (one based on money flows, one based on the market itself), look at some new ideas and review all of our Model Portfolio holdings.

The market contributed to the bullish mien of the show, with the Dow Jones Industrial Average kicking in an 8.5% gain since our last issue. The economy also did its part; rates are stable right now, and the job market continues to improve. There is currently, on average, less than one potential employee for every job opening in our country.

Our contributors continue to be bullish, although with a cautious stance, as you’ll see reflected in our Advisor Sentiment Barometer and Market Views.

Market trends remain quite positive, and I continue to recommend that you work to get more invested. According to our market timing indicators, the odds are still very good that months from now, the market will be higher.
With today’s recommendation, I jump back on the growth track, with a stock that we sold for a 61% profit last year. The company has one of Mike Cintolo’s favorite growth stories, and if you owned it then, maybe you’d like to own it again, too.
As for the current portfolio, overall, we’re making great progress as the bull market pulls our stocks along; four are hitting new highs! But not all stocks are participating, and now it’s time to sell one. Details inside.

Current Market Outlook


Most major indexes have finally taken a bit of a breather during the past few trading days, with the 200-day moving average providing a bit of logical resistance. So far, the damage has been very limited and, in fact, many leading growth stocks actually hit new highs today. Without predicting any specific path, the big prior run, overhead resistance and still-iffy longer-term trend probably means more choppiness and potholes are on the way, especially as earnings season continues. But the overall evidence (which, by the way, includes a lack of meaningful pullbacks so far) continues to impress. We still think the next big move from here is up, but be sure to pick your spots (and your stocks) on the buy side, and practice patience with your strongest performers, giving them a chance to continue advancing.

This week’s list sports a bunch of recent earnings winners from a variety of industries. Our Top Pick is Array Biopharma (ARRY), which has shown fantastic accumulation pre- and post-earnings as it lifted to all-time highs.

Stock Name	Price	Buy Range	Loss Limit
Array Biopharma (ARRY)	46.35	20-21.5	17.5-18.5
Chipotle Mexican Grill (CMG)	773.32	575-605	530-540
Columbia Sportswear (COLM)	102.15	103.5-107.5	95-97
Glaukos Corp. (GKOS)	67.84	65.5-68	59-61
Kirkland Lake Gold (KL)	51.30	30-32	27-28.5
LPL Financial Holdings (LPLA)	85.22	74.5-77	67.5-69.5
Palo Alto Networks (PANW)	236.92	213-220	193-199
Paycom Software (PAYC)	0.00	163-170	146-151
Spirit AeroSystems (SPR)	92.54	90-93	83.5-85
Zendesk (ZEN)	82.19	73.5-77	65-67

Emerging market stocks remain in an uptrend, though like most stocks around the globe, a little resting wouldn’t be uncalled for after the recent run-up. Even so, with our Emerging Markets Timer still green, we’re looking to add exposure at opportune times.
Tonight, I see two opportunities—one from the less-followed area of Southeast Asia, and one from China, as one of our watch list stocks is being upgraded to buy. Many of our recommendations are making solid progress, and I’m optimistic both of these can be leaders going forward.

I’m happy to say that the market is looking better, with the Dow Jones Industrial Average seeing a 6.8% improvement since last issue. I think investors were relieved that the government shutdown was over (although, we don’t know if that will last!). As well, unemployment (not counting the shutdown consequences) is still steady, consumer confidence is up, and housing prices look pretty stable right now. All of that positive news is reflected in our contributors’ market sentiment, as you’ll see in our Market Views section.

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.

==

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.

Now that this drug store chain has ironed out it agreement with Walgreens, analysts are looking for triple-digit growth next year.

This gold royalty company is beginning to catch up to its larger peers, yet still trades at a buyable level.

This Western Canada oil producer is a low-priced stock, so will most likely prove fairly volatile. It has some interesting prospects, and some new catalysts that look promising.

Today four stocks move to Hold and one stock to Sell.

Here are two Top Picks, one each for more conservative or more aggressive investors.

This second top pick is the more aggressive of the two recommendations.

This newly-public company reported $3.8 million in earnings for the September quarter, a 165.2% increase. It is a speculative play in the Bitcoin arena.

The shares of this drug distribution company have recently crossed over their 50-day moving average, a bullish indicator.

One stock moves from Buy to Hold, another moves from Strong Buy to Buy, and a third joins the Growth Portfolio as a Strong Buy.

Here are two Top Picks, both Chinese companies who are growing at double-digit rates.

Here is the second of two Top Picks, both Chinese companies who are growing at double-digit rates.

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.