There isn’t a ton of good news in this new issue, but there are definite signs that emerging market stocks are making an effort at putting in a bottom. Emerging market stocks (as reflected in the MSCI EM ETF) are above their 25-day moving average and have put a little daylight between themselves and their late-October low. We’re also seeing a few stocks attracting flashes of buying interest, which is also a hopeful sign.

While the market has certainly been choppy, long-term sentiment, as you’ll see in our Advisor Sentiment Barometer skews bullish. But short-term—as our contributors note in our Market Views—it will pay to be cautious, so make sure you have your price targets and stop losses firmly set.

Here in mid-November, several themes are foremost in my mind. First is rotation; tech stocks are out and defense is in. Also in, as always, are underappreciated stocks, both big and small. Second is the traditional year-end selling of losers (for tax purposes) and year-end buying of winners (for window dressing purposes.) And third is the developing strength in international markets, which have been under pressure far longer than U.S. market and are thus riper to return to their uptrends.

Current Market Outlook


As expected, we’re seeing a ton of day-to-day volatility in the market—last week the Nasdaq spiked higher by nearly 300 points in less than three days, only to give it all back since Thursday. But net-net, we really haven’t seen any change in the market’s picture, as the intermediate-term trend is pointed down for most indexes, sectors and individual stocks. The good news is that, as expected, earnings season has revealed a nice crop of potential leaders that are acting resiliently—this week’s list has a bunch of them to consider. But remember that, in a weak market, good-looking stocks can go bad in a hurry, which is why we advise holding a bunch of cash, and if you buy, you should keep positions very small and look to enter on weakness. We’re keeping our Market Monitor at a level 4 in today’s issue.

This week’s list is chock full of earnings winners, which, encouragingly, are generally holding up well despite the market’s latest slide. Our Top Pick is Etsy (ETSY), whose growth is picking up steam and stock is acting great.

Stock Name	Price	Buy Range	Loss Limit
Alteryx (AYX)	132.78	53-56	47.5-49.5
BioTelemetry Inc. (BEAT)	58.58	59.5-62.5	54-56
CyberArk (CYBR)	111.74	73-75	67.5-69.5
Dexcom (DXCM)	421.36	138-142	127-130
Etsy (ETSY)	112.97	49-51	43-45
Genomic Health (GHDX)	64.42	77-80	67-69
Horizon Therapeutics (HZNP)	49.89	20.5-21.5	19-19.5
The Mosaic Company (MOS)	29.22	34-36	31.5-32.5
Twilio (TWLO)	183.39	81-85	73-75
Ulta Beauty (ULTA)	331.95	298-305	278-280

Whew! I’m glad to see the back of October, aren’t you? Last month lived up to its usual market volatility, with several big down days on the Dow Jones Industrial Average. However, things are looking up, and with this morning’s futures, it looks like investors appreciate the coming gridlock in Congress, following yesterday’s mid-term elections.

The market advanced nicely today, continuing the bounce it’s enjoyed during the past week and a half. It’s encouraging action, and we’re not opposed to doing a little buying here or there given our large (76%) cash position.

That said, our trend-following indicators are still negative, telling us that, despite the nice rally, we need to see continued positive action before starting a major new buying spree. Right now, we’re mostly focused on fine-tuning our watch list, which we’re not having trouble doing given the many strong earnings gaps seen recently.

In tonight’s issue, we talk a bit about how markets usually bottom after a big decline, something that’s good to keep in the back of your mind. And we spend a lot of space discussing potential leaders of the next advance.

The rally continues, but it is definitely losing steam; odds are that the market will see more downside action soon, so if you’re heavily invested, you should think about lightening up.

At the same time, there are pockets of strength developing, so if you’re perhaps underinvested, several of the portfolio stocks deserve a hard look.

The stock market continues to work its way through the second of two 10% corrections in 2018, as measured by performance of the S&P 500 index. On the bright side, the worst appears to be over for the majority of stocks that I follow. Exceptions will include stocks that are reaching annual lows. Unfortunately, those stocks will likely fall further until tax loss selling subsides.

I continue to expect many stocks to remain low through year end, possibly followed by quite a bull run in January.

Current Market Outlook


After a punishing month, last week’s three-day bounce qualifies as a decent first step for the market and many individual stocks and sectors—most now have some breathing room above last week’s low points, and ideally, we’ll begin to see more potential leaders strut their stuff in the weeks ahead as the situation stabilizes. But a good first step is the best description we can give the bounce at this point given that the intermediate-term trends of just about everything (indexes, sectors, stocks) remain pointed down, and the odds favor plenty of volatility (at the very least) going forward. It’s not 2008 out there, but trends are negative, so until the bulls truly retake control, defense is the name of the game. We’re leaving our Market Monitor at a level 3.

The good news is that this week’s list has many recent earnings winners that could do well once a new uptrend gets underway. Our Top Pick is Exact Sciences (EXAS), a name we’re high on and that remains perched near its highs after another excellent quarterly report.

Stock Name	Price	Buy Range	Loss Limit
Bilibili (BILI)	28.71	13.3-14.5	11-12
Cooper Tire (CTB)	31.50	30.5-32.5	27.5-29
Deckers Outdoor Corp. (DECK)	141.68	126-131	114-117
Exact Sciences (EXAS)	116.91	70-74	63-65.6
HealthEquity, Inc. (HQY)	70.70	90-94	81-83.5
Keurig Dr Pepper (KDP)	25.35	25-26	22.5-23.5
Omnicell (OMCL)	81.03	66-69	61.5-62.5
Starbucks (SBUX)	64.49	62-64	56-57.5
Under Armour, Inc. (UAA)	26.82	22-23.5	20-20.9
VeriSign (VRSN)	190.71	157-162	145-149

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.

Two of our stocks reported third-quarter earnings beats; another reported third-quarter earnings in line with estimates.

This once out-of-favor designer brand is now being touted by Wall Street. The shares have received lots of analyst attention lately including: upgraded by Canaccord Genuity to ‘Buy’, initiated at Barclays to ‘Equal-Weight’, and upgraded by Oppenheimer to ‘Outperform’.

New FDA approvals are giving this stock some momentum.

Two financial stocks reported earnings beats; sell one and buy the other.

This entertainment company beat analysts’ estimates by $0.12 last quarter, and Wall Street is forecasting growth north of 70% annually over the next five years for the company.

This supermarket company’s shares recently crossed over their 50-day moving average, a bullish sign. The company will announce third quarter earnings on November 15.

One of our stocks beat earnings estimates, another’s rating changes to Buy, plus updates on eight other stocks.

The shares of this recent IPO were just initiated at both Oppenheimer and William Blair with an ‘Outperform’ rating.

Our first idea is a tech stock whose earnings estimates have been increased by 31 analysts in the past 30 days.

Our second recommendation is a sale of a company whose shares have recently been pummeled.

Steel stocks are surging today, most likely triggered by the unfortunate news of corruption at Kobe Steel. The Cabot Undervalued Stocks Advisor portfolios currently hold two steel stocks.

The top five sectors in this fund are: Consumer Discretionary (27.8% of assets); Technology (18.9%), Financial Services (16.9%), Industrials (11.1%) and Consumer Staples (8.6/5).

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.