As marijuana stocks have blasted off over the past couple of weeks, it’s become clear that institutional money is entering the sector—and this is good. We like having institutions confirm our early judgment that the cannabis industry is a great place to invest, probably the greatest growth sector of our time.

The most bullish thing a market can do is hit new highs, and that’s what we’ve seen from this market in recent days, with most indexes and stocks participating on the upside. And with interest rates remaining tame, our dividend stocks have been doing well, too.

All of this is good, though it makes this month’s choice of a featured stock a bit more difficult, as many names are a bit extended to the upside. In the end, I went with a strong stock that gives us leverage to the strong U.S. economy—both the stock and dividend payment are likely to head higher over time.

The market overall and growth stocks in particular have shown great improvement during the past two to three weeks, with the major indexes hitting new highs and selling pressure drying up.

Granted, it’s late August, so we’ll see what big investors do when they come back from the beach next week, but given the evidence we’re continuing to put money to work. Tonight, we’re adding one new name, leaving us with around 17% in cash.

The market’s main trends remain up, and thus I remain bullish, while continuing to remind you that a balanced portfolio with attention to risk management is always smart.

Current Market Outlook


Ever since the mini-blowoff we saw in growth stocks in mid June, the market has been choppy, narrow and tough to maneuver, with many individual stocks going nowhere and a handful of leaders flashing abnormal intermediate-term action. But the character of the market seems to have changed during the past couple of weeks—the day-to-day rotation is gone, leading growth stocks have generally resumed their advances and the major indexes have moved to new highs. It’s still not 1999 out there, of course, and a big factor will be how the market reacts once big investors return from the beach next week. But there’s no question the evidence continues to improve, so we’re bumping up our Market Monitor to a level 8 (out of 10).

This week’s list has a bunch of good setups and great breakouts from growth-oriented stocks. Our Top Pick is Pure Storage (PSTG), which looks like it has recovered from the choppy action of the past few quarters.

Stock Name	Price	Buy Range	Loss Limit
Autodesk (ADSK)	229.00	150-155	137-140
DocuSign (DOCU)	107.98	63-66	55-57
Horizon Therapeutics (HZNP)	49.89	19.5-20.5	17.5-18.5
Nordstrom Inc (JWN)	60.72	58-61	53.5-55.5
Novocure (NVCR)	0.00	38-40	33-34
PetIQ (PETQ)	30.82	35.5-38	30-31.5
Pure Storage (PSTG)	25.64	25-26.5	22.5-23.5
SailPoint Technologies (SAIL)	31.60	29-31	26.5-27.5
Splunk (SPLK)	207.67	117-122	105-108
Williams-Sonoma (WSM)	64.96	66-69	61-62.5

Things are looking up for emerging market equities. They’re not fully healthy, yet, but there has been definite improvement since the August 16 low. In today’s issue, I have some thoughts about whether or not this is a bottom in emerging markets, and how we will know one when it appears. I also have an intriguing new IPO for you to consider.

The market’s main trends remain up, and thus I remain bullish. In fact, I think the challenging action of the past few weeks has cleared the air a bit and set the stage for a renewed advance.

Current Market Outlook


Not much has changed with the market’s tenor during the past week. The major trends are still positive, but not powerful, with many indexes not making much headway during the past two months. And for individual stocks, again, there’s more good than bad, but the advance is narrow and news driven, and we’re seeing more buying of defensive stocks. Overall, we’re still more positive than not because most of the evidence favors the bull side—and it’s worth noting that it wouldn’t take more than a couple of good days to get all the major indexes to all-time highs! But we also think it’s a good idea to go slow, look for solid entry points and, of course, honor your stops. We’re keeping our Market Monitor at a level 7.
This week’s list has a nice mix of solid stories from a few different industries. Our Top Pick is a stock that’s been a leader all year—Coupa Software (COUP), which has tightened up after a couple of months of consolidation. Start small and see what comes on earnings early next month.

Stock Name	Price	Buy Range	Loss Limit
CenturyLink (CTL)	22.88	22.5-24	19.8-20.3
Chipotle Mexican Grill (CMG)	773.32	490-505	455-460
Coupa Software (COUP)	262.20	64.5-67.5	58-60
Dexcom (DXCM)	421.36	124-130	107-111
Five9 (FIVN)	78.35	41.5-44	37.5-39
The Flowserve Corporation (FLS)	54.70	49-51	44-47
Ligand Pharmaceuticals (LGND)	267.14	232-242	206-216
Sendgrid (SEND)	33.32	30-32	28-29
Trade Desk (TTD)	468.02	120-130	104-109
Trex Company (TREX)	117.56	76-80	70-72

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.

Three analysts have increased their earnings estimates for this telecom company in the last 30 days.

The earnings forecasts for this internet marketplace have been raised by 11 analysts in the past 30 days.

When share prices fall, it’s important to determine whether the situation will last for a couple of months, which can be quite normal, or for several years, which can be insufferable.

With a sizeable earnings beat ($0.29), 14 analysts have now raised their forecasts for this drug company.

Today we’re adding a managed healthcare operator to the Buy Low Opportunities Portfolio.

The top five holdings of this real estate fund are: Lennar Corp (LEN, 5.51%), Land Securities Group PLC (LSGOF.L, 5.49%), Weyerhaeuser Co (WY, 5.44%), Global Logistic Properties Ltd (GBTZF.SI, 5.25%) and Cheung Kong Property Holdings Ltd (CHKGF.HK, 5.14%).

The price of one of our stocks has dropped to one-sixth of its yesterday close and is now trading around 29. The move is the result of a change in the ratio of native shares to ADR shares.

Although this Mexican cement company’s earnings climbed by 41% in its latest quarter, the stock has taken a hit on weaker cash flow numbers.

I’ve seen some unsettling action in a few of our stocks, I think we need to make a few small adjustments.

One of our stocks reported results this morning that beat on revenue and slightly missed on EPS.

This building products company beat analysts’ estimates by $0.12 last quarter, and 21 analysts have increased their forecasts in the past 30 days.

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.