The market remains in an uptrend, though the correction that started last week may do a little more damage. If so, try to take advantage of it, remembering that buying low is the goal.
Today’s stock is a name you know—a name all Americans know—and I think it’s a good buy here after correcting 39% last fall. Crista Huff is the Cabot analyst who recommended it most recently, in part on fundamental grounds, and my reading of the chart confirms her conclusion.
As for the current portfolio, we continue to make great progress, but there’s always room for improvement. The only changes this week are two upgrades from Hold to Buy. Details inside.

Current Market Outlook


After nine strong up weeks, the past two have seen most of the market hesitate (at first) and then pull back (the S&P 500 fell all five days last week), resulting in a few stocks hitting potholes along the way. In the short-term, we think some further consolidation could easily come, shaking out some weak hands. But bigger picture, the recent action looks normal to us—none of the major indexes and very few leading stocks cracked any meaningful intermediate-term support, and today’s sharp rally is a good sign that buyers are still lurking. Be sure to watch your stops and loss limits, and it’s a good idea to be discerning on the buy side, focusing on strong stocks that have pulled back to solid entry points. Market-wise, though, we remain bullish and are keeping our Market Monitor at a level 7.

This week’s list has stocks from all corners of the market, which we see as an encouraging sign. Our Top Pick is RingCentral (RNG), a leader in a new cloud communications field with a stock that’s acting great.

Stock Name	Price	Buy Range	Loss Limit
Carvana (CVNA)	82.90	48-51	41.5-43.5
EPAM Systems (EPAM)	188.24	155-160	142-145
Keysight Technologies, Inc. (KEYS)	97.20	81-85	73.5-75.5
Lending Tree (TREE)	411.51	307-322	278-288
Omnicell (OMCL)	81.03	80-84	73-75
Planet Fitness (PLNT)	0.00	62-64	57-58
Rapid7 (RPD)	63.52	45-47.5	40-41.5
RingCentral (RNG)	238.73	100-105	91-94
Sea Limited (SE)	132.86	22-24	18-19.5
Tandem Diabetes (TNDM)	74.77	61-65	52-55

Emerging markets (EEM) stay in a confirmed uptrend with the support of generally upbeat earnings. Investors have piled about $86 billion into emerging-market stocks and bonds this year, more than in the last nine months of 2018 combined.

We have some earnings updates and a new recommendation that actually delivers the strong e-commerce growth—a leading consumer theme of emerging markets.

The market continues to drive forward, and sentiment remains bullish, as you’ll see in our Market Views. Investors are taking all the D.C. hoopla in stride, and seem content with the favorable economy which continues to provide low unemployment and a strong housing market.

If you own small or regional Western U.S. energy stocks, make sure to read my comments in the introduction about some pending legislation in Colorado that does not bode well for in-state energy production. I’m sorry to say that the legislation is likely to rapidly move through the legislature, because the minority political party does not have enough votes to block it, and the Governor is likely to sign it. For stock investors, forewarned is forearmed.

Some areas of the market have wobbled in recent days, and even the major indexes have stalled out a bit—but none of this looks unusual to me after such a strong 10-week run prior to this. With the trends pointed up and the vast majority of stocks in uptrends, we remain overall bullish, though we’re also keeping a close eye on all our stocks and jettisoning any where the potential has faded (we have two sells tonight).

And in their place, of course, we’re adding higher potential names. Tonight’s Stock of the Week is helping to revolutionize the advertising industry, and the stock has taken a brief rest after a powerful earnings-induced breakout nearly two weeks ago.

Current Market Outlook


For the first time in two months, last week saw some sellers stepping up to the plate, taking profits in leading names despite some good earnings reports. And today we saw very strong selling across the board, with leaders falling sharply across the board, including many that dipped toward support. In the short-term, given the prolonged run off the bottom, more consolidation is likely, so we’re fine taking a profit (or partial profit) here or there. Intermediate-term, though, we’re still optimistic—while some of the action looks iffy, very few (if any) leading stocks or indexes have broken down at this point, and these type of sharp, scary pullbacks (assuming they find support at logical levels) aren’t unusual during bull moves. We’re knocking our Market Monitor down a notch, thinking the near-term will be more challenging, but remain overall bullish.

This week’s list has a bunch of strong names that have recently emerged, so they shouldn’t have as much pent-up selling pressures. Our Top Pick is MercadoLibre (MELI), where business is reaccelerating and the stock just came out of a big consolidation.

Stock Name	Price	Buy Range	Loss Limit
Acacia Communications (ACIA)	51.83	53-56	47.5-49.5
CoStar Group (CSGP)	589.55	450-470	420-430
Cronos Group (CRON)	17.62	20-22	16.5-1705
DocuSign (DOCU)	107.98	52-54	46-47.5
Etsy (ETSY)	112.97	66.5-69.5	60-62
Euronet Worldwide (EEFT)	142.83	130-134	119-122
MercadoLibre, Inc. (MELI)	980.83	445-465	400-415
Novocure (NVCR)	0.00	50-53	45.5-47
Universal Display (OLED)	187.54	143-148	128-131
Zscaler (ZS)	126.22	55-58	49.5-51.5

Today’s opportunity is a cloud software stock that’s recovered nicely from its December lows and is moving back up near its 2018 high.
The company is growing quickly, mainly because of an acquisition-led growth strategy. Evidence is building that organic growth is starting to kick in too now that the company has acquired enough solutions to start bundling them into product suites.
This M&A growth strategy is a slightly different one than pursued by the other cloud software vendors in our portfolio. I think it’s compelling. And if I’m right that organic growth will be steadier moving forward, we should see shares perform very well in 2019 and beyond.

While flashier, more star-studded teams like Lionel Messi’s Argentina, Kylian Mbappe’s France and Erling Haaland’s Norway garnered most of the headlines at the just-completed World Cup, Spain was the best team. There was nothing flashy about Spain: no mega-stars, not a ton of goals, no relentless attack. Instead, they dominated the tournament with precision passing, immaculate ball control and near-impenetrable (just one goal allowed all tournament!) defense.

The market rolls sideways amidst a slew of conflicting forces.

The S&P 500 has bounced around and is at the same level it was in the middle of May. The primary culprit is technology. That sector has been in a funk. The S&P 500 is hard-pressed to generate any lasting traction while this massive sector, accounting for over 40% of the index, flounders.

The market has gone sideways since May. It seems to be deciding what to do.

It’s encouraging that the resumption of hostilities with Iran has not sent the market lower. It’s also positive that oil prices aren’t rising back to the $100 level earlier in the war, although prices have risen. It’s also another earnings season and analysts expect a big one.

With war being one of the most dominant themes of the last four years, it stands to reason that investors should position their portfolios to account for this conspicuous (and unwelcome) trend.

And lest one be tempted to think that the warfare theme will diminish anytime soon, last week’s article by NPR deflates that illusion: It revealed that global military conflicts are at their highest level since WWII.

Price targets are standard practice on Wall Street. But sometimes, they can act as an artificial ceiling.

For example, say Truist sets a price target on an up-and-coming growth stock that’s 25% higher than its current share price. For a growth stock, a 25% return isn’t much. But then again, the stock could be a total flop, which is the natural boom-or-bust tradeoff growth investors must endure in trading off increased risk for massive upside. So, a price target on a growth stock seems almost like an unnecessary cap on a stock that has the potential to go through the roof.

WHAT TO DO NOW: Continue to trim your sails. In the Model Portfolio, we’ve been getting closer and closer to shore as growth funds and indexes are under pressure and AI stocks cascade lower. Tonight we’re going to further trim Marvell (MRVL) given its ugly action, selling a third of what we have left. That will leave the portfolio with a big 58% cash position. We could put some of that to work if growth names find support, but we want to see key growth measures firm up before buying.

After a brief pause last week, small caps are once again leading the pack.

Through Wednesday’s close, the S&P 600 Small Cap Index is up roughly 21% year to date, compared to gains of about 15% for the S&P 400 MidCap Index, 17% for the Nasdaq and 11% for the S&P 500.

Its earnings season again! That’s a good thing. Earnings just might save the day in an otherwise confusing and uncertain market.

The market is causing whiplash. The Iran peace deal changed things. Stocks held back by high oil prices, and the resulting higher inflation and interest rates, reignited as oil prices came back down after the peace deal. But hostilities with Iran have resumed.

The peace deal may be on hold again. But stocks are hanging in there so far.

The ceasefire with Iran is over and hostilities have resumed. That sounds like a bigger bummer than it’s been in the market so far. Falling oil prices enabled previously beleaguered stocks to soar higher again as the prognosis for inflation and interest rates simultaneously improved. But that rally is over if oil prices spike higher again.

It’s no surprise that summer often brings lower market volatility levels as Wall Street heads to the Hamptons and participation rates diminish.

Indeed, what we’re seeing right now has all the classic symptoms of a low-participation environment, with investor sentiment being remarkably muted. This can be seen across a number of sentiment indicators for several different markets, most of which are flashing decisively “neutral” signals.

The divide between value and growth stocks is widening, as the Nasdaq is now more than 5% off its highs after peaking in early June while the Vanguard Value Index ETF (VTV) is hovering near its late-June apex and is up 3% in the last month.

That can flip in an instant, of course, as we saw in April and May. But the bottom line is that value stocks have risen 15% year to date, compared to an 11% gain in the Nasdaq and a 9.5% boost in the S&P 500.

After a very strong run from the March lows, the market appears to be going through an uncomfortable but healthy rotation. Many of the biggest winners from the AI and semiconductor trade have come under pressure, while value stocks, equal-weight indexes and other areas that had lagged earlier in the year have held up much better.

I’m pleased to introduce myself as the new chief analyst of Cabot Benjamin Graham Value Investor. I look forward to serving you with the best value stock recommendations to help you reach your investing goals. But first, let me tell you a bit about myself and my investing philosophy.

Our first idea is an income-property owner whose shares recently crossed above their 50-day moving average—a bullish indicator. Our second recommendation is a sale of a financial company.

Our second recommendation is a sale of a financial company.

One of our stocks has reached medium-term upside price resistance, and tips on how to trade another.

The top five holdings of this ETF are Itau Unibanco Holding SA ADR (ITUB.SA, 9.00% of assets); Vale SA ADR (VALE.SA, 7.56%); Bank Bradesco SA ADR (BBD.SA, 7.09%); Ambev SA ADR (ABEV.SA, 6.00%) and America Movil SAB de CV Class L (AMXVF.MX, 4.89%).

Our first idea is a healthcare company that is expected to grow at double-digit rates for the next five years. For the second recommendation, we’re taking some money off the table.

Our first idea is a healthcare company that is expected to grow at double-digit rates for the next five years. For the second recommendation, we’re taking some money off the table.

Coverage of the shares of this biotech were recently initiated at HC Wainwright with a ‘Buy’ rating.

We have three rating changes today.

Here’s an emerging markets stock that beat analysts’ earnings by $0.08 last quarter.

This boating manufacturer’s shares were just upgraded by BMO Capital to ‘Outperform’.

Here’s an update on the stock which rating has been upped to BUY.

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 Momentum 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 Momentum Trader features.