The world isn’t providing much good news for emerging market stocks to build on, but the stocks themselves are doing a good job of ignoring that. This doesn’t mean that we have a new buy signal, but there are a growing number of stocks that are putting in bottoming structures and even a few making some progress. With the market looking ahead, we could start to see new leaders emerge in the next few weeks or after EM companies report their quarterly results in a couple of months. There will be plenty of bargains when the turn comes, and we’re featuring an old friend that been in the doldrums for quite a while but boasts a huge story. Read on for all the details.

The markets—despite continued shenanigans in D.C.—were virtually unchanged since our last issue. Unemployment remains steady, the CPI is stable and consumer sentiment is very positive.

As you’ll see in our Advisor Sentiment Barometer and Market Views, market experts remain bullish, although we’ve seen a bit more selling this past week.

September is living up to its reputation as a tricky month, with lots of volatility among leading stocks and rotation and news-driven moves on a day-to-day basis. Still, just going with the evidence, the trends of the major indexes and most stocks are up, so I remain bullish. That said, finding stocks early in their overall uptrends that aren’t obvious to the crowd is vital—tonight’s Stock of the Week fills the bill, blasting off three weeks ago after a 14-month correction and consolidation.

Current Market Outlook


We’ve entered the third week of September, and today was another day of sharp rotation, with the market’s leading growth stocks and indexes taking hits while other areas declined modestly (if at all). Big picture, the intermediate-term trend of the major indexes is still up, and most leading stocks, while choppy, are in the same boat; hence, we remain optimistic. That said, we are nudging our Market Monitor down a notch today to respect the repeated waves of selling and, just as important, a bit more iffy action from leading stocks (including a few that are seeing wild swings up and down after a big run, which is often a sign of distribution). Thus, we’re being patient with our top performers, but it’s also a good idea to tread carefully, holding at least a little cash and booking some partial profits on any stocks that are showing wear and tear.

This week’s list is another growth-heavy list, which is encouraging to see given the bouts of rotation. Our Top Pick is CarGurus (CARG), which is aiming to be the TripAdvisor of car information and whose stock is under accumulation after a four-week dip.

Stock Name	Price	Buy Range	Loss Limit
Acxiom (ACXM)	0.00	46.5-48.5	42.5-43.5
Align Technology (ALGN)	316.20	372-382	345-350
CarGurus (CARG)	41.58	49-52	44-45
Centennial Resource Development (CDEV)	20.33	20.2-21	18.4-18.9
Guidewire (GWRE)	90.60	102-105	94-96
HealthEquity, Inc. (HQY)	70.70	90-93	82-84
Jacobs Engineering Group (JEC)	89.83	73-76	67.5-69.5
Sendgrid (SEND)	33.32	34-36	30.5-31.5
Spirit Airlines (SAVE)	57.03	46-48	42-43
Viper Energy (VNOM)	36.55	37-39.5	33.5-35

Of course, it’s always more fun when the market is doing well, and we are continuing our upward trend, supported by robust earnings growth. For quarter 2, 80% of the companies in the S&P 500 index reported earnings higher than estimated, and 73% posted higher revenues than analysts had forecast. That’s a record—the highest number of surprises since FactSet begin gathering the data in the third quarter of 2008.

The market and growth stocks have had a couple of wobbles so far in September, and given the heady run from leading stocks in August, some further shakeouts are possible. If the selling pressure intensifies enough to turn our Cabot Tides negative, we’ll trim our sails, but right now, the trends of the major indexes and the vast majority of leading stocks are pointed up, so we remain positive.

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


Not surprisingly, we saw some selling come into the market last week, as many stocks and indexes were stretched to the upside and some near-term sentiment measures (put-call ratios, etc.) showed complacency. In the short-term, such wobbles could easily continue, as we’re seeing some bigger names get hit on decent volume. Intermediate-term, though, we’ve seen very little abnormal action among individual stocks and the trends of the major indexes are pointed up. It’s still a good idea to go slow and look for solid entry points, and don’t forget to book some partial profits on the way up. But with the evidence still bullish, we’re remaining heavily invested.

This week’s list is centered on growth ideas, including a few that have emerged after nice rest periods. Our Top Pick is Okta (OKTA), an early-stage leader that just busted loose from a three-month zone on huge volume.

Stock Name	Price	Buy Range	Loss Limit
BJs Wholesale (BJ)	36.69	29-31	27-28
Glaukos Corp. (GKOS)	67.84	59-64	51-53.5
HubSpot (HUBS)	582.89	146-152	134-137
Match (MTCH)	0.00	50-52	45-46.5
NuVasive (NUVA)	66.00	67-69.5	61.5-63
Okta, Inc. (OKTA)	148.41	68-72	58-60
Palo Alto Networks (PANW)	236.92	229-236	210-214
Ulta Beauty (ULTA)	331.95	272-283	249-254
United Continental Holdings (UAL)	96.76	84-86	78-79
Yext Inc. (YEXT)	21.32	24.5-26	21.5-22.5

Today’s Cabot Small-Cap Confidential addition isn’t a cloud-based software provider. But it is a perfect example of what I’ve been talking about – a company in an established industry that’s shaking things up largely because cloud-based technologies are at the center of its DNA. The company’s platform is helping it grow roughly 10 times faster than its industry average, while delivering profits.
It’s an exciting story that I’ve been looking forward to sharing with you. Enjoy!

What a difference a month can make! What an April! The S&P rose 9.6% in April, making it the best single month for the market in six years. It hit an all-time high on Friday.

Sure, the war isn’t over. But the market doesn’t really seem to regard it as a war anymore, more like a blockade situation with the possibility of some skirmishes. While there is still headline risk, investors have moved beyond this war and are focusing on earnings. And for good reasons.

The results are in for the month of April. It was fabulous. The S&P rose 9.6%, making it the best single month for the market in six years. It hit an all-time high on Friday.

Sure, the war isn’t over. But the market doesn’t really seem to regard it as a war anymore, more like a blockade situation with the possibility of minor skirmishes. While there is still headline risk, investors have moved beyond this war and are focusing on earnings.

Now before you call me crazy concerning today’s newsletter headline, hear me out.

Even though large-cap names have garnered more than a fair share of attention among investors this year, I think a case can be made that companies with big capitalizations have a lot more room to run higher before they can be truly regarded as “overbought” or “played out.”

The market is digesting the push and pull of higher oil prices, a deeply divided Federal Reserve, prospects for a prolonged blockade of the Strait of Hormuz and fading momentum from the AI trade that helped push markets to all‑time highs earlier this month.

Despite the crosscurrents, the overall tone still tilts bullish, supported by investor comfort (for the time being) with the geopolitical tension, resilience in the U.S. economy, and improving visibility into earnings growth over the coming quarters.

Yesterday, four tech giants, Alphabet, Amazon, Meta and Microsoft, representing 22% of the S&P 500’s market value, reported strong quarterly earnings that highlighted the importance of AI.

You might think the above companies and their AI brethren are “asset light” companies but you would be very wrong.

It’s been a glorious April following a miserable March for the market. What happens in May may determine which direction stocks are headed for the rest of the year.

That’s probably overstating things a bit, but May should be crucial for the reasons we discussed last week: namely, the fate of the Iran war, but also the bulk of first-quarter earnings season and the introduction of a new Fed chair.

What war? This market is moving on. We may not be out of the woods yet, but investors are looking beyond the Iran war.

Stocks have already made up all losses from a rough March and then some. The S&P 500 had fallen 7.7% in the month of March by the 30^th. Since then, the index has rallied over 13%. The S&P is now at a higher level than before the war began and is hitting new all-time highs.

The other day I was paid a visit by a roving ISP salesman who was pitching his company’s fledgling internet service over the local monopoly’s. We struck up a conversation and he asked what I did for a living. When I told him, his eyes lit up and he asked, “Got any good stocks you can recommend?”

Without thinking I blurted out, “Anything AI-related. You can’t go wrong.” The advice was only semi-facetious, for there’s undeniably a degree of truth behind it. My instinctive response to that question also prompted me to consider the question: just how long can the broad market continue its “all things AI” run without broader sector participation

Note: I’m out of town this week, so I’ll be a bit briefer on the update today—but I’m still checking my laptop a couple of times a day if you have any questions or comments. I’ll be back at my desk come Monday. Cheers.

WHAT TO DO NOW: Remain optimistic. The market and some leaders have hesitated, but all of our market timing indicators are bullish, and most stocks we own or are watching are working. Last Friday, we bought a half-sized stake in Nebius (NBIS) and added a 3% additional stake in ProShares S&P 500 Fund (SSO); earlier this week, we sold our small remaining position in GE Aerospace (GE); and tonight, we’ll buy a half-sized position (5% of the portfolio ) in Cava (CAVA). We’ll still have 46% in cash or so after these moves.

Despite all the headline noise lately we’re marching deeper into first‑quarter earnings season with the market’s path of least resistance still pointing higher.

Optimism around the extension of the tentative ceasefire in the Middle East has reduced geopolitical anxiety to a seemingly manageable level. The U.S. economy continues to show resilience, and the corporate earnings outlook points toward meaningful growth in the coming quarters and years.

The old saying, “History doesn’t repeat itself, but it rhymes,” is an apt one for the stock market these last two years.

In early 2025, the S&P 500 raced to new all-time highs before peaking in late January/early February, only to get dragged down in March and April by a geopolitical crisis (tariffs/Liberation Day), before rallying in a V-shaped pattern as the severity of the crisis abated.

The market turned on the afterburners. The S&P 500 made up all the March losses and catapulted to a brand new high in a remarkably short time. It’s a market that sure looks like it wants to go higher. But stocks are being held back this week by more war uncertainty.

The current ceasefire with Iran expires on Wenesday night. Talks may not happen, and war talk is growing. The resumption of the war will almost certainly prompt a decline in the market. Aside from that near-term threat, investors are clearly looking past this war. Hopefully, it won’t last much longer.

Updates on three of our stocks, including one rating change. Also, three excellent stocks to buy now.

While this Fidelity fund falls into the large-cap growth category, the fund’s mandate is quite different from that of most of its peers.

Updates on Vertex Pharmaceuticals (VRTX) following the July 18 breakthrough drug announcement, and Chipotle Mexican Grill (CMG), which is in the news again due to the closing of a Virginia restaurant location.

This optical company was recently added to the Russell 2000 Microcap/Small Cap Index, which should invite new institutional interest in the shares.

Crista comments on Goldman Sachs’ and Bank of America’s strong second quarter earnings beats this morning, plus provides an earnings report calendar for our stocks through July.

Along with other top management changes, this biotech just announced a new CFO today.

Special updates on two of our stocks that are good Buys here.

Analysts are forecasting double-digit growth for this new Top Pick.

This uranium company has several catalysts in store, and analysts are projecting double-digit growth this year.

Today we have five buy ideas including two ratings changes.

This pharmaceutical company is forecast to continue growing at double-digit rates over the next five years.

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 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.