While we have yet to get a buy signal from the Cabot Emerging Markets Timer, our stocks are generally performing very well and we have only a couple of quarterly reports yet to come. In today’s issue, I talk about the trouble with too much news and write up a Chinese financial company that has a powerful head of steam up, with only a Q1 report to worry about.

At last, market volatility has lessened and the Dow Jones Industrial Average is steady, resting at about the same level as it was at last month’s issue.

Economic stats also remain status quo, with a slight improvement in job openings, a small dip in retail sales, and a Consumer Sentiment Index that continues increasing.

That has given rise to a return to a more bullish environment for advisors, as you will see in our Advisor Sentiment Barometer and our Market Views this month.

The past week was one of the most fun in a while! But you can’t rest on your laurels in this business; just when you start to congratulate yourself is when the market comes around to slap you down. Today I’m dialing back the risk a bit with a conservative growth stock that you almost certainly know, and which is at a decent buying point.

Current Market Outlook


After establishing three bottoms in three months—with each bottom higher than the last—the broad market blasted higher last week, pushing our Market Monitor back into the green zone. But we’re not recommending indexes, we’re recommending stocks, and these stocks are not bouncing off bottoms, they’re breaking out to new highs! Furthermore, a lot of these market leaders are new names that are not familiar to investors—which means there is far more potential buying power than selling power in the stocks.

There are many great growth stories in the bunch, with many possibilities of huge long-term gains in revolutionary businesses, and our Top Pick is one of them; it’s Coupa Software (COUP), a small but fast-growing company whose spending-management software addresses a huge potential market.

Stock Name	Price	Buy Range	Loss Limit
AAXN (AAXN)	87.11	51-55	45-48
Coupa Software (COUP)	262.20	51-54	46.5-48.5
Green Dot (GDOT)	85.11	70-72	63-65
Guess (GES)	0.00	23-24.5	20.5-21.5
Petrobras (PBR)	14.78	15-16	13.8-14.8
Pure Storage (PSTG)	25.64	22-23.5	19.5-20
Teladoc, Inc. (TDOC)	127.95	44-49	39-41
Tenet Healthcare (THC)	0.00	30.5-32	28-29.5
Trade Desk (TTD)	468.02	71-76	65-68
Twilio (TWLO)	183.39	50.5-55	46.5-47.5

During the past three-plus months, the market has put in a firm foundation, with numerous tests of long-term support, positive divergences among various breadth measures and three legs down to the correction. And now we’re starting to see buyers take control—today our Cabot Tides flashed a green light, telling us to begin putting money to work.

Market volatility declined somewhat, leaving us at about the same level we were at the time of last month’s issue. The Federal Reserve—while still indicating it will most likely raise rates in June due to creeping inflation—left them alone last week. Coupled with steady economic improvement, including stable employment (the unemployment rate for April dropped to 3.9%) and improving consumer sentiment, the maintaining of the rates helped allay any market jitters that Washington’s continued schoolyard fighting may have caused.

Cabot’s intermediate-term market timing indicator has swung back to the positive side, lending a bit of ammunition to the bulls, but a look at the bigger picture reveals that the market remains in the sideways trading pattern that has defined it since the market’s initial selloff at the start of February.

Current Market Outlook


After the umpteenth test of their February lows and 200-day moving averages, the major indexes have surged over the past couple of days, with many potential leading stocks going along for the ride. Put together, the action is very encouraging and raises the odds that we’ve seen a tradeable bottom. However, despite the uptick, we haven’t yet gotten a green light from our intermediate-term—a good day or two from here could do the trick, but we don’t anticipate signals. Thus, right here, we’re sticking with our current, cautious stance, though we’re keeping our eyes open for definitive signs that a new intermediate-term uptrend has begun.

This week’s list is chock-full of stocks that look like they want to move higher if this rally is the real McCoy. Our Top Pick is Shake Shack (SHAK), which catapulted higher on earnings last week on its heaviest volume ever. Keep positions small and use a loose leash.

Stock Name	Price	Buy Range	Loss Limit
Box Inc. (BOX)	0.00	23-25	21-22
Ecopetrol (EC)	22.17	20.5-22	18.5-19.5
Interactive Brokers (IBKR)	0.00	74-77	68-70
Realpage (RP)	0.00	57-59.5	53-54
Sarepta Therapeutics (SRPT)	120.93	85-88	76-78
Shake Shack (SHAK)	92.08	54-58	48-50
Shutterfly (SFLY)	94.71	89-93	82-84
Splunk (SPLK)	207.67	106-110	97-100
Valero Energy (VLO)	97.40	109-113	99-101
Zendesk (ZEN)	82.19	51-54	46-48

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.

Here’s my assessment of the high flying technology stocks, which now look vulnerable.

I’m selling one of our stocks and adding a new bank stock to the Growth Portfolio. I also describe a big June catalyst for banks’ share prices and highlight 11 other bank stocks.

The top five holdings of this fund are: iShares Russell 2000 Growth (IWO, 3.16%); Six Flags Entertainment Corp (SIX, 2.40%); j2 Global Inc (JCOM, 2.39%); FirstCash Inc (FCFS, 2.02%) and Ligand Pharmaceuticals Inc (LGND, 1.96%).

Analysts are forecasting double-digit growth for this turnaround auto company in the next five years.

Crista is selling one stock, moving another from Hold to Strong Buy, and names 15 great stocks to buy today.

This fund’s top five holdings are: Apple Inc (AAPL, 7.57% of assets); Alphabet Inc A (GOOGL, 6.45%); Amazon.com Inc (AMZN, 6.07%); Facebook Inc A (FB, 4.25%) and Tesla Inc (TSLA, 3.56%).

Seasonal cycles make this healthcare company a buy.

Our second recommendation is profit-taking on a previous idea.

This miner is expanding and recently acquired a silver stream from Taseko Mines Ltd.

Now that CMG has been resting for quite a few weeks in a trading range between 470 and 500, I’m moving CMG back to Strong Buy.

This home builder is benefiting from increased demand from first-time home buyers.

Ratings changes on three stocks, one update and 10 stocks that are at good buy points.

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.