Throughout days of incredible highs and lows, the markets have managed to end up just about where they started at the beginning of this year. Nevertheless, the volatility has created some tremendous opportunities to make money in the markets—and we can never be sorry about that!

Last week I told you that we’d received a new buy signal from our intermediate-term market-timing indicator—but it didn’t last long. The market’s widespread selling on Wednesday and Thursday quickly turned it negative again.

So capital preservation is once again of primary importance—though the charts say the time is ripe for at least a modest bounce.

Current Market Outlook


The market had put together a few small positive steps heading into last week, but after a solid G20-induced rally on Monday, it’s been all selling, all the time—the intermediate-term trend has rejoined the longer-term trend in bearish territory, with some indexes (including the S&P 500 today) hitting new correction lows. Because of that, we’re moving our Market Monitor back down a notch to a level 4 and advise remaining in a defensive stance. That said, it’s not all bad news; we’re seeing more stocks that are resisting the market’s pull (forming significantly higher lows), and many indexes are still being defended at their October/November lows. Bottom line, it’s best to take things day-by-day and go with the evidence—which, today, means holding plenty of cash.

This week’s list, though, is a good place to start building a watch list if you’ve yet to do so, as many of these stocks look like they want to move higher if the market gets going. Our Top Pick is MongoDB (MDB), a stock that actually nosed to new highs after earnings before pulling back in.

Stock Name	Price	Buy Range	Loss Limit
Guardant Health (GH)	88.34	42-44.5	36.5-38
Kirkland Lake Gold (KL)	51.30	22-23.5	20-21
LHC Group (LHCG)	103.10	97.5-100	89-91
MongoDB (MDB)	156.56	80-84	70-72.5
Okta, Inc. (OKTA)	148.41	61-64.5	54-56
RH Inc. (RH)	252.93	132-138	119-123
Shopify (SHOP)	585.00	143-150	130-134
Spirit Airlines (SAVE)	57.03	57.5-60.5	52-53.5
Vanda Pharmaceuticals (VNDA)	31.04	26-28	22.5-23.5
Zscaler (ZS)	126.22	38.5-41	33.5-35.5

Today’s new addition is, like last month’s, a stock that has bucked the broad market’s trend and gone up!
It’s an industrial biotechnology stock. And the secret to its success lies in a proprietary technology platform that uses artificial intelligence and machine learning to create new proteins for use in various industries.

The action of the past few weeks looks like a solid bottoming attempt by the market, and we received a Cabot Tides buy signal late last week. But yesterday’s huge decline is a good indication that sellers are still lurking, which along with our still-bearish longer-term Cabot Trend Lines, is a reason to remain mostly defensive and go slow on new buying.

These few companies found in today’s issue are newsworthy, and lots of people are pondering buying and selling these stocks, so let’s get a firm grasp on whether the stocks warrant your attention.

The good news is that we have a new intermediate-term market-timing buy signal. The bad news is that our long-term market-timing indicator remains negative—and that markets as a whole remain in disarray, with no clear leaders.
Thus, some caution is still warranted, at least until the end of the year, as tax-selling forces will hold some stocks down.
But today’s recommendation is not one of those. Instead, it’s a little-known biotechnology stocks with big connections and great growth prospects.

Current Market Outlook


Last week, the market took another step on the road to health, as the intermediate-term trend of the major indexes began to turn up and many potential growth leaders showed strong accumulation. That’s enough for us to nudge up our Market Monitor another notch and, assuming you’ve been in a relatively defensive stance, you should begin to put some money to work. That said, we also think it’s best to go slow—the longer-term trend remains sideways-to-down, very few stocks have hit new highs (as many new lows as new highs on the Nasdaq today) and there’s still a bunch of overhead for most indexes, stocks and sectors to chew through. Still, despite the potential issues, we’re growing more positive as the market’s action has improved in recent weeks.

This week’s list is full of stocks from a variety of sectors that look poised to do well if the market’s recent strength continues. Our Top Pick is Workday (WDAY), which, while it could pull back a bit, is acting like a liquid leader of any sustained advance that develops.

Stock Name	Price	Buy Range	Loss Limit
Amedisys (AMED)	174.06	133-138	120-123
Delta Air Lines (DAL)	54.28	58.5-60.5	54.5-55.5
Glaukos Corp. (GKOS)	67.84	65-68	57.5-59.5
Omnicell (OMCL)	81.03	72.5-75	67-69
PRA Health Sciences Inc. (PRAH)	96.08	114-118	105-107
Tesla, Inc. (TSLA)	818.87	350-360	323-318
Trade Desk (TTD)	468.02	142-147	123-126
Veeva Systems (VEEV)	180.23	97-100	89-91
Workday (WDAY)	194.88	160-166	145-148
Xilinx (XLNX)	134.50	89.5-93	82-84

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.

Change has come to the weight loss industry, and this company is leading the way with 30% revenue gains in the past quarter.

Two of our stocks reported earnings and opened lower this morning. I’m keeping one on Hold and moving the other, which was rated Buy, to Hold as well.

Nine analysts have boosted their earnings outlook for this energy service company in the past 30 days.

Scripps Networks (SNI) will be acquired by Discovery Communications. SNI shareholders will receive $90.00 per share in the form of $63.00 cash plus $27.00 in Discovery Communications common stock. Sell SNI now.

The shares of this big-box retailer were just upgraded to ‘Outperform’ at Raymond James. The company beat estimates by $0.09 last quarter, and seven analysts have boosted their earnings forecasts in the past 30 days.

This credit card marketer beat analysts’ estimates by $0.10 in its most recent quarter.

Legg Mason and Total exceeded all analysts’ earnings per share (EPS) estimates and Invesco reached the highest analyst estimate. Boise Cascade fell short of the consensus estimate, although the stock broke out on the upside today.

In the last 30 days, four analysts have boosted their EPS forecasts for this industrial company. But the shares are still trading at bargain levels.

Two of our stocks report second-quarter earnings beats, one stock moves from Buy to Hold, and a good buying opportunity.

The shares of this cosmetics company were initiated at Jefferies as a ‘Buy’ last month. In the company’s recent quarter, it beat analysts’ estimates by $0.04.

One of our stocks reported a second-quarter earnings beat, there’s strength in steel stocks today, and one stock moves from Buy to Hold.

One stocks moves to Hold, and updates on two other stocks.

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.