In today’s issue, we’re giving some tips about how to handle your portfolio when markets are kicking up a fuss. We also have a new stock pick that takes us outside China and the tech sector, plus the portfolio moves we’re taking to lower our exposure a little.

Investors are ignoring the unreal circus atmosphere in Washington, D.C. and continuing to focus on economic growth, which is fueling their thirst for good investments. The Dow Jones Industrial Average has risen some 353 points since last month’s issue on good economic and earnings news. Mortgage applications are up 7.1%, unemployment claims continue to decline and job openings are rising.

In selecting today’s stock, I looked for a quality stock with a strong and healthy technical pattern that was presenting a decent buy point. Oddly, it’s a bricks-and-mortar retailer, a category with an abundance of losers these days. But it’s a winner, and I think you’ll like it.

Current Market Outlook


After a hot and heavy few weeks, the growth stock sellers came out of the woodwork during the past two days, driving many down sharply to support. What happens from here will tell the tale in our view—if most growth stocks hold up in this vicinity or push nicely higher, then the odds will favor this being another shakeout. But should we see a weak bounce (or, worse, no bounce), then it’s likely growth stocks will be entering a longer consolidation following their heady runs. We’ll see how it goes, but right now, you should honor your stops and maybe even take a couple of partial profits if you haven’t recently. As for buying, we’re OK with it, but look for stocks near support and keep new positions small.

This week’s list has far more non-growth ideas, which have found some buying in recent days. Our Top Pick is Penn National Gaming (PENN), which is part of a strong group and looks relatively early in its overall advance.

Stock Name	Price	Buy Range	Loss Limit
Abiomed (ABMD)	0.00	136-139	128-131
Berry Global (BERY)	64.22	56.5-58	52-53
CBOE Holdings (CBOE)	0.00	87-90	81-83
Grand Canyon Education (LOPE)	121.03	77-80	70-72
Hancock Holding (HBHC)	0.00	49-51	45-46
ILG Inc. (ILG)	0.00	24.5-26	22-23
Penn National Gaming (PENN)	45.38	20.3-21.3	18.7-19.4
Sherwin-Williams (SHW)	526.09	340-350	320-325
Terex (TEX)	0.00	35.5-37	32.5-33.5
Workday (WDAY)	194.88	94-98	87-90

This month’s Cabot Value Model contains a diversified list of buy recommendations, with a bias toward high quality companies in the technology and financial sectors. These and similar companies have propelled the Cabot Value Model to gain more than the Dow Jones Industrial Average, Standard & Poor’s 500 Index and Warren Buffett’s Berkshire Hathaway.

We’re restoring Buy ratings on a couple of stocks, and averaging up in one of them as it has begun to emerge from a multi-month rest period. That said, we’re still holding about 14% in cash given the iffy broad market and the many divergences in the market.

Today’s recommendation is a very strong Chinese stock that had quieted down nicely during the past two weeks and is now on a four-day run. One thing we really like in a growth stock is a huge mass market, and this company is right in the middle of one of the biggest markets there is.

The market seems to be lending itself to more bullish price action in June, and I’m looking forward to making money this month! Today’s issue brings you one new stock, and one rating changes.

Current Market Outlook


There are a still a couple of flies in the market’s ointment, but the past week or two has seen the market broaden out—the Nasdaq and growth stocks are still leading the way, but the S&P 500 and NYSE Composite have joined them in new high ground, and even the lagging small- and mid-cap indexes have perked up. Market-wise, then, the evidence has improved, so we’re nudging up our Market Monitor to a level 9. Just as important, though, is handling your stocks correctly—right now, many are extended to the upside, though some are just emerging while others look like great buys on any dips. Long story short, you should remain bullish, but honor your stops and continue to pick your spots on the buy side.

This week’s list has another batch of strong growth stocks. Our Top Pick is JD.com (JD), which catapulted to all-time highs a month ago on earnings and has calmly consolidated since.

Stock Name	Price	Buy Range	Loss Limit
Autodesk (ADSK)	229.00	107-112	99-102
Bob Evans Farms (BOBE)	0.00	67-70	62-63.5
Broadcom Limited (AVGO)	266.26	245-255	227-232
Graco Inc (GGG)	0.00	109-113	101-103
JD.com (JD)	39.58	38-40	35-36.5
Lumentum (LITE)	87.00	56-58	51-52.5
Marriott Vacations (VAC)	0.00	116-120	105-108
Marvell Technology Group (MRVL)	36.88	16.8-17.5	15.8-16.2
ServiceNow (NOW)	341.86	102-105.5	95.5-97.5
Weibo (WB)	98.16	73-76	66-68

This month, we’re going back to what’s served us well, small business software. The company has a cloud-based software solution tailor-made for property managers. It’s growing revenue by more than 30%, has no debt, and is on track to become profitable this year. The chart is solid. And I believe the company will ultimately be sold, hopefully at a nice premium to where shares trade today.

It’s the same basic market story as it has been for the last four months. Technology is floundering while other sectors are killing it. But a couple of events occurring this week could potentially change the dynamic.

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.

Today, Goldman Sachs Group (GS) reported a tremendous third quarter, with earnings per share (EPS) of $4.88 vs. Wall Street’s consensus estimate of $3.82, and up 47% vs. $2.90 EPS a year ago (December year-end).

Shares of Aerohive (HIVE) plummeted at the open today but have come back relatively strong and are now down just 2%. I’m moving the stock from Hold to Sell today.

Today’s move pushed our Cabot Tides back into a negative stance, so we’re raising our cash position to around 40%.

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.