Current Market Outlook


All eyes are on Janet Yellen this week, who is set to speak Friday morning, and whether she’ll offer hints to the Fed’s next move. As always, we’ll let others slice and dice the comments; we’ll stick with the market’s action itself. And on that front, things look solid—the market’s consolidation of the past few days has been normal thus far, and while a short-term shakeout of some sort wouldn’t surprise us, the odds continue to point toward higher prices down the road. We continue to advise you to remain heavily invested, though be sure to honor your stops for any stocks that break support.

This week’s list includes a nice array of stocks and sectors, including a few recent earnings winners. Our Top Pick is Gigamon (GIMO), a hot stock that’s recently taken a few weeks to catch its breath. Further dips are possible but buying here with a tight stop makes for a good risk-reward opportunity.

Stock Name	Price	Buy Range	Loss Limit
Yelp (YELP)	41.30	35-37	32-33
US Silica Holdings, Inc. (SLCA)	0.00	38.5-40.5	35.5-36.5
Royal Gold, Inc. (RGLD)	129.66	80-83	74-75
Pioneer Natural Resources (PXD)	0.00	177-183	164-166
Insulet (PODD)	175.69	40.5-42.5	37-38
MercadoLibre, Inc. (MELI)	980.83	160-165	149-150
Line Corporation (LN)	0.00	44-46	39.5-40.5
Gigamon (GIMO)	0.00	43.5-46	40-41
Dicks’s Sporting Goods (DKS)	0.00	56-58	50-51
Acuity Brands (AYI)	0.00	273-280	253-256

Current Market Outlook


While most investors are either bearish, neutral or not paying attention at all, the market remains healthy as a horse—most major indexes reached all-time highs last week, which is music to our ears. And we saw improved action among individual growth stocks, too, with some super-hot names racing higher. As we’ve said repeatedly, pullbacks and shakeouts will occur at some point, and if you have a couple of stocks that are very extended to the upside, feel free to book partial profits. But our focus remains on the intermediate- to longer-term, and just about all the evidence on that front continues to point to higher prices in the weeks and months ahead. Thus, you should remain heavily invested.

This week’s list has a mid-cap focus to it, but our Top Pick is a big-cap stock that just emerged from months of base-building: Alibaba (BABA) has all the makings of a liquid leader, and we think it’s starting its first major advance. Details inside.

Stock Name	Price	Buy Range	Loss Limit
Twilio (TWLO)	183.39	55-60	46-48
Symantec Corporation (SYMC)	0.00	21.5-23	20-20.5
Nevro Corp. (NVRO)	0.00	91-95	84-86
MasTec, Inc. (MTZ)	66.65	27.5-29	25.5-26.5
Inphi (IPHI)	120.16	40-42	36-37
Etsy (ETSY)	112.97	13.5-14.5	11.5-12
Copa Holdings (CPA)	0.00	79-81	71-72
Callon Petroleum (CPE)	0.00	13-14	11-11.5
Alibaba (BABA)	254.81	93-96	89-90
Applied Materials (AMAT)	0.00	26-27	24-25

Current Market Outlook


From a top-down perspective, our bullish market stance has not changed—the small- and mid-cap indexes have now joined the large-cap S&P 500 in all-time high territory. Obviously, dips and shakeouts are possible, but to this point, we’ve seen a vacuum of selling pressure on the major indexes. Individual stocks have been a bit trickier, partly because of earnings season; more than a few stocks and sectors have been nailed as money hunts for the leaders of the advance. Overall, we remain bullish and advise you to stay heavily invested, but you should also follow the plan—book some partial profits on the way up and if a stock cracks through support or trips your stop, be sure to exit. Conversely, aim to let most of your winning positions run, as this is the kind of market that should produce many big winners over time.

This week’s list includes many recent earnings winners, including a couple of energy stocks. Our Top Pick is Parsley Energy (PE), which we think is probably the top stock in the sector. Try to buy on dips.

Stock Name	Price	Buy Range	Loss Limit
XPO Logistics (XPO)	0.00	34-36	31-32
Wright Medical (WMGI)	0.00	23-24	21-22
Wingstop (WING)	121.52	28.5-30	26.5-27
Trex Company (TREX)	117.56	57-59	51-52
Shopify (SHOP)	585.00	35-37	31-32
Rice Energy (RICE)	0.00	23.5-25	22-22.5
Parsley Energy (PE)	0.00	30-32	27-28
Paycom Software (PAYC)	0.00	49-51	45-46.5
Louisiana-Pacific (LPX)	0.00	19.5-20.5	18-18.5
Align Technology (ALGN)	316.20	88-91	81-82

Current Market Outlook


One thing that keeps coming up in our research is that the majority of investors think the market is ready for a pullback. Of course, a dip is certainly possible—the major indexes have had a great run over the past month and some short-term measures of sentiment are elevated. But we don’t expect a large market retreat, and besides, obsessing over the next week or two misses the big picture—that a new uptrend is likely underway, and many stocks and sectors are performing extremely well. You still want to find advantageous buy points and cut your losses when things go awry. But we continue to advise you to be heavily invested in strong stocks and let your winners run.

This week’s list has a great batch of high-potential stocks, many of which have excellent growth stories. Our Top Pick is Cirrus Logic (CRUS), a chip firm with great earnings estimates that just exploded out of a year-long base. Try to buy on dips.

Stock Name	Price	Buy Range	Loss Limit
United States Steel Corporation (X)	0.00	24.5-26	22-23
VCA Inc. (WOOF)	0.00	69-71	65-66
Wix.com (WIX)	302.53	33-35	30.5-31.5
Tempur Sealy (TPX)	85.53	73-75	66-68
Lumentum (LITE)	87.00	28.5-30	25-26
GrubHub (GRUB)	140.03	35-38	32-33.5
Cirrus Logic Inc. (CRUS)	0.00	46.5-49	42.5-43.5
Buenaventura (BVN)	16.23	13.5-14.5	12-12.5
B&G Foods (BGS)	0.00	50-51.5	46-47
Abiomed (ABMD)	0.00	117-120	108-109

Current Market Outlook


The market remains in very strong shape. Whether you’re looking at breadth, the trends of the indexes, the action of leading stocks, or sentiment among investors (mostly apathy with some disbelief thrown in), most of the evidence continues to point to higher prices ahead. Of course, that’s for the market as a whole—for individual stocks, earnings season is likely to rock the boat a bit, with some failing while others take the leadership mantle. You should remain heavily invested, but make sure you have your plan in place when it comes to handling your stocks during earnings season. As always, we’ll ditch any stocks that crack and hop on board new leadership that emerges.

This week’s list has a nice mix of sectors, including a few that have already reported earnings. Our Top Pick is Burlington Stores (BURL), a retailer that’s firing on all cylinders and recently pre-announced bullish earnings. Try to buy on minor weakness.

Stock Name	Price	Buy Range	Loss Limit
Yelp (YELP)	41.30	28.5-30	26-27
UFPI (UFPI)	0.00	100-104	91-92
PulteGroup (PHM)	45.93	20.5-21.5	19.5-20
Proofpoint (PFPT)	113.79	69-72	62-63
MSCI Inc. (MSCI)	0.00	80-82	76-77.5
MercadoLibre, Inc. (MELI)	980.83	145-150	138-139
Ligand Pharmaceuticals (LGND)	267.14	128.5-133	116-118
Ironwood Pharmaceuticals (IRWD)	0.00	13.5-14	12-12.5
New Oriental Education (EDU)	113.97	42-44	39-40
Burlington Stores (BURL)	193.95	71-73	66-67

Current Market Outlook


We always strive to go with the evidence the market has presented. Right now, just about all of it is bullish: The intermediate- and longer term trends are up, the broad market is in terrific health (new highs are expanding while new lows are minuscule), we’ve seen some rare, powerful blastoff indicators flash (which almost always portend solid gains in the months ahead), leading stocks are perking up and many investors remain on the sideline. Obviously, a pullback could occur at any time, and earnings season is sure to create some potholes among individual stocks.

But overall, the path of least resistance is up, so we’re pushing our Market Monitor further into bullish territory. This week’s batch of stocks includes many that report earnings within a few days, which makes buying a bit tricky. For our Top Pick, we think a small position in Masco (MAS) can work—it’s shown great power, has buoyant earnings estimates and is part of the newly-strong housing group.

Stock Name	Price	Buy Range	Loss Limit
Zendesk (ZEN)	82.19	27-28.5	25-26
Tahoe Resources (TAHO)	0.00	15-16	13-13.5
Dave & Buster’s (PLAY)	57.01	46-48	42-43
Nucor Corporation (NUE)	66.20	55-56.5	50-51
Match (MTCH)	0.00	15.5-16.5	14-14.5
Mobileye N.V. (MBLY)	0.00	46-48	41-42
Masco (MAS)	0.00	33-34	31-31.5
EBIX Inc. (EBIX)	0.00	51-53	48-49
ServiceNow (NOW)	341.86	19.5-20.5	17.5-18
CBM (CBM)	0.00	54-56	48-49

Current Market Outlook


You really can’t ask for better action from the market since the Brexit vote two weeks ago—the quick shakeout in the major indexes has given way to many days of strong buying, pushing the S&P 500 briefly to new highs this morning and driving other indexes toward key levels. Moreover, a ton of individual stocks have either lifted to new highs or look ready to do so. Short-term, a pullback wouldn’t be surprising given the recent run higher, especially with earnings season set to get underway. Thus, we don’t advise going wild on the buy side. But we’re pushing our Market Monitor back into bullish territory to reflect the evidence—we think you can continue to put money to work as opportunities arise.

This week’s list has a bunch of potential leading stocks if the market keeps improving. Our Top Pick is Acuity Brands (AYI), a leader from a couple of years back that, after a long consolidation, has reasserted itself on the upside as it rides the LED revolution.

Stock Name	Price	Buy Range	Loss Limit
Vantiv (VNTV)	0.00	57-58.5	53-54
Thor Industries (THO)	104.76	69-71.5	65-66.5
Rice Energy (RICE)	0.00	22-23	20-20.5
Monster Beverage Corporation (MNST)	0.00	157.5-160.5	149-150
LifeLock Inc. (LOCK)	0.00	15-16	13.5-14
KB Home (KBH)	36.05	15-16	14-14.5
Ellie Mae (ELLI)	0.00	90-94	84-85
Acuity Brands (AYI)	0.00	260-270	238-240
Applied Materials (AMAT)	0.00	24-25	22.5-23
Acacia Communications (ACIA)	51.83	44.5-47.5	38-39.5

Current Market Outlook


Our title last week was “What Happens from Here Will Tell the Tale.” And so the market’s impressive and immediate snapback from the two-day Brexit decline is a good sign that the bears just aren’t able to take control of this market, even when obvious bad news hits. That said, while the panic low from last Monday should hold, we can’t say the bulls are in control, either, as all the major indexes are still stuck below longtime resistance levels dating back to early 2015. Altogether, we’ll nudge our Market Monitor back up a notch, but what we’re really looking for is a decisive move to new highs before getting bullish. For now, you should hold your top performers, but keeping new buys relatively small and holding some cash is also prudent.

This week’s list has a bunch of mid-cap names that are showing excellent strength—they could be among your leaders if the bulls step up to the plate. Our Top Pick is Beacon Roofing (BECN), a growing play on housing and construction, which may actually get a boost as interest rates plunge.

Stock Name	Price	Buy Range	Loss Limit
TAL Education (XRS)	0.00	60-62.5	56-57
TransUnion (TRU)	83.09	32.5-33.5	30-30.5
NetEase, Inc. (NTES)	0.00	181-185	169-170
Newfield Exploration (NFX)	0.00	41.5-43	38-39
Dycom Industries (DY)	0.00	85-88	79-80
DOC (DOC)	0.00	20-21	19-19.5
Beacon Roofing (BECN)	0.00	45-46.5	42.5-43
Activision Blizzard, Inc. (ATVI)	0.00	38.5-40	36-36.5
AG (AG)	0.00	13.5-14.5	12-13
Abiomed (ABMD)	0.00	106-109	98.5-100

Current Market Outlook


Following the Brexit reaction, all of the major indexes are now decisively below their respective 50-day lines. Thus, we consider the intermediate-term trend to be down, which means it’s best to pare back. (We’ve knocked our Market Monitor down two notches this week.) It’s fine to hold your resilient, profitable performers (there are many stocks and sectors taking this selloff in stride), but you should honor all stops and loss limits and limit new buying to just small positions in strong stocks. The net result will be a higher cash position (around 50%, give or take, depending on what stocks you own and how you run your portfolio) and a handful of top performers in your portfolio. The next few days will be important—a quick snapback would be encouraging, but continued deterioration would have us advising an even more defensive posture. We’ll be watching.

This week’s list is a combination of defensive stocks, yield stocks, some precious metals and a couple of resilient growth ideas. Our Top Pick is Dollar Tree (DLTR), a defensive-type stock that should show excellent earnings growth thanks to last year’s game-changing buyout of Family Dollar.

Stock Name	Price	Buy Range	Loss Limit
Veeva Systems (VEEV)	180.23	32-34	29.5-30
Silver Wheaton (SLW)	0.00	20.5-21.5	19-19.5
SiteOne Landscape Supply (SITE)	98.49	31.5-33	28-28.5
Royal Gold, Inc. (RGLD)	129.66	67-69	61-63
Jack in the Box (JACK)	0.00	82-84.5	77-78
Gigamon (GIMO)	0.00	33-35	30-31
Dollar Tree (DLTR)	0.00	89-92	84-85
Communication Sales & Leasing (CSAL)	0.00	26-27.5	24-24.5
Boardwalk Pipeline Partners (BWP)	0.00	16.5-17.5	15.5-16
Align Technology (ALGN)	316.20	75.5-77.5	72-73

Current Market Outlook


With some weekend polls showing the chance of a “Brexit” lessening, the market gapped up this morning and finished with solid gains. Today’s rally is obviously encouraging and hints that, should the vote on Thursday go as expected, buyers could take control afterwards. Still, as always, we don’t predict—right now, the evidence remains more bullish than not, so it’s best to hold your strong, profitable stocks and add new leaders as they develop. That said, the intermediate-term trend of the indexes is mostly neutral, and until the uncertainty clears up, it’s a good idea to keep new positions smaller than normal, and to honor your stops and loss limits.



The good news is that most top performing stocks handled the market’s 3% dip in fine fashion. This week’s list is another batch of (mostly familiar) names that look great. Our Top Pick is Weibo (WB), a little-known Chinese firm that looks like one of the market’s top glamour stocks.

Stock Name	Price	Buy Range	Loss Limit
wb (wb)	0.00	26-27.5	23.5-24.5
symc (symc)	0.00	19.5-20.5	18-18.5
simo (simo)	0.00	43-45	39.5-40.5
oled (oled)	0.00	67-69	60-62
nvro (nvro)	0.00	71.5-74	66.5-67.5
nuva (nuva)	0.00	57-59	54-55
lulu (lulu)	0.00	69.5-71.5	66-66.5
five (five)	0.00	44-45.5	41-41.5
cprt (cprt)	0.00	47.5-49.5	44-44.5
Barrick Gold (ABX)	0.00	19-20.5	17-17.5

Current Market Outlook


The market was due for a pullback after three straight good weeks, and that’s what we’re seeing now as investors ponder 50-50 polls on Britain’s upcoming E.U. vote (a yes vote is generally considered bearish), the Fed’s meeting this week and Sunday’s horrible terrorist attack. The bottom line is that many indexes are approaching their 50-day lines, though few leading stocks have broken down. As always, you should play it by the book: By our measures, the market’s trends are still sideways-to-up, so we’re sticking with our overall bullish stance; dips following strong advances still look buyable. That said, you should also honor your stops and loss limits, jettisoning any stocks that break support. Further market weakness would have us turning cautious, but today we’ll keep our Market Monitor where it’s been.

Encouragingly, we had no problem finding some great-looking stocks. Our Top Pick is Dave & Buster’s (PLAY), which has a newer retail concept that’s working well, and the firm is on a solid expansion pace.

Stock Name	Price	Buy Range	Loss Limit
Dave & Buster’s (PLAY)	57.01	44.5-46.5	41-42
Penumbra Inc. (PEN)	173.25	57-59	53-54
Match (MTCH)	0.00	13.5-14.5	12-12.5
LLL (LLL)	0.00	142-146	132-134
Halliburton (HAL)	0.00	43-44.5	39.5-40
Cornerstone OnDemand (CSOD)	51.01	39.5-41.5	36.5-37
CDK (CDK)	0.00	54-56	51-52
Burlington Stores (BURL)	193.95	61-63	56-57
AMN Healthcare (AHS)	0.00	38-40	35-36
Agnico Eagle Mines (AEM)	79.05	49-51	45-46

Current Market Outlook


The S&P 500 and Nasdaq came into last week perched just under major resistance levels. But despite the prior run-up, weak opens on every day of the week and the poor jobs report on Friday, the market couldn’t pull back! Of course, the indexes still aren’t free and clear, and there are many uncertainties out there including the Fed’s next move and the upcoming EU vote in Britain, so we can’t rule out another retreat. But the market’s resilience thus far and the improved action from many leading stocks bodes well. We’re keeping our Market Monitor in bullish territory—a breakout on the upside (with many more stocks hitting new highs) would prompt us to lean toward a fully invested posture, while a dip of a few percent would have us paring back again.

This week’s list has many enticing selections, but we’ve selected an energy stock for our Top Pick. Continental Resources (CLR) has the acreage to crank out huge profits if oil prices creep higher, and the stock has tightened up nicely after a big run. Start with a small position and add to it as it rises.

Stock Name	Price	Buy Range	Loss Limit
Zendesk (ZEN)	82.19	24-26	23-23.5
Zillow (Z)	76.64	29-30.5	25-25.5
UnitedHealth Group Inc. (UNH)	0.00	133-136	125-126
Ulta Beauty (ULTA)	331.95	227-234	208-211
Tata Motors Limited (TTM)	0.00	32-34	29-30
Steel Dynamics (STLD)	0.00	24.5-25.5	22.5-23
Sanmina (SANM)	0.00	26-27	24-24.5
Continental Resources (CLR)	66.19	40.5-43	37-37.5
Big Lots (BIG)	43.12	50-53	46-47
Broadcom Limited (AVGO)	266.26	158-162	148-150

Hello from sunny Florida!

I am on vacation with my family this week, taking a much-needed break from the harsh, snowy Vermont winter (and narrowly making it down here ahead of the latest blizzard to dump another foot or two of snow on the Northeast). But with so much going on in the market – tariffs rejected! GDP growth slowing! AI panic! – I wanted to provide an update on everything that’s going on with our stocks.

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%.

If you own TSLA with a large profit, as many of my early subscribers do, I recommend that you continue to hold your shares.

Universal Electronics (UEIC) in the Growth Portfolio has risen to my price target of 69, and should be sold. I also reiterate my Buy rating on H&R Block (HRB).

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.