Current Market Outlook


Last Friday saw a big, broad selloff in the market, not unlike what we’ve seen a few times so far this year. But, interestingly, while those other selloffs lasted a few days, this one might not—the market snapped back vigorously today. All of this is short-term stuff, of course; the overall trend is still generally sideways and few stocks are running away on the upside, so we’re not suggesting it’s time to become fully invested. But we’re seeing evidence that selling pressures are fading, which, if earnings season goes well, could launch a sustained advance.

This week’s list has a nice mix of charts; some are super-strong, some are tight after prior advances. Our Top Pick is MobilEye (MBLY), a company with as big a growth story as you’ll find and a chart that’s showing strength after a long decline. Stick with a small position and expect volatility.

Stock Name	Price	Buy Range	Loss Limit
WABCO Holdings (WBC)	0.00	124-126.5	116-117
Qunar (QUNR)	0.00	43-44.5	39-40
Universal Display (OLED)	187.54	45.5-47.5	41-42
Newfield Exploration (NFX)	0.00	36-37.5	33.5-34
Netflix, Inc. (NFLX)	423.92	540-560	490-500
Mobileye N.V. (MBLY)	0.00	43-46	38-39
First Solar (FSLR)	83.74	60-63.5	54-55
Esperion Therapeutics (ESPR)	0.00	98-100	89-90
Depomed (DEPO)	0.00	25-27	22-22.5
Builders FirstSource (BLDR)	44.12	12.5-13.5	11-11.5

Current Market Outlook


The Nasdaq poked above the 5,000 level for the third time in six weeks today, and most other indexes aren’t far behind. To us, what’s distinctive about the recent upmove is a complete lack of selling—very few stocks are hitting new lows, and even bad news has failed to attract the bears. Now, to be fair, buyers aren’t exactly flexing their muscle, either; not many stocks are hitting new highs and volume’s been generally light. Overall, we’re going to keep our Market Monitor where it is because the sideways trend of the market is still intact, but we do think there’s a good chance the third time could be the charm as the Nasdaq tests new high ground.

This week’s list has a bunch of good prospects, including some from unexpected areas (energy and yieldcos!). But our Top Pick is Valeant Pharmaceuticals (VRX), a steady grower in the drug field that should see earnings accelerate thanks to its recent acquisition of Salix.

Stock Name	Price	Buy Range	Loss Limit
Valeant Pharmaceuticals (VRX)	0.00	200-210	188-190
Terraform Power (TERP)	0.00	38-40	35-35.5
Sabre Corp. (SABR)	0.00	24.5-25.5	22-22.5
PDC Energy (PDCE)	0.00	53-55	49-50
Orbital ATK (OA)	0.00	74-76	67-69
JD.com (JD)	39.58	33-34.5	30-31
Intercept Pharmaceuticals (ICPT)	0.00	270-285	245-250
Harman International Industries, Inc. (HAR)	0.00	134-139	124-126
Canadian Solar (CSIQ)	0.00	34-36	30.5-31
Autohome (ATHM)	98.65	46.5-49.5	42-43

Current Market Outlook


The market found some buying support after this morning’s gap lower, as some investors believe the Fed might stay on hold for longer considering job growth has slowed. That was good to see, but, daily wiggles aside, the intermediate-term trend remains sideways, which means staying selective, holding some cash and honoring your stops is paramount. There are still plenty of stocks working and a few set-up nicely, and that’s where your focus should be.

This week’s Top Ten presents a bunch of current winners; all have held up well during the market’s recent selloff. Our Top Pick is Carmax (KMX), which popped out of a nice, flat base on earnings last week.

Stock Name	Price	Buy Range	Loss Limit
58.com (WUBA)	0.00	49-51	45-46
United Therapeutics (UTHR)	0.00	170-175	160-162
Medivation (MDVN)	0.00	125-130	116-117
CarMax (KMX)	0.00	72-75	67-68
Horizon Therapeutics (HZNP)	49.89	24.5-26	21-22
Humana Inc. (HUM)	0.00	175-179	158-162
Diamondback Energy (FANG)	0.00	75-78	67-69
E*Trade Financial (ETFC)	0.00	26.5-28	24-25
D. R. Horton (DHI)	66.55	27.5-28.5	25.5-26
Cirrus Logic Inc. (CRUS)	0.00	31.5-33.5	29.5-30

Current Market Outlook


Despite today’s rally, the major indexes have basically been in a sideways trend during the past few months—they’ve tried to get going on the upside twice during the past few weeks, but both times hit a wall and fell back. Now, a sideways trend isn’t a death knell for the market, but it does make it more difficult—it’s vital to pick your spots when buying, to book partial profits on the way up and to honor your stops should a stock break down. We’re going to knock down our Market Monitor a bit—we’re still more bullish than bearish, but given the environment, we want to lighten up on the gas pedal a bit.

This week’s list has a few dependable growers, not surprising given the market’s wobbles. Still, for our Top Pick, we’re going with a faster mover—Ctrip.com (CTRP) recently gapped up on earnings after 18 months out of the spotlight, thanks to a bullish forecast. We think you can start a position around here.

Stock Name	Price	Buy Range	Loss Limit
VeriSign (VRSN)	190.71	63-65	59-60
Twitter (TWTR)	40.37	47.5-50.5	44-45
Signet Jewelers (SIG)	0.00	132.5-136.5	126-127
ServiceMaster (SERV)	0.00	32-34	29.5-30.5
Red Hat (RHT)	0.00	75-77	68-70
Novo Nordisk (NVO)	0.00	52-54.5	47-48
Molina Healthcare (MOH)	0.00	63-65	59-60
Huntington Ingalls (HII)	0.00	135-140	127-129
Ctrip.com International Ltd. (CTRP)	34.94	56-58	51-53
Abiomed (ABMD)	0.00	70-73	64-66

Current Market Outlook


The market has had plenty of gyrations this year, even since it pushed out to new highs in February. But at no time since then has the intermediate-term trend turned down, and at no time have a bunch of Top Ten stocks showed abnormal action. Thus, we remained bullish, and that patience began paying off last week as the market’s uptrend resumed. There will surely be pullbacks and potholes among various sectors and indexes from time to time, but with the odds favoring higher prices in the weeks ahead, you should be holding your top performers and looking to add new leaders at good buy points.

This week’s list has a diverse mix of stocks, including a few new names. Our Top Pick is Ulta Beauty (ULTA), which is one of the market’s top retail stocks and cookie-cutter stories. A buy on dips is your best bet.

Stock Name	Price	Buy Range	Loss Limit
Western Refining (WNR)	0.00	47-49.5	43-44
Vipshop Holdings (VIPS)	14.25	26-28	23-24.5
Ulta Beauty (ULTA)	331.95	145-152	137-139
Ryland (RYL)	0.00	45-47.5	41.5-42.5
Regeneron Pharmaceuticals (REGN)	512.96	460-475	430-440
Universal Display (OLED)	187.54	42-45	38-39
Juno Therapeutics (JUNO)	0.00	55-60	51-52
JD.com (JD)	39.58	27-28.5	25-26
JetBlue Airways Corporation (JBLU)	0.00	18-19	16.5-17
Fortinet Inc. (FTNT)	137.53	33.5-35	31.5-32

Current Market Outlook


The market has been shaking and baking during the past three weeks on lots of headline (mainly currency-related) news, but while there has been some damage, the major indexes are holding key support and relatively few stocks have fallen apart. Of course the evidence can change at any time, and if the market really breaks down, we’ll turn cautious. But, despite the whippy day-to-day action, we’re sticking to our bullish stance, and believe holding your best performers, and even doing a little buying at opportune times, will prove fruitful.

This week’s list is once again heavy on the medical and retail sectors, though there are a few other tempting ideas out there, too. Our Top Pick is Urban Outfitters (URBN), which has come back to life after a long period out of the limelight.

Stock Name	Price	Buy Range	Loss Limit
WisdomTree (WETF)	0.00	20-21	18-19
Vulcan Materials Company (VMC)	137.10	80-83	75.5-76
United Therapeutics (UTHR)	0.00	164-168	158-160
Urban Outfitters (URBN)	0.00	43.5-45	38-39
SunEdison (SUNE)	0.00	22.5-24	20.5-21
IPG Photonics (IPGP)	0.00	96-99	87-89
Horizon Therapeutics (HZNP)	49.89	21-23	19-19.5
GrubHub (GRUB)	140.03	42-44	39-39.5
Foot Locker (FL)	0.00	59-62	56.5-57
American Eagle (AEO)	0.00	16.5-17.5	15-15.5

Current Market Outlook


After a straight-up move in February, the market has hit some rough waters, with the major indexes and lots of growth stocks taking hits. There’s always the chance that the market is beginning a major correction after a strong but relatively brief (in this case, four weeks) advance, but we like to go with the evidence. So far, all of the indexes are holding above their 50-day lines, and very few stocks have shown any abnormal selling. Thus, while we’re not fully invested, we are sticking with a bullish outlook and believe holding your best performers, and even buying a little on this dip, makes sense.

This week’s list is again heavy on the chip and medical (mainly biotech) sectors, with a smattering of retail. Our Top Pick is Biogen (BIIB), a blue-chip leader of the biotech group. The stock lifted out of a 10-month base in January and has acted well since, and it’s now approaching a solid entry point after pulling back.

Stock Name	Price	Buy Range	Loss Limit
WhiteWave Foods (WWAV)	0.00	39.5-41	37-38
Tesoro (TSO)	0.00	86-89	80-81
Skyworks Solutions (SWKS)	0.00	90-92	80-82
NXP Semiconductors (NXPI)	0.00	95-100	87-89
Mallinckrodt (MNK)	0.00	117-121	108-110
Jack in the Box (JACK)	0.00	92-95	87-88
HDFC Bank Limited (HDB)	0.00	59-61	56-57
Centene (CNC)	0.00	61-62.5	57-58
Burlington Stores (BURL)	193.95	54-56	50-51
Biogen (BIIB)	0.00	405-415	370-380

Current Market Outlook


With the broad market zooming, finding strong stocks is easy these days. But while buying any strong stock might work, your best odds will come from buying strong stocks that have set up well. That means they have a base, where supply and demand have stabilized for a while, or they have a breakout, which can kick off a new advance, or other supportive patterns. What you don’t want to do in a market this strong is buy (or own) laggards. Make hay while the sun shines! (And take advantage of what are traditionally the two last months in the market’s favorable November-April season.)

Our Top Pick this week is WABCO Holdings (WBC), a global supplier of technology systems for commercial trucks, buses and trailers. Business is booming and the stock has great and growing sponsorship.

Stock Name	Price	Buy Range	Loss Limit
WABCO Holdings (WBC)	0.00	116-118	103-105
Norwegian Cruise Lines (NCLH)	0.00	47.5-49.5	43-43.5
IntercontinentalExchange, Inc. (ICE)	0.00	230-236	220-222
Hilton Worldwide Holdings (HLT)	0.00	28-29	26-26.5
Salesforce.com (CRM)	0.00	68-70	60-62
Cracker Barrel Old Country Store (CBRL)	0.00	149-152	133-136
Cavium (CAVM)	0.00	68-70	62-64
Acuity Brands (AYI)	0.00	155-160	144-146
Akorn (AKRX)	0.00	51-53	46-48
Agrium (AGU)	0.00	110-114	104-106

Current Market Outlook


Along with heaps of snow in the Northeast, February has brought a marked change in character for the general market—the major indexes have moved into new high ground (led by the growth-oriented Nasdaq Composite), and individual stocks have done the same. In the short-term, we have seen a little giddiness take hold, which could easily lead to some potholes and shakeouts. But there’s no doubt that the intermediate-term evidence remains bullish, so we believe dips will present good buying opportunities.

This week’s list has an interesting mix of volatile glamour stocks and bigger-cap companies that are under accumulation. There are many attractive charts, but our Top Pick is CommScope (COMM), a telecom play that’s super-strong after a recent, game-changing acquisition.

Stock Name	Price	Buy Range	Loss Limit
Zillow (Z)	76.64	115-122	106-109
VeriSign (VRSN)	190.71	62-64	58.5-59.5
Vipshop Holdings (VIPS)	14.25	24.5-26	22.5-23.5
Ultimate Software (ULTI)	0.00	162-166	152-154
Sony Corp. (SNE)	0.00	25.5-27	23-24
Molina Healthcare (MOH)	0.00	60-63	55-57
Marathon Petroleum Corporation (MPC)	0.00	100-104	92-93
FireEye (FEYE)	0.00	41-43.5	37.5-38
CommScope (COMM)	0.00	28.5-30.5	26-26.5
Berry Global (BERY)	64.22	33-34.5	30-31

Current Market Outlook


For the past three months, the market has been on the cusp of breaking out a few times, only to fail as selling pressures grew. The past couple of weeks, however, have brought a change of character—many stocks surged on earnings, and then held and even built on those gains. And of course, the major indexes have kissed new high ground. That doesn’t guarantee higher prices—you’ll often see major indexes “fake out” above obvious resistance before pulling back—but we’re putting more emphasis on the increasingly positive action of individual stocks. Our Market Monitor is back into bullish territory, and we’re looking to put money to work as opportunities arise.

This week’s list has a broad array of stocks and sectors, a sign the buying pressures have broadened. Our Top Pick is LinkedIn (LNKD), which gapped out of a huge base on earnings two weeks ago—it looks like a liquid leader and should do very well if the market can continue higher.

Stock Name	Price	Buy Range	Loss Limit
Twitter (TWTR)	40.37	45.5-48	41.5-42.5
Skechers (SKX)	0.00	64-67	58-59
Sealed Air (SEE)	0.00	44-45	40-41
Ryland (RYL)	0.00	43-45	39-40
Pharmacyclics (PCYC)	0.00	157-165	147-150
Martin Marietta Materials (MLM)	261.52	138-145	128-130
LinkedIn Corporation (LNKD)	0.00	260-272	236-239
CyberArk (CYBR)	111.74	48-51.5	42-43
Charter Communications (CHTR)	0.00	172-177	164-168
Apple (AAPL)	248.94	120-125	112-114

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%.

Both Carnival (CCL) in the Smart Investing Growth & Income Portfolio, and Royal Caribbean Cruises (RCL) in the Growth Portfolio, were up over 5% yesterday, after Carnival reported a blowout first quarter.

GameStop (GME) reported fourth-quarter 2016 results on Friday (January year end), encouraging both bulls and bears.

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.