Not much has changed with the market’s big picture—some energy stocks are still doing well and the broad market is holding up near its highs, but many growth stocks and sectors are still in base-building phases. The goal as investors isn’t to discern what comes next (a leg up or leg down), but to be ready to act in either scenario. That means having your watch list ready (there are a good number of growth stocks beginning to set up), but also remaining defensive until you see evidence that the trend has turned up.

This week’s list is chock-full of energy stocks, which remains the clear leading group in the market. Our favorite of the week is Weatherford (WFT), a turnaround in the oil services space that recently staged a monstrous breakout on bullish earnings.

Stock Name	Price	Buy Range	Loss Limit
Weatherford International plc (WFT)	0.00	19.5-21	17-18.5
US Silica Holdings, Inc. (SLCA)	0.00	43.5-45.5	39-40
RPC Inc. (RES)	0.00	21-22.5	19.5-20
Patterson-UTI Energy (PTEN)	0.00	32-33	30-30.5
Micron Technology, Inc. (MU)	43.31	25-26	23.5-24
Level 3 Communications (LVLT)	0.00	42-43	38-39
Itaú Unibanco Holding S.A. (ITUB)	0.00	15-16.5	14.5-15
Garmin (GRMN)	97.45	55-57	52-53
Greenbrier (GBX)	57.73	48-50	45-46
Consol Energy Inc. (CNX)	0.00	42.5-44	40.5-41

We look at hundreds of charts every week, and we’ve seen worse environments than this—while high-growth stocks have taken a beating, much of the broad market is at least hanging in there. But the fact is that as long as the intermediate-term trend of the major indexes is pointed down, it’s going to be tough to make much money; the last couple of trading days has reinforced that fact. Thus, while a little buying here or there is fine, especially in resilient groups, less is generally more in this environment—preserving most of your capital and building your watch list are what will pay off down the road.

The good news is that, as earnings season progresses, we’re able to see which stocks have “it,” and which ones are being tossed out by big fund managers. This week’s list has a few recent earnings winners, including our Top Pick, Harley-Davidson (HOG), which just blasted out of a 14-week base on a great quarterly report.

Stock Name	Price	Buy Range	Loss Limit
WABCO Holdings (WBC)	0.00	104-107	97-98
Skyworks Solutions (SWKS)	0.00	39-41	35-36
SunEdison (SUNE)	0.00	18-19	15.5-16
SunPower (SPWR)	12.26	34-35	29-30
Salix Pharmaceuticals (SLXP)	0.00	102-106	98-100
Matador Resources Company (MTDR)	27.89	26-27	24-24.5
Harley-Davidson Inc. (HOG)	0.00	70-72	66-67
Delta Air Lines (DAL)	54.28	35-36.5	33-34
Comstock Resources (CRK)	0.00	25-27	22-23
Cabot Oil & Gas (COG)	0.00	36.5-38	35-35.5

The market finally bounced following last Tuesday’s big-volume support day, which has allowed many beaten-down growth stocks to get off their knees. It’s also allowed many energy stocks to show their muscle—many have lifted to new highs after multi-month launching pads! Overall, we’re keeping our Market Monitor neutral, as there’s no evidence yet that a sustainable bottom has been reached. But we’re OK with a little buying in the energy sector (as well as some other strong commodity stocks), because if the current rally gains momentum, many of these names could prove to be leaders of the upmove.
This week’s list did pick up on a few growth stocks that are beginning to separate from the pack, but half the stocks are commodity-related. Our favorite of the week is GasLog (GLOG), a shipper of liquefied natural gas that sports both rapid and predictable growth.

Stock Name	Price	Buy Range	Loss Limit
Weatherford International plc (WFT)	0.00	17-18	16-16.5
Vipshop Holdings (VIPS)	14.25	140-148	128-130
Taiwan Semiconductor (TSM)	78.41	19.5-20.5	18.5-19
SanDisk Corp. (SNDK)	0.00	80-82	76-77
Rice Energy (RICE)	0.00	28-29.5	25.5-26
Garmin (GRMN)	97.45	55-57	52-53
Gulfport Energy (GPOR)	0.00	71-73	66.5-67.5
GasLog (GLOG)	21.39	25.5-27	23.5-24
Finisar (FNSR)	0.00	26-27	24-24
Allegheny Technologies (ATI)	27.78	38.5-40	35-36

The selling pressures have been spreading during the past couple of weeks, moving from just the highfliers of the past year to much of the broad market. Most stocks (especially growth stocks) have suffered severe damage on their charts, and that will take time to repair; the odds are against a sustained rally from this point. That said, a few commodity-related groups continue to trade well, including a bunch of energy stocks that are beginning to push higher—they could prove to be new leaders if the market stabilizes. Overall, you should remain in a defensive stance because the overall trend is down, but buying a little of a resilient name or two is OK.

This week’s list is very heavy on commodity names, and our Top Pick is Athlon Energy (ATHL), a fast-growing producer in the Midland Basin. Its recent land grab is helping the stock push out from its first-ever base.

Stock Name	Price	Buy Range	Loss Limit
Zillow (Z)	76.64	85-90	77-79
Stillwater Mining (SWC)	0.00	15-16	14-14.5
Pacific Ethanol (PEIX)	0.00	13-14.5	11-12
Huntsman (HUN)	0.00	23-24.5	20-21
HDFC Bank Limited (HDB)	0.00	38-40.5	33-34
HD Supply Holdings, Inc. (HDS)	0.00	24-25	22-22.5
Diamondback Energy (FANG)	0.00	65-67	61-62
Concho Resources (CXO)	0.00	122-127	118-119
Athlon Energy (ATHL)	0.00	36.5-39	34-35
Archer Daniels (ADM)	0.00	43.5-44.5	41-42

Growth stocks remain dead in the water, with the sellers still focusing their efforts on the high valuation names that led the market higher during the past eight months. But now we’re beginning to see the weakness is that niche spread—broader indexes like the S&P 500 are feeling the heat, and while few cyclical-type stocks have broken down, most are starting to look ragged as big investors head toward defensive names. All told, it’s not 2008 all over again, but now is the time to hold plenty of cash, build a watch list and, if you buy, keep position sizes small and make sure you have your stops in place.

This week’s list is heavy with still-resilient cyclical stocks with great projected growth during the next couple of years. Our Top Pick is Devon Energy (DVN), a big company with a solid turnaround story and a stock that’s just getting going after a few down years.

Stock Name	Price	Buy Range	Loss Limit
Williams-Sonoma (WSM)	64.96	62-64	58-59
Ultra Petroleum (UPL)	0.00	26.5-28	25-25.5
Schlumberger (SLB)	0.00	95-97	91-92
RH Inc. (RH)	252.93	68-70	63-64
Southwest Airlines (LUV)	0.00	23-24	21.5-22
GT Advanced Technologies (GTAT)	0.00	15.5-17	14-14.5
Electronic Arts (EA)	0.00	27.5-29	25.5-26.5
Devon Energy (DVN)	0.00	66.5-68.5	62.5-63.5
CARBO Ceramics (CRR)	0.00	130-135	120-121
AerCap (AER)	0.00	38-40	34-35

After huge runs during the past six months, the evidence of the past few weeks indicates that most growth stocks have topped for the intermediate-term; sure, things can always change during earnings season, but most of the “hot” growth stocks will likely need time to build new launching pads. The key going forward will be whether the selling in growth stocks spreads to the broad market—that hasn’t happened yet, and in fact, we’re seeing many quality set-ups (and a few real breakouts) among some cyclical-type stocks. It’s encouraging, but for now we’re content to watch and wait to see if selling spreads or if buyers return.

This week’s list features many resilient names in less-sexy industries that nevertheless still have great potential. Our favorite of the week is Diebold (DBD), an older tech player whose earnings should boom in the quarters ahead.

Stock Name	Price	Buy Range	Loss Limit
Domtar (UFS)	0.00	108-114	100-102
Under Armour (UA)	0.00	110-120	102-104
Tata Motors Limited (TTM)	0.00	32-34	29-30
US Silica Holdings, Inc. (SLCA)	0.00	34-36	31-32
Martin Marietta Materials (MLM)	261.52	123-126	112-115
Ingram Micro (IM)	0.00	28-29.5	26-27
Horizon Therapeutics (HZNP)	49.89	14-15.5	12-13
Diebold (DBD)	0.00	38-40	34-36
Comstock Resources (CRK)	0.00	21-22	19-19.5
Baker Hughes (BHI)	0.00	63-66	60-61

Large-cap indexes like the S&P 500 continue to hang in there, but under the market’s hood, the selling in leading stocks that began three weeks ago has intensified, with many now showing abnormal action. Most fast-moving stocks are in a correction, and that’s enough for us to switch our Market Monitor to neutral, meaning you should limit new buying and raise some cash. That said, we’re not making any bold predictions; we’ve seen these rotations out of growth stocks before, and they often reverse themselves quickly. But right now, it’s best to pull in your horns and wait for leading stocks to find support.

Despite the carnage in certain sectors, we’re encouraged by this week’s list—there are many solid stories here, not just defensive or mega-cap names. Our Top Pick is Nabors Industries (NBR), one of a few energy stocks that are acting well.

Stock Name	Price	Buy Range	Loss Limit
Zulily (ZU)	0.00	52-56	45-48
Zillow (Z)	76.64	92-95	85-86
WhiteWave Foods (WWAV)	0.00	27-28.5	25-26
SanDisk Corp. (SNDK)	0.00	78-80	73-74
Nabors Industries (NBR)	0.00	22.5-23.5	20-20.5
Kate Spade & Company (KATE)	0.00	37-39	33-34
First Solar (FSLR)	83.74	68-72	60-62
Finisar (FNSR)	0.00	26-27.5	23.5-24
E-Commerce China Dangdang (DANG)	0.00	14-15.5	12-12.5
Activision Blizzard, Inc. (ATVI)	0.00	20-21	18-18.5

Following the huge lift-off in February, a pullback was likely, and the Ukraine-related tensions have been the excuse for persistent selling (especially among growth stocks) during the past couple of weeks. At this point, we think it’s fair to say the situation is on the fence—many leading stocks are down to key support, so if all’s well, the major indexes and individual names should find support soon. If they don’t, it’s likely that the market is in for a deeper consolidation; if they do (today was a decent start), then this news-driven pullback could be near an end. We’ll be watching.

In the meantime, this week’s list has many new names, including many that have just began their major advances within the past few months. Our Top Pick is Freescale Semiconductor (FSL), part of the strong chip group and a stock that is pulling back for the first time since an ultra-powerful breakout.

Stock Name	Price	Buy Range	Loss Limit
XPO Logistics (XPO)	0.00	30-31.5	28-28.5
Tesla, Inc. (TSLA)	818.87	220-235	190-200
TripAdvisor (TRIP)	55.14	100-105	91-92
Salix Pharmaceuticals (SLXP)	0.00	108-112	97-99
Palo Alto Networks (PANW)	236.92	74-77	68-69
Ligand Pharmaceuticals (LGND)	267.14	75-77	64-66
GT Advanced Technologies (GTAT)	0.00	16-17	13-14
Freescale Semiconductor (FSL)	0.00	21-22.5	19-19.5
Diamondback Energy (FANG)	0.00	62-64	56-57
AngloGold Ashanti (AU)	20.45	18-19	16-17

Last week we wrote that usually the first shakeout after a multi-week thrust isn’t the last, and indeed, we’ve seen some follow-on profit-taking among the market’s strongest stocks. There has been a little abnormal action here and there (mostly in biotech, but some elsewhere, too), but so far, the vast majority of stocks are simply pulling back after big-volume moves to new highs. If the selling spreads and the uptrend fails, then we’ll change our advice. But, as usual, we advise going with the weight of the evidence, which today remains bullish. Thus, hold your top performers, and adding a stock or two on dips is still favored.

This week’s list has a diverse flair to it—it’s not all high-flying stocks like we saw during February. But there is still plenty to like, including our Top Pick, Novo Nordisk (NVO), which has a solid growth story and a chart that’s at a fine entry point.

Stock Name	Price	Buy Range	Loss Limit
Under Armour (UA)	0.00	110-115	99-102
Trina Solar (TSL)	0.00	17-18	14-15
SouFun (SFUN)	0.00	88-90	78-80
Qihoo 360 (QIHU)	0.00	112-120	97-100
Novo Nordisk (NVO)	0.00	44.5-46.5	41-42
MasTec, Inc. (MTZ)	66.65	40-42	37-38
Magna International Inc. (MGA)	0.00	94-96.5	88-89
CoStar Group (CSGP)	589.55	200-208	182-185
Athenahealth (ATHN)	0.00	178-182	154-156
Alaska Air Group (ALK)	0.00	87-90	80-81

Trouble comes from where investors least expect it, so it’s not surprising to us that the Russia-Ukraine situation is making investors nervous. Is there a chance this is the event that capsizes the market? Of course there is—and that’s why you should watch your stops and risk. But after such a powerful rally for much of February among the major indexes and many stocks, the odds favor the first dip being buyable, at least among leading stocks. That doesn’t mean the pullback can’t last a few days (news-driven ups and downs are likely in the short-term), but with the overall uptrend intact, we remain optimistic.

This week’s list isn’t as growth-oriented as the past few weeks, but there are still more than a few good stories here. Our Top Pick is Avis Budget (CAR), a well-known firm with surprisingly solid earnings growth prospects as global travel increases.

Stock Name	Price	Buy Range	Loss Limit
58.com (WUBA)	0.00	46-48	41-42
Trimble Navigation (TRMB)	0.00	36-38	34-35
Signet Jewelers (SIG)	0.00	93-95	85-87
Spirit Airlines (SAVE)	57.03	54-57	49.5-50.5
Regeneron Pharmaceuticals (REGN)	512.96	320-330	275-280
Penn Virginia (PVA)	0.00	14-14.5	12-12.5
Michael Kors Holdings Limited (KORS)	73.22	95-100	85-90
Keurig Green Mountain (GMCR)	0.00	105-112	91-92
Avis Budget Group (CAR)	0.00	45-47	41-42
Basic Energy Services (BAS)	0.00	21.5-23	19-20

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.

==

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%.

Yesterday, Vulcan Materials (VMC) reported fourth-quarter 2015 results of $0.31 per share, when the market was expecting $0.26. As a result, the stock is climbing.

For the second time since we launched Smart Investing in Turbulent Times in October 2015, we have a takeover stock in the Buy Low Opportunities Portfolio.

I recommend that you sell Boeing and move your capital into WellCare Health Plans (WCG) or Cardinal Health (CAH).

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.