This remains a split tape, with many defensive and some commodity stocks testing new-high ground, while most of the market is chopping around, and growth stocks are still lagging. That said, we have seen a few rays of light lately—the mid-cap indexes are back above their 50-day lines, many growth stocks have held support for many weeks, and we’re seeing a few more potential leaders emerge on earnings or other good news. We’re sticking with our neutral Market Monitor until we see more bullish action among a variety of stocks and sectors, but the next week or two will be interesting.

This week’s list is still relatively heavy on commodity names, but our Top Pick is a growth stock that just completed a game-changing acquisition. Avago Technologies (AVGO) has great projected earnings growth, but the company reports earnings on May 29 so keep new positions small.

Stock Name	Price	Buy Range	Loss Limit
Zillow (Z)	76.64	95-100	88-90
Nabors Industries (NBR)	0.00	25-26.5	23-24
Lazard (LAZ)	0.00	47-49	45-46
Diamondback Energy (FANG)	0.00	72-74	66-67
Extra Space Storage (EXR)	0.00	49-51	46-47
Constellium (CSTM)	0.00	29-31	27-27.5
Carrizo Oil & Gas (CRZO)	24.03	53.5-55.5	50-50.5
Broadcom Limited (AVGO)	266.26	66-69	61-62
Athlon Energy (ATHL)	0.00	39-41	36-37
AerCap (AER)	0.00	45.5-47.5	41.5-42

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

If you have the feeling that this year’s boom in the tech sector—and the corresponding record highs in the major averages—isn’t being felt on a market-wide basis, you’re not imagining it.

As it turns out, the record lift in the Nasdaq and S&P is being driven by a troublingly small number of stocks. The result of this narrowing market is that value-focused investors like us have been forced to exercise patience while waiting for the boom to visit our corner of the market (more on that in a minute).

WHAT TO DO NOW: Big picture, the market and most leaders look great, and our market timing indicators are in fine shape. Near-term, though, there’s little doubt things have gotten a bit giddy, with many names and indexes extended to the upside. Tonight, we’re placing Cava (CAVA) on Hold as that stock has been caught up in some group weakness; we’ll hold our 45% cash position for now, but stay tuned, as we’d like to add some new names (or add to existing names) in the near future.

What a difference a month can make! What an April! The S&P rose 9.6% in April, making it the best single month for the market in six years. It hit an all-time high on Friday.

Sure, the war isn’t over. But the market doesn’t really seem to regard it as a war anymore, more like a blockade situation with the possibility of some skirmishes. While there is still headline risk, investors have moved beyond this war and are focusing on earnings. And for good reasons.

The results are in for the month of April. It was fabulous. The S&P rose 9.6%, making it the best single month for the market in six years. It hit an all-time high on Friday.

Sure, the war isn’t over. But the market doesn’t really seem to regard it as a war anymore, more like a blockade situation with the possibility of minor skirmishes. While there is still headline risk, investors have moved beyond this war and are focusing on earnings.

Now before you call me crazy concerning today’s newsletter headline, hear me out.

Even though large-cap names have garnered more than a fair share of attention among investors this year, I think a case can be made that companies with big capitalizations have a lot more room to run higher before they can be truly regarded as “overbought” or “played out.”

The market is digesting the push and pull of higher oil prices, a deeply divided Federal Reserve, prospects for a prolonged blockade of the Strait of Hormuz and fading momentum from the AI trade that helped push markets to all‑time highs earlier this month.

Despite the crosscurrents, the overall tone still tilts bullish, supported by investor comfort (for the time being) with the geopolitical tension, resilience in the U.S. economy, and improving visibility into earnings growth over the coming quarters.

Yesterday, four tech giants, Alphabet, Amazon, Meta and Microsoft, representing 22% of the S&P 500’s market value, reported strong quarterly earnings that highlighted the importance of AI.

You might think the above companies and their AI brethren are “asset light” companies but you would be very wrong.

It’s been a glorious April following a miserable March for the market. What happens in May may determine which direction stocks are headed for the rest of the year.

That’s probably overstating things a bit, but May should be crucial for the reasons we discussed last week: namely, the fate of the Iran war, but also the bulk of first-quarter earnings season and the introduction of a new Fed chair.

What war? This market is moving on. We may not be out of the woods yet, but investors are looking beyond the Iran war.

Stocks have already made up all losses from a rough March and then some. The S&P 500 had fallen 7.7% in the month of March by the 30^th. Since then, the index has rallied over 13%. The S&P is now at a higher level than before the war began and is hitting new all-time highs.

The other day I was paid a visit by a roving ISP salesman who was pitching his company’s fledgling internet service over the local monopoly’s. We struck up a conversation and he asked what I did for a living. When I told him, his eyes lit up and he asked, “Got any good stocks you can recommend?”

Without thinking I blurted out, “Anything AI-related. You can’t go wrong.” The advice was only semi-facetious, for there’s undeniably a degree of truth behind it. My instinctive response to that question also prompted me to consider the question: just how long can the broad market continue its “all things AI” run without broader sector participation

Note: I’m out of town this week, so I’ll be a bit briefer on the update today—but I’m still checking my laptop a couple of times a day if you have any questions or comments. I’ll be back at my desk come Monday. Cheers.

WHAT TO DO NOW: Remain optimistic. The market and some leaders have hesitated, but all of our market timing indicators are bullish, and most stocks we own or are watching are working. Last Friday, we bought a half-sized stake in Nebius (NBIS) and added a 3% additional stake in ProShares S&P 500 Fund (SSO); earlier this week, we sold our small remaining position in GE Aerospace (GE); and tonight, we’ll buy a half-sized position (5% of the portfolio ) in Cava (CAVA). We’ll still have 46% in cash or so after these moves.

Despite all the headline noise lately we’re marching deeper into first‑quarter earnings season with the market’s path of least resistance still pointing higher.

Optimism around the extension of the tentative ceasefire in the Middle East has reduced geopolitical anxiety to a seemingly manageable level. The U.S. economy continues to show resilience, and the corporate earnings outlook points toward meaningful growth in the coming quarters and years.

If you’re wondering which excellent stock to add to your portfolios right now, H&R Block (HRB) is the one.

Sell Abercrombie & Fitch (ANF) for a 21% gain and Buy Federated Investors (FII).

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 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.