Issues
The market began correcting in late March, and since then it has tried to get going twice (in late April, and in early June), with both rallies failing. Late last week, though, another rally attempt got underway, and while it’s early, it looks more promising—the upmove last Friday was powerful, and there appears to be less uncertainty surrounding Europe. Plus, potential leading stocks have now had two to three months to rebuild bases, so there are more potential buyable patterns out there. That said, the market remains fragile, and earnings season is dead ahead; our guess is that earnings, not Europe, will likely decide the market’s next big move. We’ll keep our Market Monitor in neutral territory for now, but color us encouraged by the market’s action.
This week’s list has a few good ideas; sector-wise, it’s clear that the housing stocks are performing best. Thus, we’ll keep it simple and name Lennar (LEN), the leading homebuilder in the market, as our Editor’s Choice; the company just came out with a great earnings report, propelling shares to new highs. Try to buy on weakness.
This week’s list has a few good ideas; sector-wise, it’s clear that the housing stocks are performing best. Thus, we’ll keep it simple and name Lennar (LEN), the leading homebuilder in the market, as our Editor’s Choice; the company just came out with a great earnings report, propelling shares to new highs. Try to buy on weakness.
| Stock Name | Price | ||
|---|---|---|---|
| 3D Systems (DDD) | 0.00 | ||
| CPHD (CPHD) | 0.00 | ||
| Cirrus Logic Inc. (CRUS) | 0.00 | ||
| Eagle Materials Inc. (EXP) | 0.00 | ||
| Expedia Group (EXPE) | 0.00 | ||
| Lennar (LEN) | 61.85 | ||
| Ocwen Financial (OCN) | 0.00 | ||
| Skechers (SKX) | 0.00 | ||
| Ultimate Software (ULTI) | 0.00 | ||
| Western Refining (WNR) | 0.00 |
The market’s intermediate-term trend briefly turned positive last week, but the quick rejection of the indexes on Thursday and today’s battering clearly tell you that sellers are still lurking. That said, we would avoid any big-picture predictions—the weakness of last Thursday and today might mean the downtrend is resuming ... but the market could also be in a bottoming process, which often has many ups and downs as investors place (or take off) their bets. Either way, for an investor in leading stocks, there’s not much to do here; while some stocks have perked up, few have made any real progress, and to this point, most names that poke into new-high ground are quickly swarmed with sellers. Thus, our Market Monitor will remain neutral; some new buying here or there remains fine, but keep cash on the sideline and don’t get aggressive until the market kicks into gear.
This week’s list is a potpourri of differing sectors and stories, though there is a retail bent to the list. Our favorite of the week is Coinstar (CSTR), a company with a solid history of growth that might now have (another) new concept to keep the bottom line humming. The stock has built a solid base during the market’s correction.
This week’s list is a potpourri of differing sectors and stories, though there is a retail bent to the list. Our favorite of the week is Coinstar (CSTR), a company with a solid history of growth that might now have (another) new concept to keep the bottom line humming. The stock has built a solid base during the market’s correction.
| Stock Name | Price | ||
|---|---|---|---|
| CSTR (CSTR) | 0.00 | ||
| eBay Inc. (EBAY) | 0.00 | ||
| HTWR (HTWR) | 0.00 | ||
| MDC (MDC) | 0.00 | ||
| Medivation (MDVN) | 0.00 | ||
| NetSuite, Inc. (N) | 0.00 | ||
| PetSmart (PETM) | 0.00 | ||
| SolarWinds (SWI) | 0.00 | ||
| VSI (VSI) | 0.00 | ||
| Zumiez (ZUMZ) | 0.00 |
During the past couple of weeks the market has shown some improvement—first, the big shakeout in the indexes on June 1 (following a disappointing jobs report) was quickly reversed, then the market and potential leaders consolidated amidst a rash of worrisome news, and now we’re seeing real buying appear—some stocks have already pushed to new high ground! That said, now’s a good time to keep your feet on the ground; by our measures the market remains in an intermediate-term downtrend, though that could change if the bulls continue making progress this week. Thus, while some small new buying here is fine, you shouldn’t put on your bullish hat until we see confirmation that the trend has turned up.
Whether you buy a little here or not, you should be sure to have your watch list in tip-top shape should an uptrend emerge. This week’s list has many great candidates, and our favorite of the week is Cerner (CERN), a leader in the IT healthcare segment, which features a couple of great-acting stocks. CERN lifted to new highs today on big volume.
Whether you buy a little here or not, you should be sure to have your watch list in tip-top shape should an uptrend emerge. This week’s list has many great candidates, and our favorite of the week is Cerner (CERN), a leader in the IT healthcare segment, which features a couple of great-acting stocks. CERN lifted to new highs today on big volume.
| Stock Name | Price | ||
|---|---|---|---|
| Akorn (AKRX) | 0.00 | ||
| American Eagle (AEO) | 0.00 | ||
| AUXL (AUXL) | 0.00 | ||
| Biogen (BIIB) | 0.00 | ||
| Cerner Corporation (CERN) | 0.00 | ||
| Edwards Lifesciences (EW) | 228.06 | ||
| Equinix, Inc. (EQIX) | 547.73 | ||
| Skyworks Solutions (SWKS) | 0.00 | ||
| TripAdvisor (TRIP) | 55.14 | ||
| VeriSign (VRSN) | 190.71 |
The broad market remains (ahem) challenging, but there are still broad pockets of strength, and if you care to mine them (we have mining on our minds, for obvious reasons), and you watch your stocks carefully, you can still make money in this market. Coal, oil and fertilizer remain strong, but we’re now seeing more action in stocks of supporting industries, like the companies that help the drillers, or the companies that sell and service the tractors that roam the fields. This extension of strength into supporting industries is normal; we well remember when layers of technology stocks went through the process in the 80s and 90s. So don’t fear it and don’t fight it; embrace it and prosper. Our Editor’s Choice in this issue is one of these stocks, Titan Machinery. Making its first appearance in Cabot Top Ten Report, and hopefully not its last, it boasts good management, a great industry rolling in cash, and excellent expansion opportunities. Plus, it’s a young stock, and the buyers are in total control.
| Stock Name | Price | ||
|---|---|---|---|
| AGU (AGU) | 0.00 | ||
| AUXL (AUXL) | 0.00 | ||
| BUCY (BUCY) | 0.00 | ||
| CPX (CPX) | 0.00 | ||
| CRM (CRM) | 0.00 | ||
| GDP (GDP) | 0.00 | ||
| MOS (MOS) | 0.00 | ||
| ROST (ROST) | 0.00 | ||
| STLD (STLD) | 0.00 | ||
| TITN (TITN) | 0.00 |
The market’s growing volatility is a small area of concern on our mind today; if anything, it should cause you to manage your market exposure a little more carefully; buy low and keep losses small. On the other hand, there are still some very strong stocks out there, and as we all know, trends can persist far longer than expected. Four oil stocks anchor this issue of Cabot Top Ten Report, reflecting the fact that the sector is strong, that it held up extremely well in last Friday’s market dump, and that many mid-sized companies in the sector are attracting institutional investors’ money. As long as the trend continues—and we recognize that it may be overdone in the short-term—we like them all. But our Editors’ Choice is one of the two steel companies in the issue, Gerdau. Benefiting from the fast-growing Brazilian economy but diversified into the rest of South America and North America, it’s got a great track record of growth as well as a chart that’s been building a base for the past month.
| Stock Name | Price | ||
|---|---|---|---|
| BNI (BNI) | 0.00 | ||
| CXO (CXO) | 0.00 | ||
| ENER (ENER) | 0.00 | ||
| GGB (GGB) | 0.00 | ||
| MDU (MDU) | 0.00 | ||
| ME (ME) | 0.00 | ||
| MT (MT) | 0.00 | ||
| TAP (TAP) | 0.00 | ||
| WLL (WLL) | 0.00 | ||
| AGU (AGU) | 0.00 |
Commodity stocks have been (and remain) the leaders of the market’s advance, but interestingly, the tech-heavy Nasdaq has been outperforming all other major indexes for the past few weeks. Now, finally, some individual tech stocks are beginning to pop up—there are two chip stocks and one hard disk drive maker in this week’s Top Ten. We’re not ready to tell you to move a ton of money into technology sectors, but it’s a sign the rally is broadening out. Elsewhere in this week’s list, there are the usual suspects of oil, natural gas, steel and alternative energy. Our favorite of the week is Marvell Technology (MRVL), a chip firm that gapped up in a big way after its earnings announcement last Friday. We think you could nibble around here, although a drop of a point or two isn’t out of the question.
| Stock Name | Price | ||
|---|---|---|---|
| AMSC (AMSC) | 0.00 | ||
| CMI (CMI) | 0.00 | ||
| EAC (EAC) | 0.00 | ||
| GTI (GTI) | 0.00 | ||
| HK (HK) | 0.00 | ||
| MA (MA) | 0.00 | ||
| MRVL (MRVL) | 0.00 | ||
| NETL (NETL) | 0.00 | ||
| PCX (PCX) | 0.00 | ||
| WDC (WDC) | 0.00 |
We knew a correction was on the way, and the market delivered it last week. The major indexes still look fine, but we’re a bit wary of the action of leading stocks—even in recent days when the indexes are up, most leaders are dropping. That doesn’t mean the bull move is over, but as you can see in our Market Monitor above, we’d cool our heels a bit; don’t hesitate to take a few chips off the table, and remember to cut all losses short. As for buying, we believe this week’s list offers many of the top leaders in the market in various sectors. Not all are near good buy points, but any further weakness should bring them there soon. Our favorite of the week is Hercules Offshore (HERO), a shallow-water driller that has recently emerged from a tight consolidation. We do feel that many energy names can pull back, but HERO should pull back less than most.
| Stock Name | Price | ||
|---|---|---|---|
| ANR (ANR) | 0.00 | ||
| CLF (CLF) | 0.00 | ||
| CLR (CLR) | 0.00 | ||
| ENER (ENER) | 0.00 | ||
| FRO (FRO) | 0.00 | ||
| HERO (HERO) | 0.00 | ||
| MMR (MMR) | 0.00 | ||
| SOHU (SOHU) | 0.00 | ||
| SU (SU) | 0.00 | ||
| X (X) | 0.00 |
Last week we bemoaned the fact that the market had not yet decisively broken out to the upside, and indeed, most major indexes were below resistance and close to their longer-term 200-day moving averages. However, last week, leading stocks separated themselves from the pack—even during days the indexes were flat, the best stocks cranked out solid gains. We know that a pullback or correction could occur at a moment’s notice, yet we remain optimistic the best is yet to come. This week’s Top Ten reflects the broad bullish action among leading stocks last week, as we have a good mix of growth and commodity, big and small. Our favorite of the week is MasterCard (MA), a big-cap leader of this market advance that reacted very well to earnings last month, and has since quieted down beautifully. You can start a position in this area, and don’t worry about the high share price—just buy fewer shares.
| Stock Name | Price | ||
|---|---|---|---|
| ARG (ARG) | 0.00 | ||
| CLR (CLR) | 0.00 | ||
| EGLE (EGLE) | 0.00 | ||
| FLR (FLR) | 0.00 | ||
| GU (GU) | 0.00 | ||
| MA (MA) | 0.00 | ||
| MTL (MTL) | 0.00 | ||
| PXD (PXD) | 0.00 | ||
| UNT (UNT) | 0.00 | ||
| WTI (WTI) | 0.00 |
A few weeks ago, we were optimistic that by this point the market would be in a full bore, all-out bull stampede. Instead, the market’s advance has turned into a choppy uptrend, especially among individual stocks and sectors, where a solid week or two of rising prices attracts profit-takers. Nevertheless, the good shouldn’t be the enemy of the perfect—most stocks are heading higher, and while volatility is elevated, there are plenty of winners to go around. Just remember to keep your feet on the ground, take a few chips off the table if your stock soars for a few days, and to cut all losses short. This week’s Top Ten contains a few names that are new to us, including one monster earnings winner last week. Our top pick is FMC Technologies (FTI), an oil service stock that is showing great price and volume action of late. It’s not as extended as some of its oil peers, but looks to be a great buy around here, or a little lower.
| Stock Name | Price | ||
|---|---|---|---|
| GTI (GTI) | 0.00 | ||
| JRCC (JRCC) | 0.00 | ||
| PXD (PXD) | 0.00 | ||
| SOL (SOL) | 0.00 | ||
| CRK (CRK) | 0.00 | ||
| CSIQ (CSIQ) | 0.00 | ||
| EAC (EAC) | 0.00 | ||
| ENER (ENER) | 0.00 | ||
| ERES (ERES) | 0.00 | ||
| FTI (FTI) | 0.00 |
The past couple of weeks have brought a distinct change in the market’s behavior. While the major indexes continue their mild advance, beneath the surface, we’re seeing more and more stocks acting in a healthy manner, including plenty that have gapped up on earnings. That tells us that big investors aren’t waiting patiently to build positions—they’re buying with both hands, driving the market’s leading stocks higher. There will be bumps in the road, of course, but you should be putting money to work in the market’s leading stocks at prudent buy points. This week’s Top Ten contains something for everyone—some commodity, some growth, some big, and some small. Our favorite of the week is Gafisa (GFA), a fast-growing Brazilian homebuilder that shot out of a nice, tight pattern last week. Earnings are due out tonight, but we think you can buy some around here.
| Stock Name | Price | ||
|---|---|---|---|
| CNQR (CNQR) | 0.00 | ||
| FEED (FEED) | 0.00 | ||
| FST (FST) | 0.00 | ||
| GFA (GFA) | 0.00 | ||
| KSU (KSU) | 0.00 | ||
| MA (MA) | 0.00 | ||
| MMR (MMR) | 0.00 | ||
| PWRD (PWRD) | 0.00 | ||
| WLT (WLT) | 0.00 | ||
| X (X) | 0.00 |
The meat of earnings season is upon us—many blue-chip firms have already reported, but the fast-growing, emerging leaders are just starting to release numbers. Remember that big earnings gaps up (10% or more) generally lead to further gains in the weeks ahead (with normal pullbacks, of course), and vice versa. So it shouldn’t be a surprise to see a few recent earnings winners in this week’s Top Ten; a couple of them are likely to be big winners should the market continue to trend higher. Overall, we remain optimistic the market’s best days are ahead, but there’s no rush—things are still falling into place, supporting further gains in the weeks to come. Our favorite of this week is Fording Canadian Coal (FDG), a stock that’s been featured a few times in Top Ten, thanks to its huge reserves of metallurgical coal. The entire group remains strong, although it has paused somewhat in recent weeks. We think it’s a good time to get on board.
| Stock Name | Price | ||
|---|---|---|---|
| FRO (FRO) | 0.00 | ||
| GDI (GDI) | 0.00 | ||
| PDE (PDE) | 0.00 | ||
| SOHU (SOHU) | 0.00 | ||
| SOL (SOL) | 0.00 | ||
| SWN (SWN) | 0.00 | ||
| XEC (XEC) | 0.00 | ||
| CLF (CLF) | 0.00 | ||
| DAR (DAR) | 0.00 | ||
| FDG (FDG) | 0.00 |
Last week was a decisive week, in our view. Not only did the major indexes score solid gains, but many individual leading stocks put on a good show, telling us the bulls are finally joining the party. Of course, with the meat of earnings season still coming up, there are bound to be ups and downs in the weeks ahead. But we’re growing more confident that the bear phase from October of last year through March of this year—punctuated by the collapse of Bear Stearns—is coming to an end. This week’s Top Ten is once again heavy in the commodity areas, which are leading the market higher. We do believe traditional growth stocks will appear if this market is going to run, but for now, the buying is clearly in metals, steels, oil and gas. Our favorite of the week may be a surprise. It’s U.S. Steel (X), a big, old firm, but one that might be best positioned to take advantage of higher steel prices in the months ahead. Try to buy on weakness.
| Stock Name | Price | ||
|---|---|---|---|
| AGU (AGU) | 0.00 | ||
| BUCY (BUCY) | 0.00 | ||
| EAC (EAC) | 0.00 | ||
| HP (HP) | 0.00 | ||
| MEE (MEE) | 0.00 | ||
| MMR (MMR) | 0.00 | ||
| PXD (PXD) | 0.00 | ||
| SOHU (SOHU) | 0.00 | ||
| WFT (WFT) | 0.00 | ||
| X (X) | 0.00 |
Updates
WHAT TO DO NOW: It’s not 2008 out there, but the market environment remains very challenging, especially for growth, where most indexes, funds and stocks are struggling. That said, we have started to see some growth names emerge on the upside, and our watch list is growing—if we can see more than a day or two of strength, we’d like to put some money to work. But until then, we’re content to stay close to shore and patiently wait for growth stocks to get moving. In the Model Portfolio, we’re placing Axsome Therapeutics (AXSM) on Hold tonight; our cash position is still just above 50%.
It’s been an interesting week here in Rhode Island, where most people are finally dug out from the roughly three feet of snow that fell across the state Sunday night and into Monday.
Growing up in Vermont, major snowstorms were certainly disruptive. But more often than not, it was all about how we would get to the ski resort without going off the road.
Growing up in Vermont, major snowstorms were certainly disruptive. But more often than not, it was all about how we would get to the ski resort without going off the road.
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.
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.
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%.
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%.
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.
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.
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.
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%).
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%).
Alerts
Portfolios
Strategy
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.