Last week, our issue was titled “Decision Time,” and after the Federal Reserve’s disappointing report, the market made the decision to go down with force—not only have the major indexes broken their intermediate-term trend lines, but tons of stocks have been nailed as the selling pressures intensify. Yes, there are still many decent-looking names out there, but the market is the elephant in the room at this point; it’s best to hold plenty of cash and do little new buying until stocks find their footing.

The good news from a stock picker’s standpoint is that it’s easiest to spot strength in a weak market; if a stock is holding up well in this environment, it deserves some extra attention. This week’s list has many stocks that fill that bill; our favorite is Infoblox (BLOX), a young, rapidly-growing networking firm. Just be sure to keep any positions small if you decide to buy.

Stock Name	Price	Buy Range	Loss Limit
Yelp (YELP)	41.30	28-30	26-27
The ExOne Company (XONE)	0.00	48-50	42-43
Tesla, Inc. (TSLA)	818.87	93-103	85-88
SodaStream (SODA)	142.91	65-69	60-61
Charles Schwab (SCHW)	0.00	19.5-20.5	18-18.5
RH Inc. (RH)	252.93	67-71	60-62
Colfax (CFX)	0.00	48-50	46-47
Infoblox Inc. (BLOX)	0.00	27-28	23-24
ANGI Homeservices Inc. (ANGI)	14.81	25-26	23-24
ACADIA Pharmaceuticals (ACAD)	47.84	16-17.5	13.5-14

It’s been nearly four weeks since the market’s correction and consolidation began, and overall, the damage hasn’t been that great—interest rate-sensitive names have been hammered, but many growth stocks remain in good shape. Now the question is whether buying power will return; holding up is all well and good, but we want to see evidence that institutional investors are adding shares of resilient stocks, even buying them as they reach new high ground. If we see that, we’ll switch the Market Monitor back into the green. But right now, we advise holding some cash and keeping new positions small.

Once again, we’re pleased to see many enticing names in this week’s list. Our favorite is one of the first stocks to hit new-high ground—Oasis Petroleum (OAS) is emerging from a gigantic base, and if the market gets going on the upside, it looks like a new leader.

Stock Name	Price	Buy Range	Loss Limit
Tenneco (TEN)	0.00	44-47	38-40
Shutterfly (SFLY)	94.71	50-52	44-46
Oasis Petroleum (OAS)	12.57	39-42	36-37
Northrop Grumman (NOC)	0.00	81-83	77-78
Morgan Stanley (MS)	0.00	25-26	22.5-23.5
3D Systems (DDD)	0.00	45-46	41-42
Delta Air Lines (DAL)	54.28	18-19	16.5-17
Carter’s (CRI)	0.00	70-72	66-67
Celldex Therapeutics (CLDX)	0.00	14.5-15.5	12-13
CBOE Holdings (CBOE)	0.00	41-42	37-38

There’s no question that last Thursday’s and Friday’s show of support in the major indexes and many stocks (especially growth-oriented stocks) was a positive sign—it tells you big investors are still interested in buying on weakness at or near support levels. (Many stocks found support near their 50-day lines.) That continues to bode well for the intermediate- and longer-term uptrend. That said, there are still question marks in the short-term—there’s been lots of distribution since mid-May, especially in many defensive and interest rate-sensitive areas, and sentiment remains a bit complacent. By all means, you should hold onto your top performers, but for now, we continue to advise caution when it comes to new buying (keep positions small) and holding some cash.

Perhaps the most impressive thing we saw this weekend were our own screens—this week’s list has a ton of great-looking charts despite the market’s recent sloppiness. Our favorite of the week is Parexel (PRXL), which remains in a tight, controlled uptrend and has great growth prospects.

Stock Name	Price	Buy Range	Loss Limit
Salix Pharmaceuticals (SLXP)	0.00	59-61	52-54
Pioneer Natural Resources (PXD)	0.00	139-144	129-131
Parexel Corp. (PRXL)	0.00	44-46	41-42
OmniVision (OVTI)	0.00	18-19	16.5-17
MercadoLibre, Inc. (MELI)	980.83	113-118	103-105
EQT Corporation (EQT)	0.00	78-82	74-75
Electronic Arts (EA)	0.00	21.5-22.5	19.5-20.5
Ctrip.com International Ltd. (CTRP)	34.94	30-32.5	27-28
Conn’s Inc. (CONN)	0.00	51-53	46-47
TD Ameritrade (AMTD)	0.00	22.5-23.5	20.5-21

Ever since the market suffered a wave of nasty distribution two weeks ago, it’s been tough to make much money; strength has attracted sellers, interest rate-sensitive groups have been crushed, the broad market has weakened and, today, growth stocks were battered. Now, the long-term trend is still up, and many stocks remain in uptrends, but the market has changed character. Thus, we’re moving our Market Monitor into neutral territory—maybe this retreat will find support soon, and if it does, we’ll be happy to quickly switch back to an aggressive stance. But for now, we believe it’s best to play things a little cautiously and hold some cash.

This week’s list does have a good crop of candidates if you want to nibble on weakness, including a few bigger-cap issues that have great stories. Our favorite is one of those bigger names—Boeing (BA), which, despite its image as a slow-moving behemoth, has a history of sustained moves when the aerospace industry turns up, as it has today.

Stock Name	Price	Buy Range	Loss Limit
Valeant Pharmaceuticals (VRX)	0.00	86-89	78-80
SunPower (SPWR)	12.26	17-19	14.5-15
Sohu.com (SOHU)	0.00	61-64	52-54
SodaStream (SODA)	142.91	65-67	55-57
Ocwen Financial (OCN)	0.00	41-43.5	36-37
Jazz Pharmaceuticals (JAZZ)	0.00	65-67.5	59-60
Illumina Inc. (ILMN)	289.74	68-71	63-64
Chart Industries (GTLS)	72.05	94-97	84-95
General Motors Company (GM)	0.00	33-34	31-32
Boeing (BA)	432.22	97-100	90-91

Overall, the main trends of most stocks, sectors and indexes remain firmly up; that’s why we’re leaving our Market Monitor in bullish territory. That said, we’re confident in saying that the next month will be more challenging than the straight-up action of the past month—more names are showing wide-and-loose action, which isn’t always abnormal but does make it harder to be patient and find low-risk entries. Remain bullish, but also stick to your plan and don’t be afraid to throw some losers or laggards overboard.

Once again, we’re pleased to see so many attractive, growth-oriented stocks in this week’s list, a sign that the buyers haven’t left the building. Our favorite of the week is Regeneron Pharmaceuticals (REGN), which is part of the strong biotech sector and has enjoyed an orderly pullback of late.

Stock Name	Price	Buy Range	Loss Limit
Western Digital Corporation (WDC)	0.00	59-63	54-55
Tesla, Inc. (TSLA)	818.87	95-100	83-85
Regeneron Pharmaceuticals (REGN)	512.96	245-260	220-225
Qihoo 360 (QIHU)	0.00	42-44	36-37
Pandora Media Inc. (P)	0.00	15.5-17	13.5-14
Old Dominion Freight Line Inc. (ODFL)	221.91	42-43	39-40
Hornbeck Offshore (HOS)	0.00	50-53	46-47
First Solar (FSLR)	83.74	48-52	43-44
3D Systems (DDD)	0.00	44-47	40-41
American Axle (AXL)	0.00	15-16.5	13-14

Whenever the market acts extraordinarily (either on the upside or downside), investors tend to forget their discipline and act instead on emotion. But the best thing to do is to stick with your plan and keep it simple. In this environment, doing that has allowed us to ride many winners higher as the bull market has strengthened, as well as jump into plenty of names during temporary weakness. Overall, the market’s trend remains strongly up so we’re keeping our Market Monitor in bullish territory. While now likely isn’t a great time to buy a ton of extended stocks, there remain a good number of opportunities as the market continues to rotate into and out of various stocks and sectors.

This week’s list has stocks that are part of many of the recent leading themes—Japan, housing, young software firms, 3D printing and medical. Our favorite of the week is Realogy Holdings (RLGY), an interesting way to play the housing upturn. We’re intrigued with the volume expansion in the stock, as well as the company’s huge earnings estimates going forward.

Stock Name	Price	Buy Range	Loss Limit
The ExOne Company (XONE)	0.00	40-42	34-36
Workday (WDAY)	194.88	65.5-69	62-64
TripAdvisor (TRIP)	55.14	58-60	54-55
Toyota Motor (TM)	0.00	122-127	105-110
Splunk (SPLK)	207.67	43.5-45	41-42
Santarus (SNTS)	0.00	20.5-22	19-20
Realogy Holdings (RLGY)	0.00	52-53.5	46-48
PulteGroup (PHM)	45.93	22-23.5	20-21
Myriad Genetics (MYGN)	0.00	31-34	29-30
DIRECTV (DTV)	0.00	62-64	56-58

The market continues to act excellently, and we’re pleased to see more and more growth-oriented stocks flex their muscles, while many defensive sectors take a breather. Of course, part and parcel of that is that we’re seeing a little froth; investor sentiment is getting a bit giddy as some names explode higher. That doesn’t mean a top is imminent—our Market Monitor is solidly in the bullish camp—but it does mean you should be prepared for some news-driven potholes. Overall, you should be holding your best performers and putting more money to work at good entry points, but be sure not to get carried away after a good few months.

This week’s list has an impressive array of stocks that are showing extremely powerful accumulation. Our favorite of the week is SodaStream (SODA), which is very volatile but just broke out on earnings last week on very big volume.

Stock Name	Price	Buy Range	Loss Limit
Uni-Pixel (UNXL)	0.00	33-35	29-30
SodaStream (SODA)	142.91	55-58	52-53
Spirit Airlines (SAVE)	57.03	27-28.5	25.5-26
Oceaneering International (OII)	0.00	70-73	67-68
Ocwen Financial (OCN)	0.00	41-42.5	37.5-38
Meritage Homes (MTH)	102.20	48.5-52	45-46
MercadoLibre, Inc. (MELI)	980.83	110-117	98-100
Fortune Brands Home & Security (FBHS)	81.02	38-40	35-36
Electronic Arts (EA)	0.00	20.5-22	19-20
Ctrip.com International Ltd. (CTRP)	34.94	27-28.5	23-24

The title says it all—overall, the trend remains up for the major indexes and most stocks and sectors, and so our Market Monitor remains in bullish territory. But there’s also no question that the environment is whippy; big moves happen almost daily, and earnings season continues to bring a bunch of big moves in both directions. None of this is bad, per se, but it does mean you have to be more discerning with your buys and make sure your timing is right and your stops aren’t too tight.

This week’s list has yet another impressive crop of stocks with good stories and charts that have shown large recent buying power (usually on earnings). Our favorite is Yelp (YELP), a relatively recent IPO that has a great, sustainable story, rapid sales growth and a stock that just exploded higher on earnings.

Stock Name	Price	Buy Range	Loss Limit
Yelp (YELP)	41.30	29-31.5	26-27
Trulia (TRLA)	0.00	33-35	29.5-30.5
Seagate Technology (STX)	0.00	39.5-41.5	36-37
Parexel Corp. (PRXL)	0.00	42-44	39-40
IntercontinentalExchange, Inc. (ICE)	0.00	165-170	156-158
Hertz Global Holdings, Inc. (HTZ)	0.00	23-24.5	21-22
Hornbeck Offshore (HOS)	0.00	49-50.5	44-45
Guidewire (GWRE)	90.60	39.5-41	35-36
Gilead Sciences (GILD)	75.10	51-54	47-48
EQT Corporation (EQT)	0.00	73-75	67-69

Just as it appeared the sellers were taking control, the market bounced back in impressive fashion last week, and encouragingly, we saw more than a few growth stocks pop on earnings. Is it a major new buy signal for the market? We can’t go that far, at least not yet—plenty of stocks are still stuck in the mud, and the market remains volatile as earnings season continues. Even so, we’ve seen enough strength to move our Market Monitor back to the bullish camp, so you can look to extend your line as opportunities arise.
More important these days than the market’s daily gyrations is the consistent stream of enticing ideas being produced by our screens. This week’s list has another batch of high-potential names (with no defensive-type stocks at all). Our favorite being ARM Holdings (ARMH), which roared back to life after a two-month rest thanks to a great quarterly report.

Stock Name	Price	Buy Range	Loss Limit
Toyota Motor (TM)	0.00	113-115	103-104
Ryland (RYL)	0.00	43-45	38-39
RockTenn (RKT)	0.00	95-97	90-92.5
Pandora Media Inc. (P)	0.00	13-14.5	12-12.5
Netflix, Inc. (NFLX)	423.92	210-220	188-192
Keurig Green Mountain (GMCR)	0.00	54-56	50-52
Fifth & Pacific (FNP)	0.00	20-21	18-18.5
D. R. Horton (DHI)	66.55	25-26.5	22.5-23
ARM Holdings (ARMH)	0.00	44.5-45.5	40-41
ANGI Homeservices Inc. (ANGI)	14.81	22.5-24	20-21

With most major indexes still within 2% or 3% or their recent peaks, we can’t say the market is a horror show. But the evidence pointing toward a fatigued market continues to pile up, with last week’s waves of distribution (on Monday, Wednesday and Thursday) telling us sellers are gaining strength. We’re not predicting anything, but right now, making lots of money is very difficult; even the strong defensive sectors are choppy, and if you buy a stock at the wrong time, forget about it. Thus, we’re leaving our Market Monitor in neutral territory, and advise you to play things cautiously—keep positions small, keep your laggards on tight leashes and hold some cash.

Just as important, though, you should also keep your eyes open for a resumption of the uptrend. This week’s list has a few potential shooting stars, though there’s also a flavor of safety to some of the names. Our favorite of the week is First Solar (FSLR), which is dancing to its own drummer after a bullish near- and long-term earnings forecast a couple of weeks ago.

Stock Name	Price	Buy Range	Loss Limit
Santarus (SNTS)	0.00	17.5-18.5	15-16
Shutterfly (SFLY)	94.71	42.5-44.5	39-40
ONYX Pharmaceuticals (ONXX)	0.00	95-99	87-88
ServiceNow (NOW)	341.86	36-39	33-34
NetSuite, Inc. (N)	0.00	77-79	73-74
Medicines Company (MDCO)	56.98	33-34	29-30
Cheniere Energy (LNG)	63.82	25-26	22-23
Home Depot (HD)	0.00	73-74.5	70-71
First Solar (FSLR)	83.74	36-37.5	32-34
Actavis (ACT)	0.00	95-97	90-91

The market isn’t in awful shape, but it’s not in as good shape as the major indexes would have you believe—the advance has been narrowing for a while now, and last week, as the Dow and S&P leapt to new highs, many stocks and sectors lagged behind. It’s not the end of the world and there’s nothing that says the market can’t chop around for a bit, get its act together and march higher; we’re certainly not advising you to sell everything. But given the evidence, and the fact that earnings season picks up this week, we think it’s best to keep our Market Monitor in neutral territory and see what comes.

Backing up that thought is this week’s list—there are a few very enticing ideas, but it’s not exactly chock-full of young whipper-snappers. Our favorite of the week is GameStop (GME), a stock that’s strong because of industry-specific factors that should boost earnings later this year.

Stock Name	Price	Buy Range	Loss Limit
Yahoo (YHOO)	0.00	23-24	21.5-22
Tesla, Inc. (TSLA)	818.87	40-42	35-36
Toyota Motor (TM)	0.00	105-110	98-100
Regeneron Pharmaceuticals (REGN)	512.96	195-205	180-185
Omega Healthcare Investors (OHI)	0.00	30.5-31.5	28.5-29
International Paper Company (IP)	0.00	45-46	42-43
GameStop (GME)	0.00	29.5-31	27-28
Avis Budget Group (CAR)	0.00	26-28	24-25
BlackRock (BLK)	0.00	250-260	240-245
BE Aerospace (BEAV)	0.00	58-60	55-56

The internal condition of the market began to weaken in mid-March, as defensive-type stocks and sectors led the way higher, while everything else stagnated or worse. And last week we saw some real selling pressures emerging; it’s not the end of the world, but it’s certainly a change in character for a market that’s been chugging relentlessly higher since the start of the year. We’re moving our Market Monitor to neutral and will be watching carefully—it’s possible this will be just another brief shakeout, with earnings season rescuing the bulls. But, as always, it’s best to go with the evidence, and right now, that means raising some cash, limiting new buying and building a watch list for when the bulls re-take control.

On the plus side, we’ve been pleased with the solid growth stories we’ve seen in our screens the past few weeks, despite the market. Our favorite this week is Fifth & Pacific (FNP), a turnaround and special situation play in the retail sector that’s set to ride one super-powerful brand.

Stock Name	Price	Buy Range	Loss Limit
Zillow (Z)	76.64	50-52	44-46
ValueClick (VCLK)	0.00	27-29	25-26
Safeway (SWY)	0.00	24-25	22-22.5
Splunk (SPLK)	207.67	39.5-41	36.5-37
Sony Corp. (SNE)	0.00	16-17	15-15.5
SanDisk Corp. (SNDK)	0.00	53.5-55	50-51
Parexel Corp. (PRXL)	0.00	38-39	36-36.5
Keurig Green Mountain (GMCR)	0.00	53-55	46-47.5
Gilead Sciences (GILD)	75.10	45-47	41-42
Fifth & Pacific (FNP)	0.00	19.5-21	17.5-18

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.

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.