*Note: Your next issue of Cabot Profit Booster will arrive next Wednesday, February 18, due to the market holiday next Monday, February 16, in observance of Presidents’ Day.

Despite a mid-week tech-led sell-off that dragged the broad markets lower, investors clawed back lost ground on Friday on a rebound in semiconductors, AI-related optimism and stabilization in risk assets like bitcoin. By week’s end, the S&P 500 had lost a mere 0.1%, the Dow actually closed at a new all-time high above 50,000, and the Nasdaq had fallen 1.8%.

It’s fair to say the overall evidence took a step back last week, with the Nasdaq coming under pressure, though many cyclical stocks act well (in fact, there are a few in this week’s issue that have shown great recent power) and, ironically, we’re actually seeing some solid strength in many AI-related stocks, a bunch of which have lifted off from three-plus-month consolidations even as other growth areas have flailed. As has been the case for weeks, then, the market outlook really depends on where you’re looking. We’ll move our Market Monitor to a level 6 here, but we’re still game for taking a swing at some of the many strong names (ideally on dips) out there.

This week’s list is chock-full of strong names, mostly from the cyclical side of the aisle, with many lifting out of very long-term consolidations after earnings, showing great power. Our Top Pick is helping to lead the broader transport group, which is also breaking out to new highs.

It pays to be an optimist when it comes to investing. So, in a middling market, you’re better off focusing on the positives: The bull market remains intact, volatility is down, earnings growth continues to be robust, and market breadth has spread to the many previously unloved sectors. With that optimistic slant in mind, today we look internationally to add one of the biggest names in South America – an e-commerce giant recently recommended by Carl Delfeld to his Cabot Explorer audience.

Details inside.

*Note: Your next issue of Cabot Options Trader will arrive next Tuesday, February 17 due to the market holiday next Monday, February 16 in observance of Presidents’ Day.

Despite a mid-week tech-led sell-off that dragged the broad markets lower, investors clawed back lost ground on Friday on a rebound in semiconductors, AI-related optimism and stabilization in risk assets like bitcoin. By week’s end the S&P 500 had lost a mere 0.1%, the Dow actually closed at a new all-time high above 50,000, and the Nasdaq had fallen 1.8%.

*Note: Your next issue of Cabot Options Trader Pro will arrive next Tuesday, February 17 due to the market holiday next Monday, February 16 in observance of Presidents’ Day.

Despite a mid-week tech-led sell-off that dragged the broad markets lower, investors clawed back lost ground on Friday on a rebound in semiconductors, AI-related optimism and stabilization in risk assets like bitcoin. By week’s end the S&P 500 had lost a mere 0.1%, the Dow actually closed at a new all-time high above 50,000, and the Nasdaq had fallen 1.8%.

Growth as a whole has been stagnant for three months, and this week, we started to see the selling spread out a bit, with our Two-Second Indicator waiving a yellow flag and with more names coming under pressure (and with many growth stocks really caving in). To be fair, the top-down evidence isn’t much changed, so we’re flexible--if this is the final shakeout to the past three months of rest, there could be many things to sink our teeth into soon.

But as growth investors, we’re focused on the growth evidence, which tells us to remain in a cautious stance until the buyers step up.

Large-cap stocks are starting to show some cracks. But small caps aren’t.

After years of underperformance, small-cap stocks appear to finally be poised for a breakout 2026 thanks to a combination of lower interest rates and soaring earnings. So in this month’s Cabot Value Investor issue, we present a small-cap company that is already coming off a very strong quarter, whose sales and earnings have more than doubled since Covid, but whose shares were overly punished last fall and are just now starting the long climb back. The combination of double-digit earnings growth and a well-below-average valuation makes this small cap ripe for our Buy Low Opportunities Portfolio.

Details inside.

Industrial stocks are hot. So today we’re jumping into a small-cap precision‑engineering and motion‑technology company that has both a self-help and an improving end-market story.

This company has spent the past several years transforming itself from a niche motor supplier into a vertically integrated engineering platform. After a strong start to 2025, it looks like 2026 will be even better.

All the details are inside the February issue of Cabot Small‑Cap Confidential.

Despite a rally midweek to new all-time highs, last week finished on a soft note as profit-taking and macro uncertainty crept back into equities. Investors grappled with cooling tech leadership, mixed earnings reactions, and a fresh focus on monetary policy. By week’s end the S&P 500 was up 0.3%, the Dow Jones Industrial Average had slipped 0.4%, the Nasdaq Composite had fallen 0.9%, and the Russell 2000 had lost 1.5%.

The market hasn’t completely changed character at this point, but the recent action suggests that we’re at a key juncture here: After testing its October high, the Nasdaq has been fading, dragging down most other indexes while the number of new lows has picked up right off the recent high, all while defensive areas perk up—though, we’re also seeing many growth stocks hang in there well, with a few testing new high ground. All told, we’re again leaving our Market Monitor at a level 7, but we think the next few days will tell the tale of whether some new leadership can emerge … or whether a more general corrective phase gets underway. Stay tuned.

This week’s list has lots of strong names, including a few early earnings winners. Our Top Pick has a solid aerospace story but, like other names in this issue, is moving into the AI power space with some big future deals. We think nibbling on some here or on a further pullback makes sense.

Stocks continue to prove resilient in the face of myriad economic and geopolitical fears. And the U.S. consumer – despite declining sentiment and confidence – is doing enough to make those fears seem overblown, pushing large-cap companies toward their fifth consecutive quarter of double-digit earnings growth. So today, we add a stock that’s well-known to the U.S. consumer – and one that’s making a strong comeback after being overly punished by investors. It’s a recent addition by Clif Droke to his Cabot Turnaround Letter portfolio.

Details inside.

Despite a rally midweek to new all-time highs, last week finished on a soft note as profit-taking and macro uncertainty crept back into equities. Investors grappled with cooling tech leadership, mixed earnings reactions, and a fresh focus on monetary policy. By week’s end the S&P 500 was up 0.3%, the Dow Jones Industrial Average had slipped 0.4%, the Nasdaq Composite had fallen 0.9%, and the Russell 2000 had lost 1.5%.

Stocks started off this week much higher as the end of the government shutdown seems likely. The newfound strength comes off a sluggish month for stocks and could signal a new surge higher.

The shutdown has lasted over 40 days, and investors began to worry that it was negatively affecting consumer confidence and could lower GDP going forward. Ending the shutdown does take some risk off the table. At the same time, some bullish forecasts have come out for 2026, citing rising overall earnings and continuing AI dominance.

In view of the alarming number of news headlines that point to a weakening economy (at least in some quarters of it), it may seem surprising that the normally defensive consumer staple stocks are underperforming.

Normally, the staples are viewed by investors as something of a safe haven during periods of economic uncertainty, providing as they do essential goods like food and household products that are purchased even in tough times. But the present environment is proving to be an exception to that rule of thumb.

WHAT TO DO NOW: Our Cabot Tides are now on the fence while our Two-Second Indicator is negative as the market is in the middle of another test of the uptrend. Meanwhile, growth stocks have bent but not too many have truly broken, and there are still a good number setups out there. We sold Arista (ANET) on a special bulletin this morning, leaving us with around 45% in cash; we’ll hold onto that tonight as we want to see how this pullback plays out. Details below.

After beautifully navigating the historically troubling months of September and October, stocks are off to a dicey start this month. While the S&P managed to close slightly higher on Monday, most stocks had a rotten day. The index was propelled by technology while 400 of the 500 stocks moved lower on the day. On Tuesday, technology sold off and almost all sectors were lower. Is this a hiccup or a harbinger?

The S&P 500 started the week on another up note. But the index return is deceiving.

The S&P is being pulled higher by a handful of technology stocks. But 400 of the 500 stocks and nine of the 11 sectors were lower on Monday at midday. The earnings season so far has reaffirmed a positive outlook for artificial intelligence investments. That helps drive the index higher as technology stocks represent more than a third.

It’s not always that the market outperforms in October, but this year’s “jinx month” came and went on a positive note (albeit with a minor setback earlier in the month).


Granted, there was some volatility on the political front, but as far as the equity market was concerned, it wasn’t too bad. The S&P 500 index stood at a record high as recently as Wednesday, and Wall Street’s favorite stocks and ETFs are mainly trending higher as we exit the month.

The Russell 2000 and S&P 600 SmallCap Index have pulled back from recent highs, but the data suggests they’ll go higher in the weeks ahead.

Bank of America’s seasonality analysis shows November tends to be a strong month for the market. The Russell 2000 is up 70% of the time, with an average gain of 2.64%. Small-cap industrials tend to be particularly strong, up by 6.1% on average, and rising 79% of the time.

As expected, the Federal Reserve cut interest rates by a quarter point yesterday. This was largely already baked into the market. Looking ahead, Fed Chairman Jerome Powell had an impactful comment: “What do you do if you are driving in the fog? You slow down.”

This comment is consistent with our strategy of alternating aggressive and conservative stocks, taking partial profits to build cash, and seeking international diversification.

This Halloween, there’s nothing to fear. At least not for investors.

OK, nothing is a bit of an exaggeration. Today’s anticipated meetup between President Trump and Chinese President Xi Jinping could go sideways, putting high tariffs between the two mega-powers back on the menu. There could be some key earnings blowups ahead as we remain in the thick of third-quarter reporting season. And the government shutdown is more than a month old at this point, which could take a toll on the market.

The market just keeps on going. So far this week, the S&P 500 has hit a new high on both Monday and Tuesday.

The S&P 500 is now up about 17% year to date with more than two months left in 2025. There is a good chance that the index delivers another 20%-plus return year, which would make it three consecutive years of such returns for the first time in nearly 30 years. Sure, we’re in a Fed rate-cutting cycle. Investors love that. But artificial intelligence is the main force driving the market higher.

One of the most attractive industries right now for turnaround-focused investors is chemicals, with the share prices for many major producers in this group hovering at or near multi-year lows.

The reasons for this collective underperformance vary, and while not all chemical companies are in a classic turnaround situation, many of them are under serious margin pressures and are implementing strategic plans aimed at improving their company’s fortunes and reversing the stock price declines.

WHAT TO DO NOW: The market continues to hang in there, but growth stocks have been far trickier, with many pulling back sharply, others testing support and a few breaking down. Still, it’s mostly mixed, with some names perking up, so we’re staying flexible, especially as earnings season plows ahead. This week we sold two names that cracked—MP Materials (MP) and GE Vernova (GEV)—which leaves us with 43% in cash. We’ll stand pat tonight, though we could redeploy some of the money into stronger names if growth stocks continue to stabilize.

WHAT TO DO NOW: The market remains in good shape, and we remain overall bullish, though we’re not flooring the accelerator given that earnings season is revving up. Today’s bulletin concerns Uber (UBER), which is cracking some support today on another round of autonomous news from others—we’re going to cut bait. On the buy side, we’re starting a half-sized stake in Oracle (ORCL), which quacks like a liquid leader.

Sell a Half Position in Paramount Global (PARA)

GE Vernova (GEV) Powers Higher

Enovix Warrant (ENVXW) Follow Up. Exercise Enovix Warrants (ENVXW)

We added a half position in Freshworks (FRSH) back in March and another half in May.

Sell Palomar (PLMR)

Heading into mid-day shares of BYRN are down about 20%, canceling out our paper gain that accumulated over the last five weeks. Here are a few thoughts after digesting commentary on this morning’s conference call.

Today, a whopping eight Profit Booster positions will expire. Most are “slam-dunk,” full-profit trades, while others will go down to the wire.

The big takeaway, before we dive in, is we are going to let the situation play itself out, and come Monday/Tuesday of next week we will revisit our profits, as well as how we will manage the remaining positions.

The management team at Enovix (ENVX) has been busy.


Late last week, the company announced a $60 million share buyback program. Then yesterday, the company released preliminary Q2 results that came in slightly better than management guidance.

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.