We want to take a moment to highlight breadth across the overall markets. Many individual stocks are down well over 50%, while indices have remained more stable. Why? The composition of the S&P 500 is weighted heavily towards mega-cap technology companies. Stocks like Apple, Amazon, and Google remain near all-time highs, bolstered by the overall current flight to quality. Investors remain enticed by buybacks, splits, and fundamental cash flow generation.

Many investors are simply asking themselves: what do I buy right now if anything at all?



Demand for unprofitable assets has fallen off precipitously.

With the market becoming less supportive, I’m dialing back the aggression, so this week’s recommendation is a lower-risk company in the pharmaceutical sector that pays a solid dividend.
As for the current portfolio, our three energy stocks remain very strong, and there are no changes.


Details inside.

The environment remains essentially the same this week, as we have a broad market that continues to struggle, major indexes that are back in intermediate-term downtrends and commodity and defensive stocks about the only two areas that are doing decently. We continue to see secondary signs that are encouraging, including many measures that tell us selling pressures are gradually easing, but as always, we need to see the market and individual stocks prove themselves before changing our stance in any real way. It’s best to remain mostly cautious until the buyers return. Our Market Monitor will remain at a level 5.

See-sawing—that’s what these markets bring to mind. And I think we can expect more of the same, due to three factors:

1. The war in Ukraine2. Rising inflation—up about 8.4% last month3. Increasing interest rates. Economists now expect the Federal Reserve to raise rates by one-half a percent, in both May and June

Explorer recommendations were pretty flat this week but demonstrated some strength as well. JPMorgan led the banks, reporting a first quarter with a net profit of $8 billion on over $32 billion of revenue. Keep your perspective and play defense and offense. Emerging markets offer you both and we will be adding to the portfolio selectively. This week I highlight a defensive healthcare play of the highest quality.

Today, I’m recommending a company that provides the “picks and shovels” to the massive Alzheimer’s market.
Other key points:

•High insider ownership (30% of the company).•45%+ revenue growth this year.•Secular winner trading at P/E of 33x.

All the details are inside this month’s Issue. Enjoy!

The market situation is changing. Amidst persistent high inflation and concerns about future economic and earnings growth, investors are adjusting. Energy is up nearly 40% YTD as that sector benefits from inflation. Utilities and Consumer Staples are also thriving as investors focus on value, defense, and income in the market uncertainty.
Many stocks in the CDI portfolio have performed well and are likely to continue doing so. But because of the high prices they are rated a HOLD. However, there are two standout positions. In this month’s issue, I highlight two stocks that have what it takes in this market. They both benefit in the current environment, sell at reasonable valuations, and pay sky-high yields.


The market situation is changing for the worse overall. But there are still great opportunities if you know where to look.

In this month’s issue, we focus on the smaller, and lesser known ETFs featured in the undiscovered portfolio.

While asset allocation is a tried-and-true method for longer-term investing, you can boost your return with ETF trading. That’s what the undiscovered portfolio is designed to do.



With market volatility remaining, this portfolio gives you an opportunity to capture excess returns from asset classes outperforming the broader market.

With commodities and energy stocks still holding up, though, today I’m adding an American company engaged in hydrocarbon exploration: Marathon Oil (MRO).

The ongoing war between Russia and Ukraine—and the consequent sanctions and production cuts—has forced producers across several areas of the metals sector to make desperate bids to secure much-needed supplies.

This dynamic is expected to keep metal prices elevated across the board in the coming weeks and months. As noted here previously, there are other fundamental factors behind the bull market in the major industrial metals, but this is diminished by the Russia factor.



In the portfolio, we just added a new position in a silver miner that is showing a surprising amount of relative strength given the current silver market backdrop, as well as a major player in the titanium dioxide market.

There were a lot of positives that built up for the market during February and early March, but that multi-week stretch of improving evidence has certainly run into a wall—the market has taken it on the chin during the past couple of weeks, with the major indexes giving up a big chunk of their gains (the brief intermediate-term trend all-clear is gone), and more worrisome to us, nearly every stock that has run into resistance has at least stalled out, if not come unglued. We don’t believe all of the good vibes built up are out the window; this recent action could easily be part of a longer bottoming process for the market. But we never advise ignoring the evidence in front of us, so we’re pulling our Market Monitor down to a level 5.



This week’s list is heavy on some cyclicals but also some dependable growth outfits. Our Top Pick looks to be one of those, a medical firm with a few good-selling drugs on the market and sold earnings growth projections.

Today’s recommendation is a well-known pharmaceutical giant whose stock recently broke out above the high it hit in 2000, 22 years ago! But that’s not why it’s recommended today. Today’s story is all about new drugs and renewed growth.
As for the current portfolio, there are four stocks rated sell!


Details inside.

The S&P 500 is now up over 40% from the bottom in March and less than 10% from the all time high. Forget about a bear market. It’s not even a correction any more.

Remain optimistic. Growth stocks have had a tough week, but the selling hasn’t been abnormal, few (if any) have broken down and today’s stabilization for many is a good sign.

In the market, there seems to be some rotation going on. Or at least that was my sense of things over the first two and a half trading days of the week.

The stock market rally is now more than two months old. The S&P 500 has rallied 35% since March 23 and is now just about 10% below the all-time high.

The S&P 500 Index and the Dow Jones Industrial Average began new run-ups yesterday, while the NASDAQ Composite Index continues its uptrend. I’m glad that investors are continuing to make money during this market rebound.

Enjoy the current strength but be aware of the environment we’re in, and why. Accept that we could see a significant retreat in the prices of many of our stocks in the near term, but that the fundamental reasons behind their current strength should persist despite a retreat, and drive them higher over the coming years.

Despite a Chinese economy that has grown three times faster than America’s every year over the past three decades, it has been a bit of a challenge to consistently make money in Chinese stocks.

We are in the midst of a rally that has continued for about two months. This market seems to want to go higher. While the rally has slowed significantly from the initial bounce off the lows in March, the overall market is still in an uptrend.

In keeping with last week’s comments, the stock market continues to show a willingness to rise in the near term. More than any other industry, oil refining stocks offer strong upside, including two within our portfolios.

The market’s evidence has worsened some this week—our Cabot Tides are now on the fence as the broad market has softened.

Under normal market conditions growth investors like to get pulled into strong stocks and buy them as they head higher. This is anything but a normal market, however!

The worm continues to turn for growth stocks, which are mostly lagging (at best) or cracking uptrends (at worst) after huge runs.

This electronics company beat analysts’ EPS estimates by $0.72 last quarter.

This asset manager saw its revenues increase 90%, to $28.3 million in the latest quarter.

Growth stocks continue to look iffy, with selling pressure becoming more persistent while money flows into other areas.

This lawn, garden, and pet supply company had a great third quarter.

This week has been good for the overall market, but for the leading growth titles, we’re seeing more abnormal selling than we have in a while.

This portfolio stock reported yesterday that Q2 revenue grew by 35% to $65.4 million (beating by $2.4 million) while adjusted EPS of $0.06 beat by $0.27.

I have a number of notes and recommended actions regarding several of our stocks that have made earnings-related moves recently.

This tobacco company is making waves, with its’ ‘heat-not-burn’ tobacco platform.

As you know if you’ve read anything about this deal, these two companies are the “it” players in digital health. Both have business-to-business-to-consumer (B2B2C) business models, meaning they sell to companies, but solutions are used by consumers like you and me.

Two portfolio stocks reported earnings recently and they both are still rated Buy.

This engineering and construction firm is expected to grow by 22.1% next year.

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.