The bull market remains intact, despite this morning’s sharp selloff, so I continue to recommend that you be heavily invested in stocks that help achieve your investing goals.

Today’s featured stock is a very conservative one, a solid financial institution with a good dividend, and the prospect of growing earnings as interest rates rise.



As for the current portfolio, there are no changes. It will be interesting to see which stocks bounce best after the selling pressures ease.

Current Market Outlook


Our intermediate-term trend model has effectively been neutral for months, with the big-cap indexes acting pretty well but most other areas chopping sideways. Today, though, the sellers got their act together, with the S&P 500 decisive diving below its 50-day line and small caps actually falling below their 200-day line! That’s certainly a change in character and, for the first time in months, turns the intermediate-term trend down. Of course, the evidence hadn’t quite lined up for a while now, so we’ve been playing it more cautiously than normal, but now it’s time to step carefully and see how this plays out. As for positive tidings, there are some: The bad news out there (Chinese real estate) is obvious, and looking at individual stocks, many growth titles are now holding up far better than the Dow or S&P 500 (a marked change from earlier this year). Thus, we’re still holding our resilient names and are OK doing a little buying as stocks pull in to support, but it’s not time to be a hero, with the focus shifting more toward preserving capital. Our Market Monitor has moved to a level 5.

If you are aiming to put a little money to work, you want to look for names that have recently shown good-volume buying. Happily, this week’s list has many names in this club, and our Top Pick is Lululemon (LULU), which is emerging from a long rest and has held its recent earnings gap despite the market’s dip.

Stock Name	Price	Buy Range	Loss Limit
Align Technology (ALGN)	710	685-705	640-650
Catalent Inc (CTLT)	136	129-133	121-123
Chesapeake Energy Corporation (CHK)	60	58-60	52-53
Cloudflare (NET)	127	120-124	108-110
Entegris (ENTG)	129	124-127	114-116
KKR & Co. L.P. (KKR)	62	63.5-65.5	59.5-61
Lending Club (LC)	27	25.5-27	22.5-23.5
Lululemon Athletica (LULU)	420	407-420	370-375
Natera (NTRA)	120	115-119	105-107
Wingstop (WING)	182	173-177	159-161

U.S. stocks struggle a bit to regain momentum as Hong Kong’s Hang Seng and China’s Shanghai Composite contract. Investors seem to be taking a close look at valuations as markets from Japan to Europe trade at lower valuations. The big $3.5 trillion spending bill is spooking U.S. markets and splitting U.S. Senators. Today our new recommendation is a play on the aging baby boomer generation, which will increasingly require more medical attention.

A continued mixed bag of signals from Greentech still yields some good stocks to profit with. We’ve been muddling through “two steps forward and one step back” kind of action, which means today’s market may seem bad, but the bigger picture keeps improving. The key is to continue to be diligent about avoiding weak stocks and search for good fundamental underpinnings to chart moves with the strong ones. The market is slowly laying the groundwork for the next leg of Greentech’s bull move.



This issue, we’re returning to a segment of Greentech that was red hot for a brief period before simple bad luck turned investors against it for years. The sector recently broke through long-held resistance. That’s a plus. Our featured stock has a monopoly on parts of its market. It’s nicely priced for its existing business already, but its shift into next-generation technology suggests huge opportunities ahead – that’s a big plus.



We also have newly recommended ratings, suggested buy ranges for a couple, and updated sell-stops for many of our current portfolio holdings. We also now have “sell” call on one holding which has broken through support.



Read through for more details.

Last week all the major indices took a small step back. The S&P 500 lost
1.69%, the Dow fell 2.15%, and the Nasdaq declined 1.61%.



The headlines say the 5-day pullback was the largest for the S&P 500 since February. But considering that the streak of over 230 days without a 5% pullback is still in play, the short-term bearish stretch last week was minimal.



And even with the slight pullback last week, my sentiment has not changed. I remain
“cautiously optimistic” until I see market action that changes my mind.



Of course, if we see further continuation of the recent bearish trend, I might begin to shift my outlook. But a week doesn’t make a trend, and again we must remember we are only a few percentage points from all-time highs.

Current Market Outlook


During the last couple of weeks of August, more stocks, sectors and indexes were getting in gear, which was a change from the past few months of whippy crosscurrents. But as September has progressed, it looks like we’re still in the same overall environment—growth stocks, indexes and funds have again taken hits while some cyclical/value areas have perked up. That’s not necessarily a negative (at least to this point); as we wrote last week, some retrenchment among extended growth stocks was half-expected, and even if it wasn’t, the action is more a confirmation that the choppy environment is still intact, not that the sellers are truly taking control. Long story short, we’re still sticking with the same game plan as the evidence remains unchanged—we’re more bullish than not, but booking partial profits into strength, raising stops as things head higher and aiming to enter on dips is the right way to go.

This week’s list is lighter on growth stocks than in recent weeks, reflecting some of the dents they’re taking, but there are many other names that look to be resuming their advances. Our Top Pick is Antero Resources (AR), which looks like the best play in the natural gas space. Aim to enter on dips.

Stock Name	Price	Buy Range	Loss Limit
Antero Resources (AR)	17	15.4-16.1	13.8-14.2
Celsius Holdings (CELH)	87	84-88	73.5-75.5
DOCN (DOCN)	76	69-73	58-60
ICU Medical (ICUI)	240	233-243	215-220
Innovative Industrial Properties (IIPR)	228	222-230	209-212
MongoDB (MDB)	485	460-475	408-420
Pure Storage (PSTG)	26	25-26	22.5-23
SBLK (SBLK)	24	23-24.5	19.5-20.5
Teck Resources Limited (TECK)	25	23.5-24.5	21.5-22
Varonis Systems (VRNS)	68	65.5-68	59-60

The bull market remains intact, so I continue to recommend that you be heavily invested in stocks that help achieve your investing goals.
Today’s featured stock is a small company that’s growing fast and that has huge growth potential as the market for intelligent vision systems booms.
As for the current portfolio, most of our stocks look good, and many are hitting new highs, but I have two sells, Supreme Brands (SPB) and Trulieve (TCNNF).


Details inside.

Growth stocks have gotten off a bit of a sour start in September, with a couple of leaders cracking near-term support and a few collapsing completely. That tells us the tricky environment remains in effect ... and yet, we don’t think the action is bad at all. Indeed, most growth stocks remain in good shape, and frankly a further pullback should offer up some high-odds entry points.

Tonight, though, we’re standing pat with our 32% cash position after selling one stock earlier this week.

Last week’s much-awaited pronouncement by the Federal Open Market Committee (FOMC) turned out to be a big “nothing burger.” I did not personally expect a cut in the fed funds rate.

This was another one of those weeks where you look at what the S&P 500 did—up 1.5% to a 52-week high—and you look at what the S&P 600 Small Cap Index did—up 1% to 945 and back above its 50-day line, but well off its 2019 high of 994 (let alone its 52-week high of 1,100) and you think the big picture is pretty good, but this still isn’t a broad-based market rally.

Emerging markets got a boost this week as it appears that there will be a high level meeting between the U.S. and China at the upcoming G-20 meeting.

The FOMC is meeting this week and investors can hardly contain their euphoric bliss. In-the-know pundits are already factoring in a rate cut next month and more before the end of the year. The market rallied strongly yesterday as it salivated over the prospect.

All across America, but especially in the Northeast and the Midwest, Boomers will be putting their homes up for sale, and often leaving those areas for warmer climates.

With the market having come back strong since its swift retreat in early June the immediate threat of a larger correction has diminished. The S&P 500 index is back above its 50-day line and within a couple percentage points of its all-time high.

Our Cabot Tides are yet to flash a green light, and thus we’re content to hold our strong, profitable stocks, but also to keep a chunk of cash on the sideline.

The market found its mojo after the Fed vaguely insinuated that it could conceivably consider cutting rates before the end of the year. But it looks like the momentum is gone.

We’re looking at economic data that could push interest rates upward (rising food price inflation and business expansion) and we’re also looking at economic data that could push rates downward (GDP potentially falling due to China tariffs, and slowing employment numbers).

Emerging markets (EEM) and Chinese stocks in particular continue to struggle a bit this week. The EEM is trading right at its 200-day moving average and below its 50-day moving average so the portfolio remains in a defensive stance.

Wall Street expects this REIT to grow by 10.3% annually over the next five years. The REIT has a current dividend yield of 3.93%, paid quarterly.

This portfolio stock reported preliminary Q4 revenue results a while back that were better than expected, and last night in the official earnings release and on the conference call management announced that profitability was also way above expectations.

This credit information company beat earnings estimates by $0.04 last quarter.

This biopharma handily beat earnings estimates this past week, posting EPS of $0.08, significantly higher than the -$0.06 loss that was expected.

After seven consecutive down days and a swift, brutal stock market correction, we’re bound to see a few up days quite soon. Please be cautious.

This accessories manufacturer/retailer is trading at discounted levels.

This portfolio stock reported last night that Q4 revenue rose 20.6% to $43.5 million (beating by $1.7 million) and that adjusted EPS of -$0.21 beat by $0.07.

The market has been tripped up by what seems to be an overreaction to the potential economic disruption of the coronavirus, but which is more likely the result of a trifecta of potential issues including coronavirus, a previously elevated market trading at high multiples, and uncertainties related to this year’s Presidential election.

With the market’s decline only intensifying today, more stocks are beginning to crack.

Now that the market has fallen substantially, I think we’ve reaped the bulk of the potential profits on our recent purchase of these two ETFs.

Once again, the media has done a splendid job of creating fear and panic among the citizenry.

Wall Street expects this communications equipment company to grow at a 30% annual rate over the next five 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.