After a volatile week, the major market indices all closed out with losses. The S&P 500 fell 0.97%, the Dow lost 0.52%, and the Nasdaq declined by 1.87%. And the bearish sentiment continued on Monday as the S&P 500 lost another 1.6%. Which leads to a question I’ve been receiving from a few Profit Booster subscribers: “Will you keep recommending trades if the market gets ugly?” The answer is yes. In times of rocky market action, I will continue to make trades for two reasons:

Current Market Outlook


The evidence has been steadily improving, but July has changed that—first came a lot of narrowing (most stocks below their 50-day lines even though the big-cap indexes were near new highs) along with a lack of breakouts, then came last week’s selling pressure (that saw many growth stocks show real slippage), and today we saw the sellers really start to hit things left and right. On the positive side of things, many growth titles were resilient today, and we still see a good number of setups out there; given that there are renewed fears of the virus, it’s possible many growth titles could do well even if the market has a rough go of it. But right now, the onus is on the bulls as the market’s intermediate-term trend has turned down and most stocks look iffy. We’re moving our Market Monitor to a level 5 but are keeping our eyes open for what comes next.

This week’s list is a mix of names, though some of the growth titles look like decent risk-reward situations on this dip. One of them is Marvell Technology (MRVL), a leading chip maker that’s pulling back normally after a persistent move to new highs.

Stock Name	Price	Buy Range	Loss Limit
Autodesk (ADSK)	287	284-290	270-274
Avantor (AVTR)	36	35-36.5	32-33
Bruker (BRKR)	78	76-78	70-71
Burlington Stores (BURL)	311	307-313	290-295
Chipotle Mexican Grill (CMG)	1551	1520-1560	1400-1425
CrowdStrike (CRWD)	250	247-253	223-226
Dexcom (DXCM)	435	425-438	390-395
Horizon Therapeutics (HZNP)	92	90-93	84-85.5
Marvell Technology Group (MRVL)	55	53.5-55.5	48.5-49.5
Revolve Group (RVLV)	64	62.5-65	56-57.5

The bull market remains alive and well, with major indexes hitting new highs in the last week. However, growth stocks in particular have been hit hard recently—finally spilling into the broad market in the last few trading days—and that requires some selling, so today we’re purging four of our weakest performers from the portfolio. As for new buying, today’s recommended stock is growing by consolidating a fragmented mature industry. It just came public this year, so it’s a name few investors are aware of. The stock was originally recommended by Tyler Laundon in Cabot Early Opportunities.

Details inside.



Lastly, I hope you’ll join me for the 9th Annual Smarter Investing, Greater Profits Online Conference, August 17-19. We have an incredible lineup of experts ready to share their best picks.

Growth stocks had been improving some, but the sellers never quite disappeared, and now they’re back with a vengeance—many growth-oriented measures are down 6% to 10% this month alone, and even the broad market is going along for the ride.

Thankfully, we never got heavily invested given the indecisiveness, and now we’re throwing up some safety nets—we sold one stock yesterday (giving us more than half in cash) and put two others on hold.



Despite the selling, we’re not throwing in the towel—we see a ton of decent setups still, so if earnings season goes well, there could be some liftoffs. But for now we’re remaining cautious until things change for the better.

Before we get into this recommendation, I just wanted to highlight our upcoming annual conference.

9th Annual Smarter Investing, Greater Profits Online Conference



It will take place from August 17-19 and you will hear from many experts (including me!) about opportunities in the market.



Today, we are recommending a stock with hidden value.



Some additional details:

• Its healthcare analytics division has grown at a 30%+CAGR and has a huge market opportunity in the years ahead.
• A slower growing competitor just got acquired at a premium valuation.
• My price target implies 70% upside within 12 months, but longer term this could be a multi-bagger.

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

A 10-year Treasury bond pays just 1.4%. A three-year CD pays less than 1%. A 20-year AAA-rated municipal bond pays 1.20%. After taxes and inflation, you don’t even break even. And that’s not to mention the fact that bond prices can plummet if interest rates rise.

The only game in town is dividends. You can still generate high rates from well-chosen dividend stocks and other income-paying securities. It’s nerve-racking to have so many of your investment dollars in the stock market, but with bonds so low paying and treacherous, there is little choice if you need to generate income.



In this issue I highlight an ETF that strikes a more conservative cord than most dividend stocks. It employs a time-tested strategy that has proven to earn consistent high income while generating capital appreciation at the same time. It also pays dividend on a monthly basis and should thrive when the environment normalizes on the other side of the pandemic recovery.



For more great picks and information about navigating the current environment please join me for the 9th Annual Smarter Investing, Greater Profits Online Conference, August 17-19. We have an incredible lineup of experts ready to share their best picks.

This Friday marks the expiration of July options, and if everything holds steady, our calls in MRO, GPRO and SGMS will expire worthless. As a result, we will maximize the call premium on each position. Per usual, on Monday I plan to sell my shares in each position and start the search for more opportunities.

Current Market Outlook


The news-driven environment featuring incessant rotation and crosscurrents remains in effect; throw in the fact that breadth is narrow (about half of stocks are still below their 50-day lines despite the S&P 500 and Nasdaq being near new high ground; broad market indexes are chopping sideways) and earnings season is approaching and we think it’s best to continue going slow and aim to buy on weakness. That said, there are a growing number of good-looking growth stocks out there—not a ton are kiting higher, but there are lots of setups and, while there have been bumps in the road, the sellers really haven’t been able to sink their teeth into them despite some recent strength. All in all, we’re more optimistic than not, but stock selection and solid entry points are key.

This week’s list has a variety of sectors represented, including a few that have avoided the market’s volatility. Our Top Pick is Arista Networks (ANET), whose stock is in a smooth uptrend as growth picks up steam.

Stock Name	Price	Buy Range	Loss Limit
Antero Resources (AR)	15	13.8-14.3	12.3-12.7
Ares Management (ARES)	65	62-64	57-58
Arista Networks (ANET)	371	363-370	340-345
Bentley Systems (BSY)	64	62-64.5	57-58.5
FIGS, Inc. (FIGS)	44	42.5-45	36-37
L Brands (LB)	77	73-75.5	65.5-67.5
NVIDIA Corporation (NVDA)	821	775-795	700-710
PayPal (PYPL)	303	288-297	268-273
Rapid7 (RPD)	103	97-101	87-89
Synaptics (SYNA)	158	154-158	136-138

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 consumer stock with a classic cookie-cutter story, which brings the possibility of extended long-term growth.



As for the current portfolio, to keep it at our maximum level of 20 stocks, we’re parting company with long-time holding Huazhu Group (HTHT), for a variety of reasons.



Details inside.



Lastly, I hope you’ll join me for the 9th Annual Smarter Investing, Greater Profits Online Conference, August 17-19. We have an incredible lineup of experts ready to share their best picks.

In the fourth quarter of 2018 it felt like we all finally succumbed to some festering illness that landed us in the intensive care unit. Thus far, the beginning of 2019 has the feeling of a trip home from the hospital and the beginning of the healing process.

It’s time to do a little buying. The market’s trends are still pointed down, so we still think going slow and stepping lightly makes sense. We are adding three new half positions to the portfolio tonight and keeping our cash position around 67%.

Don’t look now but the market is in rally mode and has been for a couple of weeks. We will continue to favor safer, more recession-resistant stocks and investments for the foreseeable future but the selloff may be over. One rating change as we move a position from buy to hold.

This will be a busy week for Wall Street as analysts speak with the companies within their stock purviews and write updated research reports. I expect to relay lots of changes in consensus earnings estimates in next week’s update.

I think it’s fair to say most market observers were not surprised that stocks retreated in late-2018.

The MSCI Emerging Market (EM) basket of 25 emerging market countries pulled back 15% in dollar terms, the Japan market was down 12%, and China’s Shanghai Composite index got clobbered, falling 25%. India ended the year down only 4.2% thanks to pro-business economic policies and an infrastructure boom.

Down markets are a fact of life in investing. Don’t fear them. Embrace them. They offer short term angst and long term bliss for those bold enough to take advantage. With today’s update, just one rating change but overall we’re in good shape.

I’m first coming to you in the midst of an awful market. We are unofficially in a bear market (down 20% from the high).

Remain defensive. Stocks are finally mustering a bounce today, though after the market’s meltdown of recent weeks, the intermediate- and longer-term trends remain firmly down.

As we finish 2018, let’s recap some timely investing and economic topics.

One big picture thing worth mentioning: We’ve all seen various data points about just how bad this market is and how it’s “the worst” in this dimension or that. All of this stuff is just saying what we know—the market stinks and is breaking a bunch of undesirable records.

This RV manufacturer beat analysts’ earnings estimates by $0.27 last quarter.

This is a short week but I wanted to give you some news on a couple of my recommendations that have been making news.

In the past 30 days, 11 analysts have raised their earnings estimates for this defense technology company.

The shares of this semiconductor stock were just upgraded by Mizuho to ‘Buy’.

This industrial company is expected to grow by 12.9% this year.

Yesterday, the House Judiciary Committee approved the Marijuana Opportunity Reinvestment and Expungement Act (MORE Act), which has Democratic Presidential candidate and former prosecutor Kamala Harris as one of its sponsors.

Three analysts have recently increased their EPS estimates for this Mexican media company, and are forecasting growth of 33.3% for the company next year.

This space technology company has had its ups and downs but recent moves to deleverage are stoking investors’ interest.

This BDC is a recent IPO and has a current dividend yield of 6.81%, paid quarterly.

This gold company beat analysts’ EPS estimates by $0.04 last quarter and raised its quarterly dividend by 25%, to $0.05 per share.

A leading provider of financial advice joins the Special Situation Stock Portfolio as a Strong Buy.

This regional bank is expected to grow by 22.6% this 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 Momentum 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 Momentum Trader features.