The market remains in an uptrend and, while the divergences and rotation of recent weeks haven’t been totally erased, our diversified portfolio is doing well and Cabot analysts continue to find attractive investment opportunities.

In our current portfolio, the only change this week is an upgrade of Sea (SE) to Buy.



As for today’s new recommendation, it’s in an out-of-favor sector that has the potential to deliver real upside surprises as the global economy emerges from COVID times.



Details inside.

Current Market Outlook


There were some intra-week ups and downs, but overall, not much changed with the evidence last week—the major indexes mostly closed down 0.5% to 1.5%, which keeps the broad market in an uptrend but also means growth stocks and the Nasdaq are still in corrections and consolidations. With many names now five to seven weeks into new launching pads, we’re looking for definitive signs that the buyers are coming back for growth stocks—and indeed, we have seen some encouraging action during the past two sessions—but it’s too soon to conclude the environment is changing. Thus, we’re sticking with the same stance: Some small buys of strong stocks on pullbacks is fine, but we’d stay relatively close to shore until the bulls prove that the buying pressures are spreading and more solid entry points emerge.

This week’s list has something for everyone, whether you’re looking for different sectors or setups. Our Top Pick is LGI Homes (LGIH), which has reemerged on the upside and could be leading a new group move in the homebuilders.

Stock Name	Price	Buy Range	Loss Limit
Aclaris Therapeutics (ACRS)	28	25.5-27.5	21-22
Alcoa (AA)	30	29-31	25.5-26.5
Cimarex Energy (XEC)	60	56-58.5	51-52.5
IAC/InterActiveCorp (IAC)	248	237-250	214-220
Jack in the Box (JACK)	115	111-115	100-102
LGI Homes (LGIH)	142	138-143	123-126
Spirit AeroSystems (SPR)	48	46-49	41.5-43
Steel Dynamics (STLD)	47	44.5-47	40.5-41.5
TripAdvisor (TRIP)	54	51-54	45-47
Williams-Sonoma (WSM)	180	167-173	148-152

Markets seemed to rotate and flatten this week, and the Explorer portfolio was relatively steady as well. The Federal Reserve pledged to keep its spigot open by continuing to buy $120 billion per month of Treasury debt and mortgage-backed securities and hold short-term interest rates near zero through 2023. This is encouraging to markets but unnerves me a bit as we already seem awash in liquidity.

In our new recommendation today, we explore a new technology that could shift the electric vehicle market into another gear.

Here is your March Wall Street’s Best Digest issue 839.

Happy almost Spring!



The daffodils are in blooming here in Tennessee, COVID-19 shots are reaching 2 million per day, and many children are going back to school full-time. I think that is certainly a nice beginning to the warmer season.



And the markets are continuing to surpass expectations, with the Dow Jones Industrial Average hovering at almost 33,000. We don’t know how long this bull run will last, but as you can see from our Advisor Sentiment Barometer and Market Views, investors and contributors continue to be mostly optimistic.



We begin this issue with our Spotlight Stock, the nation’s largest fully regulated, natural gas-only distributor. My Feature article further highlights the stock and summarizes the current state of the industry. We move on to Growth stocks, where we include ideas in the medical education, construction materials, and retail industries. In Growth & Income, you’ll find recommendations for transportation, pizza, and industrial companies.



This month, Value stocks have come rocketing back, and here we feature a food and a home building business. Financial stocks are also doing better, and our contributors offer several insurance companies and a Business Development firm for your review. Our Healthcare picks are focused on opioid management and COVID-19.



In Technology, you’ll find companies from the cybersecurity, wireless, semiconductor, credit scoring, hardware, and artificial intelligence sectors. We have quite a few offerings for you from the Resource & Energy industries, including miners, royalty companies, power conversion, timber, and utilities sectors. We also offer one Low-Priced stock for your consideration, heralding from the mobile device solutions business. And our Preferred Stock is backed by a banking institution.



Lastly, our Funds & ETFs section includes a couple of bond ideas, as well as a small cap fund.



I’m looking forward to getting my garden started soon and hope that you will also have much to look forward to this season. Please don’t hesitate to send me your feedback and questions. My address is nancy@financialfreedomfederation.com.

In the March Issue of Cabot Early Opportunities we offer up a diverse mix of growth stocks with exposure to vastly different markets, all of which should be healthy for the duration of 2021.

While it’s been a rough month since the February Issue and investors are still on edge, stimulus checks should be hitting the economy soon and the broader economic picture is a heck of a lot better than even a couple months ago.



Still, on balance it’s best to keep new buying on the small side and average into these positions as the market seeks the firm footing that is needed to launch a sustained advance higher.



Enjoy!

This week is the expiration of March options, and the good news is we appear to be headed to full profits on four of our March positions (JCI, SONO, GS, APHA) and are in good shape with our one position that is unlikely to be called away Friday (DT). Expect to hear from me Thursday afternoon or early Friday morning on these expiring covered calls.

The market rallied nicely last week, and growth stocks joined the crowd (which is good), but today’s strong open didn’t last and now we’re seeing deterioration across the board, reminding us that the market is a two-way street. Plus, in the background is the fact that investor sentiment is so high, and the economic news has been so good, that eventually we’re going to need a big correction.

Still, looking at the stocks in our portfolio, I see no need for any ratings changes today.



As for today’s new recommendation, it’s a growth stock that hit a new high just last Friday and has a long runway of growth ahead of it as its young industry expands.



Details inside.

Current Market Outlook


Up is good, so last week’s rebound in growth and continued push higher in the broad market was encouraging. That said, nothing much has changed with the overall evidence—many areas of the market look just fine, with a few indexes actually hitting all-time highs, but growth stocks are still (mostly) in a corrective mode, with a bunch of names having rallied only into resistance. Really, we think the action of the next week or two will tell the tale—resilience and upside from here would suggest the huge pullback earlier this month was more of a shakeout, but renewed selling pressure would hint toward another leg down. Right now, we’re playing things halfway—we’re OK with some buying, especially in stronger names that pull back some, but we’re not pushing the envelope and need to see more from growth before concluding the storm has passed. We’re leaving our Market Monitor at a level 5 today.

This week’s list is very much a mixed bag, with cyclicals, retail, growth and turnarounds all making the cut. Our Top Pick is Thor Industries (THO), which looks like the leader of a fresh move for that group. You could nibble here or (preferably) on dips.

Stock Name	Price	Buy Range	Loss Limit
Big Lots (BIG)	71	66-69	59-61
Devon Energy (DVN)	25	22-23.5	19-20
Dropbox (DBX)	28	26.5-28	24-25
Dycom Industries (DY)	100	95-98	85-87
Groupon Inc. (GRPN)	60	57-60	48-50
Inari Medical (NARI)	114	110.5-115.5	98-101
Macy’s, Inc. (M)	21	18-19.5	15.5-16.5
Owens & Minor (OMI)	37	33.5-35.5	30-31
Summit Materials (SUM)	30	28-30	25-26
Thor Industries (THO)	147	140-147	125-128

Do a little buying, but continue to keep a good chunk of cash on the sideline. The market’s evidence has definitely improved recently, though our Cabot Tides have yet to turn positive—in essence, the overall trend is neutral, though many growth stocks are setting up well.

It’s been a constructive week for the market, and for our portfolio. After bouncing off its 200-day moving average two weeks ago, the S&P 500 turned positive for the year yesterday, its first return to the black in four weeks.

It’s earnings season, first featuring bank stocks, then oilfield service companies a week from today. Most of the other companies in our portfolio won’t report results until early May. Others operate on different fiscal cycles.

Small and large cap indices are up around 2.4% from Friday’s close and the portfolio is up almost 5%.

The iShares EM Fund (EEM) has firmed up over the last few days, but has yet to actually kick out to the upside. So, while it’s still in the vicinity of its moving averages, we still have a caution signal in force.

There are two portfolio changes in this week’s update.

Even with increased tariff talk and even rockier trading, the markets rebounded strongly Monday. The volatility has increased anxiety, but the consistent bounces are a good sign. In other news, oil prices are bouncing back, interest rates remain subdued, and earnings season begins this week.

We’re still in the midst of a market correction that began in late January. I consider this correction to be perfectly normal, and unrelated to politics, economics, natural disasters or war. In short, the stock market rose for 15 months without resting, and it was overdue to rest. Sometimes things really are that simple.

There are two portfolio changes in this week’s update.

Remain cautious. Our Cabot Tides and Two-Second Indicator remain negative, but the market’s longer-term trend is still up and encouragingly, many stocks are holding support. We think there will be some great opportunities down the road, but until the buyers retake control, it’s best to cut back on new buying and hold a good amount of cash on the sideline.

Markets pulled it together last week, with oversold financial and consumer stocks finding support and delivering gains for the holiday-shortened week. However, the market started this week with another sharp pullback Monday, bringing the Dow and S&P 500 back to their February lows. And markets look set to open lower today after China announced a slew of retaliatory 25% tariffs on U.S. exports. A rebound later this week is likely, but not certain.

As we move forward we’ll look to focus capital on companies with both solid growth profiles and encouraging price charts. One without the other hasn’t been working (and in fact many of these stocks are trending down), so there’s not much incentive to hold underperformers and hope for a quick turnaround.

Another sell recommendation whose quarterly earnings disappointed.

Our other two recommendations are to sell two previous ideas whose quarterly earnings disappointed.

Our first idea today, an aviation services company, beat analysts’ earnings estimates by $0.02 last quarter, and is forecasted to grow at an annual rate of 16.61% over the next five years.

Three portfolio stocks report earnings.

This tech company beat earnings estimates by $0.07 last quarter.

Our emerging markets signal turned negative as EEM lost 3.67% today.

The Dow imploded 767 points today, while the Nasdaq plunged 278 points.

This is a very short message—the point of which is essentially to say we’re not making any dramatic changes in the portfolio right now.

The cannabis sector is still in correction mode ... looking for a bottom somewhere.

The top three sectors in this Growth fund are: Financial Services (25.93% of assets), Consumer Cyclical (20.77%), and Technology (18.58%).

This stock took a beating on earnings disappointment, but analysts forecast a 17.5% growth rate for this year.

While long-term prospects for the cannabis industry remain excellent, the sector as a whole remains in correction mode today, with the big Canadian stocks under the greatest pressure—and no one knows where the bottom is, though history tells us it will come when the last holdout capitulates.

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.