The market rebound from its lows has been impressive as the unprecedented amount of stimulus injected by the Fed and Congress has overwhelmed any forward-looking concerns about the real economy.

The key now is to build, day by day, a more normal trading pattern. Cabot Global Stocks Explorer positions have kept pace with the market with outlier Virgin Galactic (SPCE) coming back 75% in two weeks. Our emerging markets (EEM) timer needs a bit more time to come out of its negative position. Today’s new recommendation is a high-quality, debt-free robot maker that is trading at close to a 10-year low.

While the market has rallied roughly 25% off its closing low from March it’s not exactly a roaring bull market. We are where we are because the Fed and Treasury are lobbing money-filled grenades in all directions. Near-term market fundamentals are weak, but looking out a few quarters (or more) things should improve drastically, and that’s what the market is trying to factor in. On balance, it’s time to be conservative, but to take shots here and there. This month’s Issue of Cabot Early Opportunities offers up five options that look good right now.

This industry is very recession-resistant (sales grew steadily even through 2008-2009) and this stock is leading the charge to its move online (25% of sales online by 2022, up from 14% in 2017) thanks to its product selection (45,000 of them!) and fulfillment (can reach all of the U.S. within two days).

Current Market Outlook


Our thought that March 23 would prove to be a workable low was correct, and the past three weeks have seen the major indexes recoup 40% to 55% of their crash declines (depend on the index). It’s obviously been good to see, as is the continued constructive action in many stocks; it appears the wheat is separating from the chaff. Still, we think the next week or two will be the key juncture—if the major indexes can ramp from here, the intermediate-term trend would turn up and could coincide with some powerful breakouts. On the flip side, if the sellers reappear, a deeper pullback or a retest of the lows could be on tap. Right now, we’re optimistic, but we never anticipate signals; today, with the trend still down, you should remain defensive.

Happily, we continue to see a lot of stocks that want to go higher if bulls do retake control. Our Top Pick this week is Inphi (IPHI), which is already at new closing highs as demand for its high-speed goods improves. Start small and/or aim for dips.

Stock Name	Price	Buy Range	Loss Limit
Amazon.com (AMZN)	2.00	2070-2130	1890-1920
American Tower Corporation (AMT)	252.32	238-248	220-225
Bilibili (BILI)	28.71	25-27	21-22.5
Chewy (CHWY)	43.92	37.5-40.5	32-33.5
Ciena (CIEN)	44.25	42.5-44	38.5-39.5
Inphi (IPHI)	120.16	87-91	77-79
Veeva Systems (VEEV)	180.23	159-163	144-146
Wheaton Precious Metals (WPM)	34.43	31-32.5	27.5-28.5
Wingstop (WING)	121.52	92-96	81-83
ZTO Express (ZTO)	28.84	26-27.5	23.5-24.5

Market volatility remains high, and the good news is that since the bottom three weeks ago, most of the volatility has been to the upside. But don’t get complacent; conditions remain ripe for a substantial pullback as the market works to raise the fear level among investors.
In the meantime, the action of the best growth stocks remains impressive, and one of the leaders, with a great story about internet security, is today’s recommendation.


As for the rest of the portfolio, it’s acting well (with a couple of very strong stocks in the mix), and thus I have no changes today.



Full details in the issue.

The market has done about as good a job as could be expected rebounding off its March 23 low, and that makes for an interesting setup next week: If the major indexes can continue to strengthen, we could get a Tides buy signal, and that could also coincide with some bullish blastoff signals, too. To this point, though, the trends have yet to turn up, so we advise a defensive stance -- but we’re certainly keeping our eyes peeled for further unusual strength.

After a better than 30% plunge at record speed, the market has staged an epic rally from the bottom. The S&P 500 has moved more than 20% higher from the lows in late March. It is likely sensing an end to the economic shutdown sooner rather than later.
That’s good news, and the market usually gets it right. But even if the economy opens back up in May and June, there is a good chance of more trouble ahead. Terrible earnings and economic reports will come and consumers will be wounded for a while.


While I believe the economy and the markets will recover, there is a good chance of another down leg in the market. In this issue, I seek to take advantage of that possibility by targeting great companies to buy and below current prices. These are fantastic companies to own that are only ever cheap in bear markets like this.


The market will come back, but probably not yet. Taking advantage of another down move is a fantastic way to profit from the market’s eventual recovery.

Organic food is a nearly $50 billion-per-year industry in the U.S., comprising 6% of total food sales in 2018, and it’s growing at 6% annually. Whole Foods is the obvious, well-known chain that’s capitalizing on this trend, with Trader Joe’s being another that’s popular in certain areas of the country. Less famous, but with a bright future, is this U.S. supermarket chain specializing in natural and organic foods, focusing on fresh produce, bulk foods, vitamins and an array of household wares.

Current Market Outlook


Since the March 23 low, the market has pretty much followed the plan, with a good initial rally, a little upside follow through and lots of up/down, news-driven moves since. To be fair, that is more descriptive than predictive—a few big moves in one direction or the other could change the outlook, and today’s action was encouraging for the bulls. Right now, though, the overall evidence remains unchanged: The trend of the major indexes and most stocks is still pointed down, and while many names are doing a good job of hanging in there, few stocks are in true uptrends. Looking ahead, the first sign of light would be a batch of growth-oriented stocks bursting to new highs, followed by the intermediate-term trend of the major indexes turning up (likely to take another week even if all goes well). Given the unprecedented situation, we’re open to anything, but until the buyers show more muscle, we advise sticking with a mostly defensive stance.

The good news is that we continue to see quite a few stocks that institutions have been accumulating in recent weeks. This week’s list has a few, with our Top Pick being Livongo (LVGO), a newer, fast-growing name that’s popped up of late.

Stock Name	Price	Buy Range	Loss Limit
Five9 (FIVN)	78.35	74.5-78	66-68
Livongo Health Inc. (LVGO)	33.34	27.5-30	23-24.5
Newmont Mining (NEM)	57.31	48-51	42.5-44.5
Novavax, Inc. (NVAX)	65.95	13-14.5	10.5-11.5
Peloton (PTON)	53.03	27-29	23-24.5
Pinduoduo (PDD)	87.53	36.5-38.5	33-34
Regeneron Pharmaceuticals (REGN)	512.96	470-490	415-425
RingCentral (RNG)	238.73	213-225	187-192
Sprouts Farmers Market (SFM)	19.00	18.5-19.5	16-16.5
Zscaler (ZS)	126.22	61-64	54-55.5

The market was up big today, and a couple of our stocks hit new highs—which is impressive considering the recent crash—but the market’s major pattern is one of bottom-building, and that takes time.
In the meantime, the action of the best growth stocks gives us a clue as to developing leadership, and the best value stocks are absurdly cheap. Plus, many are paying huge dividends! That’s the case with today’s recommendation, a giant in the oil industry.


As for the rest of the portfolio, it’s acting well (with a couple of very strong stocks in the mix), and thus I have no changes today.


Full details in the issue.

For the third time in less than a year, a portfolio stock has received a lucrative buyout offer. The board of directors of chemical company Chemtura (CHMT) unanimously agreed to accept a buyout offer from Lanxess AG in a deal valued at $2.5 billion.

The Federal Reserve, as expected, declined to raise interest rates, although Chair Janet Yellen noted that wages are picking up and further acceleration in wages is possible. I think it’s likely the Fed will raise rates in December, a move which shouldn’t surprise investors.

We don’t have much to complain about after a week when our average gain per position was 5.8%, three positions were up double digits, and our worst performing stock was down a mere 2%. That said, today I’m moving two stocks that have just rallied back to Hold, since the near-term upside appears limited in those names. Five of our positions remain Buys.

Should the market resume its uptrend, we’ll look to put our cash to work, but tonight, with our Tides still negative, we’ll sit tight.

I’m putting Wynn (WYNN), one of our growthiest names, back on Buy today after the stock finally broke out of its multi-month trading range.

This week, financial markets bring us earnings reports from Adobe and FedEx (and possibly Carnival), and a speech by Fed Chairwoman Janet Yellen.

This looks like a classic buy-the-dip scenario. Nothing is for certain, but my best guess is we regain the small-cap 50-day moving average line next week, and after a week or two of choppy action, are trading at another 52-week high.

Volatility returned to the stock market during the past week. Investors are concerned about the possibility of a Fed interest rate hike next week after a batch of weak economic news indicated that the U.S. economy will continue to sputter.

The Emerging Markets Timer is still pointed up, but it’s clearly seen some selling volume over the last week. So while we’re still bullish, we’re not looking to push for further exposure at this point. The only change in the portfolio is the sale of Telkom Indonesia (TLK) that we recommended in a Special Bulletin on Wednesday.

Whether this is a quick V-shaped pullback like we saw after Brexit or a more serious correction will become apparent in coming weeks, but I suggest you become a little more conservative while we wait and see. We’re selling half of CVS Health (CVS) and J.M. Smucker (SJM) today and putting Home Depot (HD) on Hold.

Any surprising event of substance can affect the stock market, even if it’s only for one day. The biggest reason that non-financial events, such as the Zika virus, Mrs. Clinton’s health, Y2K and the Brexit vote impact U.S. stock markets is because U.S. news media latch onto these topics and cover them incessantly, giving the general public the impression that these pieces of news are vitally important.

Five Cabot Benjamin Graham Value Investor companies reported quarterly financial results or other noteworthy news. I have one sell recommendation: Cummins (CMI).

Our second recommendation is a sale based on sector downturn.

In the past 30 days, seven analysts have raised their EPS forecasts for our first idea today, a power services company.

Just a quick update on two of our positions and a bit of an educational component by using the strategy of averaging up, rather than averaging down.

This cutting-edge tech company’s earnings estimates were recently increased by 6 analysts who expect the company to grow 39.6% next year.

Here’s an update on five of our stocks in the portfolio.

The dividend is growing for this shipping company, and with the holiday season is full swing, analysts are expecting the company to grow 25.8% this quarter.

The market was relatively quiet today, with the Dow down 28 points and the Nasdaq down 19 as investors looked for news and rumors about the G20 economic summit this weekend.

Analysts expect this technology company to grow 18.8% annually for the next five years.

This tech company beat earnings estimates by $0.06 last quarter, but an announced acquisition caused shares to tumble a bit, creating a buying opportunity.

This technology company is forecasted to grow its earnings at an annual rate of 30% over the next five years.

Listed are the top five holdings for this small cap fund in this article.

This business services process provider beat analysts’ estimates by $0.11 last quarter, and with its recent acquisition, earnings should continue their upward track.

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.