This week’s leading issue is the China virus, which is impacting markets.
We will need to keep an eye on this breaking issue. Still, Virgin Galactic jumped another 14% yesterday and is up over 80% in the last month.

Our emerging market timer is clearly positive and today’s recommendation is an emerging country that is the overlooked big winner from the two recent trade deals. It is in a nice uptrend and has fuel to burn going forward, backed by several positive trends.

Global investment bank Morgan Stanley thrilled investors last week by delivering record profit and revenue numbers, beating Wall Street’s fourth quarter 2019 revenue and earnings estimates, and meeting or exceeding all of CEO Jim Gorman’s performance targets.

Current Market Outlook


The market remains extremely strong, as the combination of a new year and reduced anxiety about China trade has encouraged the bulls and calmed the bears. At the same time, a broad correction is increasingly overdue, as numerous stocks have grown increasingly stretched far above their moving averages. Thus, when you do buy, you need to do so with an eye not just to the potential upside but the potential downside as well.

The ideal buy for many of today’s stocks might be on a brief pullback that finds support. Stocks in this issue range from global giants like Morgan Stanley and Match to smaller, faster-growing technology companies like touch-screen expert Synaptics and chipmaker-for-Apple Cirrus Logic. Our Top Pick this week is iQiYi (IQ), a fast-growing Chinese media/technology company that has its tentacles in numerous fields and is succeeding at many of them.

Stock Name	Price	Buy Range	Loss Limit
Cirrus Logic Inc. (CRUS)	0.00	80-83	75-77
iQIYI (IQ)	0.00	22-23.5	20-21
Match (MTCH)	0.00	85-88	80-82
Morgan Stanley (MS)	0.00	55-57	50-52
Novocure (NVCR)	0.00	90-93	80-82
Synaptics (SYNA)	0.00	68-72	60-64
Teladoc, Inc. (TDOC)	127.95	93-97	75-80
Thor Industries (THO)	104.76	75-80	63-66
Toll Brothers Inc. (TOL)	0.00	42-44	38-39
Vertex Pharmaceuticals (VRTX)	230.36	230-235	210-215

The market remains in fine health, with all major indexes in strong uptrends and no signs of divergence that typically precede major market tops. Additionally, numerous market-timing indicators tell us the market is likely to be higher months from now. However, as all investors know, corrections will occur, and it’s looking increasingly likely that one is due. So, you should be prepared. This might mean taking profits in stocks that are extended—as many are now. Or it just might mean setting some stops, so that winners don’t turn into losers. In the meantime, there are plenty of fine-looking stocks to buy, and today I’m leaning toward an Asian company that happens to have my favorite fundamental characteristic—accelerating revenue growth.

Details in the issue.

The market remains super strong, and we’re pleased to see many growth stocks that rested during December break out to new highs so far this year. Shorter-term, the lack of good entry points among stocks we’re watching is a reason we’re still holding a chunk of cash on the sideline. But we remain very bullish longer-term and think pullbacks and/or shakeouts will provide some solid entry points.

Tonight, we’re standing pat once again with our collection of stocks, most of which act great. In the issue, we do write about one big-cap name that we think has regained its status as a liquid leader (Alibaba), and it’s probably the top stock on our watch list today. Elsewhere we do highlight some other ideas, and as always, share our latest thoughts on all the stocks we own.

Happy New Year! It was a great year for the markets with the DJIA gaining 22.3%, the S&P 500 up 28.9%, and the Nasdaq rose 35.2%. But it was even a better year for us! Our Top 5 Picks for 2019 averaged returns of 131%! William Velmer of S.A. Advisory was our big winner. His stock idea gained an astonishing 332%!

Congratulations to all our contributors. And 2020 looks just as promising. Employment is healthy and so is the housing market. Economists are calling for several rate decreases, which should continue to help housing. And as you can see in our Advisor Sentiment Barometer, the investment world remains very bullish.



More details in the issue.

The market has been ripping higher with broader participation from sectors that weren’t doing much a couple months ago. That’s the good news. And it’s showing up in the charts with the Small Cap Index at multi-month highs (but well below all-time highs). IPOs are starting to find their legs too. The not-so-good news is that the market is looking a little stretched, which could mean a pause or pullback is coming sooner rather than later. But, the market has a way of doing the unpredictable and with so many investors thinking it’s time for break we could see just the opposite. This month we try to play both sides of the ball by spreading things around in different sectors and across market caps. There’s some IPOs, some high growth software and MedTech ideas, and another growth + value name. They all have their own qualities and stand out to me for different reasons right now.

Last year, there were at least 7.9 billion records—including credit card numbers, home addresses, phone numbers and other highly sensitive information—that were compromised by computer hacks, mainly through invasions of business networks.

Current Market Outlook


The big-cap indexes remain in rarified air, as they continue to levitate and the sellers refuse to put up a fight. Even more encouraging is that many stocks that took the prior few weeks off (generally building tight ranges) have resumed their advances, a good sign. That said, the upmove has become a bit more selective (small- and mid-cap indexes haven’t participated lately) and numerous yellow flags among secondary indicators are still in place. All of that is a longwinded way of saying that not much has really changed—it’s a strong bull market that should go higher down the road, but the risk of near-term potholes is elevated. Thus, you should remain bullish and continue to hold most of your strong performers, but picking your spots on the buy side makes sense as well.

This week’s list includes a bunch of names that have shown excellent strength after resting for a few weeks—or in some cases, months. Our Top Pick is blue chip Salesforce.com (CRM), which has accelerated to new highs after a 15 months of base-building.

Stock Name	Price	Buy Range	Loss Limit
Aecom Technology (ACM)	0.00	45.5-47	42-43
Axsome Therapeutics (AXSM)	0.00	83-88	71-75
Dexcom (DXCM)	421.36	225-235	202-206
Dynatrace (DT)	36.59	27.5-29	24-25
Fortinet Inc. (FTNT)	137.53	112-115	103-105
Guess (GES)	0.00	21-22	19-19.5
JD.com (JD)	39.58	38-39.5	34.5-35.5
Qorvo (QRVO)	129.47	112-116	101-102
Salesforce.com (CRM)	0.00	178-182	164-167
Western Digital Corporation (WDC)	0.00	65-67	59-60

Continue to lean bullish. From a top-down perspective, there’s little negative to say about the overall market—all of our indicators remain positive, and the indexes refuse to give up any gains, a sign of strength. Individual stocks are more hit and miss, but we’re looking forward to earnings season to reveal some new leadership. We have no changes in the Model Portfolio tonight—we’re holding seven stocks and a cash position near 30%.

A correction is still possible, but the overall trend of the market is clearly up. I have no rating changes today, although I’m watching U.S. Bancorp (USB) closely after the bank reported mixed results this morning.

Most stocks in our portfolios were the subject of research articles from high-profile financial media outlets, this past week: Forbes, Barron’s, TheStreet and others. We have one dividend increase today: Carnival Corp. (CCL), and I’m lowering the rating on Federated Investors (FII) to Hold.

We have a few nuggets of news this week. And in two weeks, earnings season will kick in with three of our software stocks reporting. There are no ratings changes this week. And we should tip our hats to PFSweb (PFSW), which earned top gun honors with its 15% rally.

Recent gains in the stock market are impressive. Ms. Market seems very determined to climb a wall of worry. Economic growth in the U.S. continues to barely inch ahead, while employment is robust.

The Cabot Emerging Markets Timer continues to give a Buy signal, so we’re looking for opportunities to increase our exposure. Today, however, we have no changes to our portfolio.

Most of our stocks have spent the past week either pulling back or trading sideways, providing a good opportunity for members who are underinvested to start new positions. We’re putting Wynn Resorts (WYNN) back on Buy today after the company wowed investors with plans for a new resort last week.

Housing sector stocks—including homebuilders, raw materials, and appliances—look stronger right now than any other major industry group. Their charts are bullish, with many of them showing signs of near-term upside breakouts. In that light, I’m expecting good things from Boise Cascade (BCC), D.R. Horton (DHI), Vulcan Materials (VMC) and Whirlpool (WHR) this month.

This was another week of relatively scant stock-specific news. Action will heat up in three weeks once our companies start reporting Q1 results. Alcoa (AA) will get things going on Monday. There are no ratings changes this week.

You should continue to lean bullish, as our Cabot Tides and Two-Second Indicator, along with some secondary indicators (like the S&P 500 blastoff signal), remain positive. We’re adding one new name to the Model Portfolio tonight—Five Below (FIVE)—but will still have about 30% in cash as we wait for the longer-term trend and growth stocks to kick into gear.

After a strong end to last week—the Nasdaq joined the Dow and S&P above its 200-day moving average on Wednesday—the market is pulling back a bit to start April, but we don’t think there’s any cause for alarm yet. We are putting WYNN on Hold today, after the company reported continued weakness in Macau last night.

The Cabot Emerging Markets Timer continues to give a Buy signal, so we’re maintaining our strategy of slowly increasing our exposure. Today, we have no changes to our portfolio.

Blackstone Group, an alternative asset manager, held an Investor Day on September 21 for the first time in four years.

This insurance company beat analysts’ earnings estimates by $0.25 last quarter.

This medical device company beat analysts’ EPS estimates by $0.18 last quarter.

The Marijuana Index is trending upwards, as it has been since mid-August, but is still short of exceeding its January high, and thus the advance is likely to continue.

This party retailer just announced it would acquire a master franchise group representing 21 franchise stores in the Minnesota, North Dakota and Texas markets.

In the past 30 days, 10 analysts have increased the earnings estimates for this consumer company.

In the last 30 days, six analysts have raised their 2019 EPS forecasts and nine have increased their 2020 forecasts for this beauty company.

This pharma company just announced its intention to acquire Biscayne Neurotherapeutics, a privately-held company developing a novel treatment for epilepsy.

Analysts expect this biotech company to grow at an annual rate of 23.9% over the next five years.

This ETF goal is to provide investment results that correspond to twice (200%) the inverse of the daily performance of the Bloomberg WTI Crude Oil SubindexSM.

Two of our medical device stocks have begun to look a little shaky and today we’ll pull back on the reins and move these stocks from buy to hold, at least until the path forward becomes more clear.

The top five sectors of this small cap fund are: Industrials, 28.7% of assets; Technology, 18.0%; Health Care, 16.1%; Financials, 13.6%; and Consumer Discretionary, 11.3%.

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.