Issues
The evidence for the overall market continues to improve; over the past week, two blastoff indicators have turned green, which should bode well when looking out over the next few months. Growth stocks, however, remain in a consolidation phase following some huge runs, with many (not all) stocks sagging back during the past week or two. Overall, though, the pullbacks have been normal, so we remain optimistic, though we’re still stepping slowly and looking for decent entry points.
In tonight’s issue, we’re doing a touch more buying, filling out a position in one of our stocks, following the addition of a full position last week. That will leave us with around 18% in cash.
In tonight’s issue, we’re doing a touch more buying, filling out a position in one of our stocks, following the addition of a full position last week. That will leave us with around 18% in cash.
Today we’re breaking into a familiar market by going back to the insurance industry.
But today’s addition is very different from our other rapid growth insurance companies in a major way (as you’ll soon see!).
The stock is acting strong and the fundamentals remain great, despite COVID-19.
All the details are inside this month’s Issue. Enjoy!
But today’s addition is very different from our other rapid growth insurance companies in a major way (as you’ll soon see!).
The stock is acting strong and the fundamentals remain great, despite COVID-19.
All the details are inside this month’s Issue. Enjoy!
Three of today’s featured companies seem most obviously ready to begin or continue run-ups in the coming days. The fourth featured company is sitting at the bottom of a steady trading range, offering attractive opportunities for growth investors, dividend investors and traders.
U.S. stock markets are rising again. At some point in the coming months, the sober reality of the country’s economic situation will impact the stock market, but for now, there’s money to be made. Energy stocks and stocks within the investment, life insurance and annuity industry look especially bullish right now.
U.S. stock markets are rising again. At some point in the coming months, the sober reality of the country’s economic situation will impact the stock market, but for now, there’s money to be made. Energy stocks and stocks within the investment, life insurance and annuity industry look especially bullish right now.
Precious metal stocks have become mixed of late as economic optimism has increased, but some are still strong, and today’s recommendation is one of them.
Current Market OutlookLast week saw some vicious rotation early in the week, with the super-strong growth names coming down to earth while money gushed into cyclical sectors, but the leaders stabilized as the week wore on and the broad market remains positive, too. From a big-picture perspective, the 90% Blastoff signal last week (90% of NYSE stocks above their 50-day lines) bodes well for the overall market, and the fact that few (if any) leading stocks have cracked is a good sign. All in all, further potholes, rotations and shakeouts are relatively likely given the big run over the past two months and the divergent environment, but until proven otherwise, we continue to think the path of least resistance is pointed up. We’re moving our Market Monitor up another notch to a level 8.
This week’s list has a good mix of setups, with some recent earnings winners, some that have pulled back and others that are in persistent uptrends. Our Top Pick is Arconic (ARNC), which is one of the few cyclical stocks to appear in Top Ten since the uptrend got underway.
| Stock Name | Price | ||
|---|---|---|---|
| Adaptive Biotechnologies Corporation (ADPT) | 39.41 | ||
| Arconic (ARNC) | 17.00 | ||
| Bill.com Holdings (BILL) | 88.76 | ||
| Dynatrace (DT) | 36.59 | ||
| II-VI Incorporated (IIVI) | 48.64 | ||
| LiveRamp Holdings (RAMP) | 46.54 | ||
| Pan American Silver (PAAS) | 27.28 | ||
| Seattle Genetics (SGEN) | 150.85 | ||
| Tractor Supply Company (TSCO) | 122.24 | ||
| Zscaler (ZS) | 126.22 |
The overall market remains healthy, and while we still haven’t received an “all-clear” signal from our long-term timing indicator, we do have a positive signal from the 90% Blastoff Indicator, and that’s good!
Overall, our portfolio stocks are behaving quite well, with none disappointing today. In fact, many are so strong that I expect pullbacks in the future. The only sale today is of a stock that has given us a quick 30% profit. Otherwise, I’m sitting tight.
As for today’s recommendation, it’s a company in the online education industry, where demand is booming thanks to COVID-19.
Full details in the issue.
Overall, our portfolio stocks are behaving quite well, with none disappointing today. In fact, many are so strong that I expect pullbacks in the future. The only sale today is of a stock that has given us a quick 30% profit. Otherwise, I’m sitting tight.
As for today’s recommendation, it’s a company in the online education industry, where demand is booming thanks to COVID-19.
Full details in the issue.
Fortunately, most banks entered the current downturn in much better condition than when they entered the 2009 financial crisis. Meaningfully higher capital levels, stronger loan reserves, more stringent risk controls and tighter cost structures will all help support banks’ financial health in the difficult period ahead.
In this issue, we recommend six banks whose weak share prices imply an overly dour economic outlook.
In this issue, we recommend six banks whose weak share prices imply an overly dour economic outlook.
U.S. and international markets staged a rally this week alongside momentous events in Asia as China imposes its will on Hong Kong through the passage of national security law. America indicates it will withdraw trade preferences for Hong Kong, viewing it as indistinguishable from China. China cracks down on Hong Kong as legislation advances in the U.S. to potentially delist international and Chinese companies that do not meet U.S. disclosure standards. Meanwhile, we have a new recommendation this week that has been in the news regarding Covid-19 and how we should all look at the economics of discovering new drugs.
Updates
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).
Small caps resumed their upward trajectory over the past week, rising by 1.3%. Our portfolio did a little better, rising by an average of 2.6%. And small cap growth looks good for the year ahead. While anything can happen in the market, the game plan remains the same: stay in good stocks, avoid bad ones, and get out of those that have faltering outlooks. In short, stay the course.
Remain bullish. The market is in good shape, and we’re starting to see some growth stocks reassert themselves. There are still some potholes out there, but we believe you should remain heavily invested. In the Model Portfolio, we sold Five Below (FIVE) on a Special Bulletin yesterday, replacing it with GrubHub (GRUB), and today, we’re placing Facebook (FB) back on Buy.
Oil prices and energy stocks have strengthened, so I’m putting Pembina Pipeline (PBA) back on Buy today. However, I’m moving Costco (COST) back to Hold after the warehouse retailer’s latest sales results caused the stock to pull back once more.
Three Cabot Benjamin Graham Value Investor companies reported quarterly financial results or other noteworthy news in the past week. I have one sell recommendation: Rackspace Holding (RAX).
The Emerging Markets Timer is still pointed up, despite the market’s recent consolidation. Our moves tonight are increasing our Buy recommendation for Alibaba (BABA) to a full position, lowering our rating of Telkom Indonesia (TLK) to Hold a Half and returning Weibo (WB) to a Buy a Half recommendation.
Today I’m removing Delta Air Lines (DAL) from the Growth Portfolio. The company’s earnings outlook has deteriorated to an expectation of EPS declining 1% in 2016, and the price chart has not improved since I put the stock on Hold two months ago.
Small caps added another five points this week as the grind higher continues. Granted, the percentage rise was less than 1%. But nevertheless, the strength in small caps is creating a sense of greater confidence in the sustainability of the market’s uptrend.
Six Cabot Benjamin Graham Value Investor companies reported quarterly financial results or other noteworthy news. There is one sell recommendation: Dollar General (DG).
Remain bullish. The market has been consolidating its recent gains, which is a good sign, and all of our market timing indicators remain clearly bullish. Short term, today’s drop could lead to further weakness, especially with Fed Chief Janet Yellen speaking on Friday morning. But our market timing indicators are bullish, so the odds still favor higher prices in the weeks and months ahead. In the Model Portfolio, we’ll stand pat tonight with nine stocks and a cash position of 8%.
Alerts
Five analysts have increased their EPS targets for this software company in the past 30 days.
Stocks opened higher today on the backs of some good earnings reports, but the sellers have again come out of the woodwork and driven growth stocks lower. Looking at the primary evidence, our Cabot Tides remain negative, our Cabot Trend Lines could turn negative tonight depending on how the market closes and most important, stocks and the major indexes have been unable to mount much of a bounce in recent days. It’s best to stay defensive and we are sell the rest of one of our positions.
Four stocks in our portfolio’s have reported earnings.
This consumer finance company beat EPS estimates by $0.04 last quarter, and is expected to grow at a 13% annual rate over the next five years.
Three stocks in our portfolio’s have reported earnings beats.
The shares of this music streaming service were just upgraded to ‘Buy’ at Redfern.
This airline beat Wall Street’s estimates by $0.03 last quarter.
Tomorrow’s the day that stores across Canada begin selling marijuana legally, and as I’ve said several times before, I believe the odds are that this will mark an intermediate-term top for many of the stocks in the sector.
This trucking company beat analysts’ estimates by $0.11 last quarter and three analysts have increased their EPS estimates for the company in the past 30 days.
Next, we are cleaning house a bit by selling two previous ideas.
Our first pick today is an Indian IT company who beat EPS estimates by $0.08 last quarter.
Portfolios
Strategy
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.