Issues
Well, March in the markets certainly came in like a lion, didn’t it? And it looks like it may end the month the same way. Until we make progress in defeating the coronavirus, we expect continued volatility in the markets, and we recommend that you remain defensive.
That doesn’t mean Sell everything in your portfolio. Remember, you don’t have real losses until you sell your stocks. But it does mean if you are holding on to some stocks that weren’t doing well before the coronavirus outbreak, it might be a good idea to think about unloading them. But being defensive also means being judicious when buying. For the near future, I’m going to include this message in all my writings, as an alert that, certainly, you may buy these recommendations, but for most of us, they will provide entries into a ‘watch’ list that can be acted upon as the volatility disperses. Or you may find that you might want to nibble just a bit at some of them. That’s up to you, but please know that I’m here to help you with your investing decisions, so please don’t hesitate to reach out to me.
In the meantime, I—and our contributors—are very busy trying to find some great recommendations that will help your portfolio recover, once normalcy returns to the markets.
Read the Issue for more details.
That doesn’t mean Sell everything in your portfolio. Remember, you don’t have real losses until you sell your stocks. But it does mean if you are holding on to some stocks that weren’t doing well before the coronavirus outbreak, it might be a good idea to think about unloading them. But being defensive also means being judicious when buying. For the near future, I’m going to include this message in all my writings, as an alert that, certainly, you may buy these recommendations, but for most of us, they will provide entries into a ‘watch’ list that can be acted upon as the volatility disperses. Or you may find that you might want to nibble just a bit at some of them. That’s up to you, but please know that I’m here to help you with your investing decisions, so please don’t hesitate to reach out to me.
In the meantime, I—and our contributors—are very busy trying to find some great recommendations that will help your portfolio recover, once normalcy returns to the markets.
Read the Issue for more details.
Market volatility and weakness accelerated this week through Wednesday though U.S. Senate passage of a “bailout” measure may lead to a rebound on Thursday. In general, you should sell into strength and cautiously buy into weakness. Our emerging market signal is decidedly negative with the EEM down to 30 from a mid-January high of 46. It has not been at this low a level since early 2016 and got down to 20 at the bottom of the global financial crisis in 2008. Today we do a little selling, increase our S&P 500 Inverse ETF position marginally and add JPMorgan (JPM) to the watch list.
Well, March in the markets certainly came in like a lion, didn’t it? And it looks like it may end the month the same way. Until we make progress in defeating the coronavirus, we expect continued volatility in the markets, and we recommend that you remain defensive.
That doesn’t mean Sell everything in your portfolio. Remember, you don’t have real losses until you sell your stocks. But it does mean if you are holding on to some stocks that weren’t doing well before the coronavirus outbreak, it might be a good idea to think about unloading them. But being defensive also means being judicious when buying. For the near future, I’m going to include this message in all my writings, as an alert that, certainly, you may buy these recommendations, but for most of us, they will provide entries into a ‘watch’ list that can be acted upon as the volatility disperses. Or you may find that you might want to nibble just a bit at some of them. That’s up to you, but please know that I’m here to help you with your investing decisions, so please don’t hesitate to reach out to me.
In the meantime, I—and our contributors—are very busy trying to find some great recommendations that will help your portfolio recover, once normalcy returns to the markets.
That doesn’t mean Sell everything in your portfolio. Remember, you don’t have real losses until you sell your stocks. But it does mean if you are holding on to some stocks that weren’t doing well before the coronavirus outbreak, it might be a good idea to think about unloading them. But being defensive also means being judicious when buying. For the near future, I’m going to include this message in all my writings, as an alert that, certainly, you may buy these recommendations, but for most of us, they will provide entries into a ‘watch’ list that can be acted upon as the volatility disperses. Or you may find that you might want to nibble just a bit at some of them. That’s up to you, but please know that I’m here to help you with your investing decisions, so please don’t hesitate to reach out to me.
In the meantime, I—and our contributors—are very busy trying to find some great recommendations that will help your portfolio recover, once normalcy returns to the markets.
As the bear market continues and stocks swing wildly we have some sage advice regarding what to expect over the coming weeks. The first part of this months Issue is all about understanding the environment. We’ll get into stock talk tomorrow.
There’s obviously a lot of uncertainty when it comes to all earnings forecasts for 2020, and it’s pretty much a given that this stock itself will miss initial forecasts in Q1. But the company looks poised to be one of the blue-chips best positioned to rebound whenever the virus storm passes.
Current Market OutlookFirst and foremost, with the virus now affecting most everyone, all of us here at Cabot are hoping you stay safe (and if you’re home with your kids, sane!). As for the market, there’s not much to say except the obvious: We remain in a very steep selloff, with bounces limited to a couple of hours, though we’re seeing such crazy extremes (price and sentiment) that a near-term low is possible at any time. Our advice really hasn’t changed despite the once-in-a-lifetime action of the past couple of weeks: You should remain cautious, holding plenty of cash and keeping any new buying on the small side. Eventually, there will be huge opportunities, but we need to see the market and potential leading stocks find support before thinking a workable low could be in.
In the meantime, we’re mostly focused on eying stocks that are showing some resilience—if something can hold up in this disaster, it’s definitely worth at least keeping a close eye on. Our Top Pick is Masimo (MASI), which could be a port in the virus storm.
| Stock Name | Price | ||
|---|---|---|---|
| Acceleron Pharma (XLRN) | 75.11 | ||
| Apple (AAPL) | 248.94 | ||
| Bilibili (BILI) | 28.71 | ||
| DocuSign (DOCU) | 107.98 | ||
| Equinix, Inc. (EQIX) | 547.73 | ||
| FTI Consulting (FCN) | 120.09 | ||
| Inphi (IPHI) | 120.16 | ||
| Masimo (MASI) | 159.56 | ||
| Repligen (RGEN) | 91.34 | ||
| TAL Education (TAL) | 50.49 |
Just when you start to think this coronavirus crash will never end—it will. And our goal is to have a portfolio of healthy stocks when that day arrives. In the meantime, our selling has increased our cash position significantly—and there are two more recommended sales today.
As for new buying—there aren’t a lot of healthy stocks to choose from, regardless of whether you’re looking for low-risk or high-risk, but one that stands out is today’s recommendation, which benefits from the booming growth in working-from-home (WFH).
Full details in the issue.
As for new buying—there aren’t a lot of healthy stocks to choose from, regardless of whether you’re looking for low-risk or high-risk, but one that stands out is today’s recommendation, which benefits from the booming growth in working-from-home (WFH).
Full details in the issue.
The market has crashed during the past three weeks, with the major indexes down 25%-plus and many stocks down much more than that. We’re seeing some truly historic oversold extremes, which tell us a bounce could get underway at any time, but we’re also not seeing the market able to bounce from those extremes. The bottom line is the same as it’s been since late February: The sellers remain in control of the market and the vast majority of stocks, so we’re holding plenty of cash and paring back as need be.
Bigger picture, the market (and the country) will get through this pandemic in time, so it’s important not to lose your cool. There will be big money to be made down the road, and we’re on the hunt for stocks showing some minor relative strength and studying up on some new stories (a couple of which we highlight in the issue). But the goal is to get to the next uptrend in one piece--right now, you should respect the action and remain defensive.
Bigger picture, the market (and the country) will get through this pandemic in time, so it’s important not to lose your cool. There will be big money to be made down the road, and we’re on the hunt for stocks showing some minor relative strength and studying up on some new stories (a couple of which we highlight in the issue). But the goal is to get to the next uptrend in one piece--right now, you should respect the action and remain defensive.
The coronavirus is sending the market into a tailspin. It took a thriving bull market from all-time highs to the cusp of a bear market in a matter of weeks.
It is likely that this market will not significantly recover until there is more clarity on the extent of the economic disruptions it is causing and how long they will last. That seems unlikely for several weeks at least. In the meantime, the market is vulnerable to constant headline risks.
It is likely that the market has not found a bottom.
That said, this too shall pass. The coronavirus is a black swan event that is singularly responsible for the market crash. When the panic and emergency subsides, and it will, the market will likely recover and make up for lost time.
In this issue I discuss the ramifications and measures to protect your investments. As well, I identify rare securities that are timely opportunities while the market is down. These stocks have limited downside if the market continues to fall and huge upside leverage when it recovers.
It is likely that this market will not significantly recover until there is more clarity on the extent of the economic disruptions it is causing and how long they will last. That seems unlikely for several weeks at least. In the meantime, the market is vulnerable to constant headline risks.
It is likely that the market has not found a bottom.
That said, this too shall pass. The coronavirus is a black swan event that is singularly responsible for the market crash. When the panic and emergency subsides, and it will, the market will likely recover and make up for lost time.
In this issue I discuss the ramifications and measures to protect your investments. As well, I identify rare securities that are timely opportunities while the market is down. These stocks have limited downside if the market continues to fall and huge upside leverage when it recovers.
Amazon and others have a lock on the market for large-scale e-commerce, but this stock leads a different niche, as it’s the go-to place for buyers (46 million of them at year-end, up 16% from a year ago) and sellers (2.7 million, up 20%) of homemade, handcrafted goods.
Updates
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.
Many Smart Investing portfolio stocks are trading in narrow, sideways price ranges, since having a strong initial rebound from the winter’s stock market correction. Those trading ranges give us good guidance on how to proceed with stocks.
If market trends continue to improve, I’ll consider taking on more risk in the portfolio—but only if I think we’ll be well compensated for it. There are no ratings changes this week, and none of our stocks reported.
Continue to lean bullish, but keep some powder dry. Selling pressures remain light, but we still want to see more strength among growth stocks before getting heavily invested. There are no changes in the Model Portfolio tonight; we own six stocks and hold a cash position near 40%.
Overall, the market looks healthy, and we think you can continue to get a little more aggressive, putting cash to work and taking on a little more risk if you’re comfortable with it.
Occasionally, I will lower ratings on stocks that rose too far, too fast, and raise ratings on the stocks that present the best opportunities. Today, I’m raising the ratings on Carnival (CCL) and Vulcan Materials (VMC) to Strong Buy, and I’m lowering the rating on FedEx (FDX) to Hold.
Another week of modest gains has investors moving back into stocks, and the major indices are around breakeven for the year.
The Cabot Emerging Markets Timer continues to give a buy signal, so we’re maintaining our strategy of increasing our exposure. Today, we are increasing our half position in SBGL to a full Buy.
Alerts
Five of the stocks in the portfolio have reported earnings.
Six of our stocks reported earnings recently.
The shares of this Chinese education company were just initiated at Jefferies with a ‘Buy’ rating.
This bank is involved in several M&A transactions, and its stock appears to be heavily discounted.
Declining markets tend to bring on attacks by short-selling specialists, and today that’s what has happened to GDS Holdings (GDS)
Two of our stocks reported earnings last night.
Three analysts have raised their EPS forecast for this global telecom in the past 30 days.
Growth stocks imploded again today as buyers were nowhere to be found. Our Cabot Tides are now on the fence, as the recent selling has driven small caps, mid caps and the Nasdaq to, or slightly below, their 50-day lines. Following up our sale from this morning, we are also selling one other position and moving a few to Hold.
One of our positions fell nearly 7% after reporting earnings Friday, and the stock started today with further losses. With the lack of support, it means more downside is the most likely near-term scenario here and it’s time to sell.
The market fell sharply on Friday on no particular news, with growth stocks again taking the hardest hits. Our trend-following market timing indicators are still positive, and that is a good reason not to get overly pessimistic. We are selling one of our positions though, which dropped after earnings on Friday.
A name change and a stock upgrade to ‘Overweight’ at Barclays, and a $0.28 earnings beat are all giving this turnaround stock a boost.
This poultry producer just posted its second quarter results. Its net income was $1.58 per share and revenue came in at $815.9 million.
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.