It has been a busy week in emerging and global markets.

The MSCI Emerging Markets ETF (EEM) remains in a negative position, just below 20-day and 50-day moving averages. Our portfolio has a 35% cash position and maintains 10% allocation to an ETF that moves opposite the EEM.

The main trend remains up, in both the broad market and the cannabis sector in particular, but in the intermediate-term, we are now in a correction, and thus a little more caution is advised.

In fact, in today’s issue, I’m raising cash by selling portions of the portfolio’s two biggest investments, and then buying some more of one of the portfolio’s “safest” investments, if anything in this industry can be called safe.

The world is changing. That’s nothing new. But in terms of technology it’s changing at a faster pace than ever before. There’s a new term you’ve probably seen floating around the news, it’s called 5G. It represents a change so profound that as investors we need to understand it.

Current Market Outlook


Last week was the third straight down week for the major indexes. More importantly to us, all remain clearly below their 50-day moving average. That keeps the intermediate-term trend pointed down, which combined with some soggy action from key groups (oils and chip stocks look like death) is a good reason to remain relatively cautious. Of course, not all is bleak—the longer-term evidence is still positive, and most leading stocks are in decent shape (though many did take on water last week). Overall, then, the song remains the same: We advise holding most of your strong, profitable stocks, but also holding a good-sized chunk of cash and being very choosy on the buy side. The onus remains on the bulls to retake control—until then, step lightly.

This week’s list has another strong group of stocks; a nibble here or there is fine, or simply put your favorites on your watch list. Our Top Pick is Array Biopharma (ARRY), which emerged on big volume last week, and it helps that many biotech names are acting resiliently.

Stock Name	Price	Buy Range	Loss Limit
Array Biopharma (ARRY)	46.35	25-26.5	22.5-24
Ascendis Pharma (ASND)	119.09	123-128	112-115
Copart (CPRT)	74.80	69-71	63.5-64.5
GW Pharmaceuticals (GWPH)	174.52	177-183	162-166
Legg Mason Inc. (LM)	37.44	35-36	31.5-32.5
PulteGroup (PHM)	45.93	31-32	28.5-29.5
RingCentral (RNG)	238.73	116-120	106-108
Sea Limited (SE)	132.86	27.5-29.5	24.5-25.5
Viasat (VSAT)	81.22	90-92	83-84.5
Wix.com (WIX)	302.53	132-136	121-123

Short-term, the market remains under pressure, and this corrective phase could easily go longer (I don’t sense enough pain yet), but long-term, the market’s main trend remains up, so I continue to recommend that you be heavily invested in a diversified portfolio of stocks that are performing well.

Today’s recommendation is a recent IPO, but it’s not Uber or Pinterest or any of the big popular names. I think you’ll like it, but be careful; volatility is to be expected.

As for the portfolio’s current holdings, several are hitting new highs—and none are performing so badly that they deserve to be sold. So this week we’ll stand pat. Details in the issue.

The market correction continues, and we’re now seeing the selling pressures broaden, with many resilient growth stocks beginning to come under pressure. The longer-term evidence remains positive, so this is still an overall bull market, but our intermediate-term Cabot Tides are clearly negative, so we advise being cautious—cutting back on new buying, holding a chunk of cash and keeping losers and laggards on tight leashes.

Short-term, the market remains under pressure, notwithstanding today’s strength, so certain defensive measures remain appropriate. But long-term, the market’s main trend remains up, so I don’t recommend any wholesale changes, just minor fine-tuning.

Today, that involves upgrading one strong stock to buy, while selling two stocks that have weakened in face of growing fears of tariffs on China.

As for today’s new recommendation, it’s a high-risk stock with great long-term potential—if we can just get on board at the right time! Details in the issue.

Current Market Outlook


The market and many growth stocks had a solid three-day rally in the middle of last week, but the intermediate-term trend never turned up and the past couple of days tell us the sellers are still active—all major indexes we track are below their 50-day moving averages, with some (like the S&P 600 SmallCap) dipping to new correction lows. Stepping back, the longer-term trends are still positive, and the relatively resilient trading of many leading stocks is also a plus. But with the intermediate-term trend down and with the market having just enjoyed four months up without any pullback, it’s best to practice some caution—limiting new buying, not letting losses getting away from you and holding some cash makes sense. It wouldn’t take all that much strength to produce a new green light, and when one comes, we’ll adjust. But the evidence remains iffy here, and we think you should respect that.

Encouragingly, for the second straight week, the list is heavy on growth-oriented ideas that have held up pretty well. Our Top Pick, though, is Blackstone (BX), the huge Bull Market stock that’s benefiting from a company-specific change and the overall longer-term uptrend in asset values.

Stock Name	Price	Buy Range	Loss Limit
AAXN (AAXN)	87.11	61.5-64	56-58
Blackstone Group (BX)	49.12	39-40.5	36-37
Insulet (PODD)	175.69	100.5-104	93-95
Lending Tree (TREE)	411.51	375-395	345-355
Mercury Systems Inc. (MRCY)	68.92	70.5-73	64.5-66
Paylocity (PCTY)	97.34	96-99	88-90
SolarEdge Technologies Inc. (SEDG)	124.37	51-53.5	46-48
Twilio (TWLO)	183.39	134-138	122-125
Zoom Communications (ZM)	155.83	82-87	67-70
Zscaler (ZS)	126.22	74-77	66-68

For value-focused investors, this year’s prologue has been a welcome change from the turmoil experienced in early 2025.

In just the past few weeks, some of last year’s most ignored or underappreciated laggards have posted outsized gains, with rallies that have made even momentum-driven tech stock traders envious. Even more remarkable is the fact that much of that strength has been concentrated in ultra-defensive areas of the market like consumer staples, utilities and healthcare.

The market rotation continues to be the main story out there this week, though rumblings of a potential strike on Iran, an update from the January FOMC meeting, and a slew of earnings reports and economic data releases have been giving investors plenty to think about.

In terms of the rotation, the equal‑weight S&P 500 ETF (RSP) is up 5.5% so far this year, illustrating that leadership is broadening beyond the narrow group of mega‑cap stocks that drove much of last year’s performance.

Year to date, the S&P 600 SmallCap Index is up 8.3% and the S&P 400 Mid‑Cap Index is up 7.9%. Both are comfortably outperforming the S&P 500, which is up just 0.1%, and the Nasdaq, which is down 2.1%.

Happy Chinese New Year! The year of the horse is upon us.

China is expecting an incredible 9.5 billion trips to be made during the 40-day Lunar New Year travel period. Chinese automakers are also on the move as the country’s numerous brands sold nearly 200,000 vehicles in Britain last year, doubling their market share to almost 10%.

As U.S. investors have shifted from risk-on to risk-off mode in recent months, a clear disparity between the “haves” and the “have-nots” has materialized.

Let’s start with the “have-nots.” Financials have fared the worst so far this year (-4.7%), followed by technology (-3.1%), communication services and consumer discretionary (-2.8% each). The downturn in the two tech-related sectors in particular is a stark departure from recent years, when technology led the charge of the current bull market.

Cyclical stocks are soaring and technology is floundering in the transformed market.

The bull market is turned upside down. For most of the first three years, technology, and particularly AI stocks, soared while most other stocks did very little. Now, previously meandering stocks are killing it while technology sinks.

Strong fourth-quarter earnings are confirming what the market was already doing.

Current estimates based on earnings reported so far are for 13.2% overall S&P earnings growth for the quarter. It’s a solid quarter and the fifth straight quarter of double-digit earnings growth. In terms of sector performance, cyclical companies are killing it, and technology is floundering, just like before earnings.

Like many coffee aficionados, I have something of a love/hate relationship with Starbucks (SBUX). My main gripe is that the company’s food and beverage offerings have always been pricey compared to the fare served in most fast-food restaurants and run-of-the-mill coffee houses.

The outperformance of small caps continues.

Through Tuesday’s close, the S&P 600 is up 10% year to date versus just 1.6% for the S&P 500.

All but three small-cap sectors are outperforming their large-cap counterpart. The strongest small-cap sectors are materials (+20%), energy (+23%), industrials (+17%), and tech (+11.4%).

Let’s talk about the power of staying invested.

Sure, when the market turns south – and I’m not even sure last week’s mini-dip qualifies – it makes sense to pare back on your weakest stocks and put a larger portion of your portfolio in cash. But taking your ball and going home – selling out of all of your stocks when times are tough – is not a winning strategy. Here’s why.

NOTE: We’re sending this a day early as I’m soon to embark on a trip with the kiddos over the next week. I will be working a good amount from the road, though, and will have updates if need be. Also, next week’s issue will be published as scheduled.

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WHAT TO DO NOW: The market remains very mixed, with growth measures still generally pointed sideways to down, while the broad market remains in solid shape. What’s interesting, though, is that we’re seeing more growth stocks kick into gear, along with some huge buying action in a few “cyclical growth” names. Tonight we’re making one move—adding a half-sized stake in Macom Tech (MTSI)—but are keeping our eyes open for a broader character change among growth stocks. Our cash position will be around 53%.

Today could be a big day for cannabis stocks.

The reason: We may get an important update on the rescheduling timeline.

Cannabis investors will be watching closely today to see whether Attorney General Pam Bondi offers a rescheduling update when she appears before the House Judiciary Committee. Upbeat comments could spark a sharp cannabis sector rally. The hearing starts at 10 a.m. EST.

I’m excited to share a couple of enhancements to Cabot Early Opportunities —improvements designed to sharpen our focus and better help you stay on top of the stocks we own.

The top five holdings of this fund are: Apple Inc (AAPL, 1.59%); Microsoft Corp (MSFT, 1.51%); Amazon.com Inc (AMZN, 1.22%); Facebook Inc A (FB, 0.92%) and JPMorgan Chase & Co (JPM, 0.82%).

One of our stocks reported this morning and results came in just shy of expectations. The bottom line is that the stock is selling off hard and is back down to its 200-day line, and in the zone of support that’s held for the last four months.

Alexion Pharmaceuticals (ALXN) reported positive results in a Phase 3 clinical study of ALXN1210 this morning, for treatment of Paroxysmal Nocturnal Hemoglobinuria (PNH).

We have two funds for you today.

Two of our stocks reported their latest quarterly results yesterday and both disappointed; one is now rated Sell.

Signet Jewelers (SIG) fell dramatically upon news surrounding the fourth-quarter earnings release. The fourth-quarter numbers were not the problem, but there were additional announcements.

The shares were recently upgraded to ‘Buy’ at Gabelli & Co. and 12 analysts have increased their EPS estimates in the past 30 days.

Our first idea, an aerospace and oilfield service supplier handily beat earnings estimates and received a new ‘Buy’ rating.

Our other two recommendations are profit-taking on two previous ideas.

The market’s strength last week and today’s calm action was enough to turn our Cabot Tides back to a positive stance, flipping the intermediate-term trend back to bullish. Given that the Model Portfolio isn’t holding a ton of cash, we’ll start slow with one new addition tonight.

This company of non-physician-owned medical centers just made a strategic agreement with a major hospital chain.

Nine analysts have increased their earnings estimates for this fitness company in the past 30 days.

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.