Big data is big and growing bigger. The market is forecast to reach $103 billion by 2022, with every person generating 1.7 megabytes of data every second, with internet users as a whole expected to generate some 2.5 quintillion bytes of data each day.

The major indexes continue to hit new highs, all Cabot’s market timing indicators remain positive, and our portfolio is solid, overall, with the exception of Designer Brands (DBI), which reported third-quarter earnings this morning; more on that in the update section.



As for today’s new recommendation, it’s a brand new business with a familiar name—a high-risk/high-potential investment. It’s not for everyone, and it will be volatile. But it could change the world!



Details in the issue.

Current Market Outlook


The market hit a little turbulence early last week on renewed trade worries but bounced back nicely, with the major indexes finishing flat (S&P 500 and Nasdaq) to up (small- and mid-cap) on the week. Short-term, though, we wouldn’t be surprised to see some further ups and downs as the market and many stocks/sectors consolidate their two-month runs; we still favor buying pullbacks rather than breakouts at this time. The good news is that we continue to think current pullbacks and consolidations are leading to some good-looking entry points in a variety of leading stocks. All in all, we remain bullish, though it’s still best to be a bit choosier on the buy side at the moment, while giving some stocks that you own breathing room to consolidate if they’ve enjoyed a good run.

This week’s list has many leaders that are retreating toward support or are otherwise showing solid setups. Our Top Pick is Seattle Genetics (SGEN), which looks like a leader in the biotech field, and the stock is now pulling back for the first time after a big run.

Stock Name	Price	Buy Range	Loss Limit
Amedisys (AMED)	174.06	161-164	146-148
The Walt Disney Company (DIS)	144.76	144-147	136-138
DocuSign (DOCU)	107.98	72-75	64-66
GSX Techedu (GSX)	97.59	18-19	15.5-16
Incyte Corporation (INCY)	76.98	92-95	84-86
Qorvo (QRVO)	129.47	105-109	94-96
Seattle Genetics (SGEN)	150.85	112-115	103-105
Splunk (SPLK)	207.67	145-150	132-135
TransDigm (TDG)	599.41	550-565	515-525
Tesla, Inc. (TSLA)	818.87	333-353	303-308

This month’s Issue of Cabot Small-Cap Confidential features a newly public company that’s trying to do what seems impossible – make the healthcare system work better.

It’s essentially a big data software company for this highly complex market. But it has a services and consulting segment too that’s central to the growth story because so many clients need help getting organized before they can even implement a software system.

Revenue growth tops 30%. And the story remains relatively unknown. All the details are inside the December Issue of Cabot Small-Cap Confidential.

The market has finally begun to consolidate after a heady eight-week run in the major indexes and leading stocks. It’s never fun to see things retrench, and we do think the next couple of weeks (very roughly speaking) could see more choppy, tedious trading. But our focus remains on the intermediate- and longer-term picture, and on that front, the evidence remains bullish, so we remain heavily invested.



The Model Portfolio has been steadily putting money to work, including filling out two positions last week. We now have eight stocks and a cash position of around 14%.



In tonight’s issue, we give our latest thoughts on all our positions and write about yet another unique, longer-term bullish occurrence that bodes well going forward.

As US trade disputes spread to Latin America, Europe and a China deal may be pushed into 2020, markets struggled early in the week but rebounded yesterday.

Hong Kong retail sales were hammered in October but China’s manufacturing finally turned upward. Our emerging market signal is positive with EEM trading just above its 50-day moving average.



We will continue to diversify the portfolio and today rise above worldly concerns with a new recommendation that just may capture your imagination and make you money in 2020.

Download the new report Cabot’s 10 Best Stocks to Buy and Hold for 2020 (subscribers only)


A stock joins the Buy Low Opportunities Portfolio today and another one rejoins the Growth Portfolio. Additionally, we say goodbye toone stock, which continues to have a slightly-improving price chart, but the 2020 earnings growth prospects are too dismal to remain in the Growth Portfolio.

Open today’s issue to read additional features and changes with three more stocks.

Heading into the last month of the year, the prospects for the market remain very good, with a plethora of technical indicators telling us the market will be higher in the years ahead, and thus I continue to recommend that you be heavily invested.

Forget tariffs, forget trade negotiations, forget politics, and forget all the “problems” of the outside world. Just hold a portfolio of carefully selected high-potential stocks, and all will be well.

Today’s recommendation is a fast-growing company that’s a major participant in the 5G communications revolution.

Details in the issue.

This week’s pick has one of our favorite growth stories in the market.

While our focus is on long-term business fundamentals and underlying valuations, even we can be tempted to briefly set this aside for shorter-term bargains. And this time of year these bargains can appear, driven by artificial selling pressure.

In this issue, we look at six stocks that are promising candidates for a bounce.

Price targets are standard practice on Wall Street. But sometimes, they can act as an artificial ceiling.

For example, say Truist sets a price target on an up-and-coming growth stock that’s 25% higher than its current share price. For a growth stock, a 25% return isn’t much. But then again, the stock could be a total flop, which is the natural boom-or-bust tradeoff growth investors must endure in trading off increased risk for massive upside. So, a price target on a growth stock seems almost like an unnecessary cap on a stock that has the potential to go through the roof.

WHAT TO DO NOW: Continue to trim your sails. In the Model Portfolio, we’ve been getting closer and closer to shore as growth funds and indexes are under pressure and AI stocks cascade lower. Tonight we’re going to further trim Marvell (MRVL) given its ugly action, selling a third of what we have left. That will leave the portfolio with a big 58% cash position. We could put some of that to work if growth names find support, but we want to see key growth measures firm up before buying.

After a brief pause last week, small caps are once again leading the pack.

Through Wednesday’s close, the S&P 600 Small Cap Index is up roughly 21% year to date, compared to gains of about 15% for the S&P 400 MidCap Index, 17% for the Nasdaq and 11% for the S&P 500.

Its earnings season again! That’s a good thing. Earnings just might save the day in an otherwise confusing and uncertain market.

The market is causing whiplash. The Iran peace deal changed things. Stocks held back by high oil prices, and the resulting higher inflation and interest rates, reignited as oil prices came back down after the peace deal. But hostilities with Iran have resumed.

The peace deal may be on hold again. But stocks are hanging in there so far.

The ceasefire with Iran is over and hostilities have resumed. That sounds like a bigger bummer than it’s been in the market so far. Falling oil prices enabled previously beleaguered stocks to soar higher again as the prognosis for inflation and interest rates simultaneously improved. But that rally is over if oil prices spike higher again.

It’s no surprise that summer often brings lower market volatility levels as Wall Street heads to the Hamptons and participation rates diminish.

Indeed, what we’re seeing right now has all the classic symptoms of a low-participation environment, with investor sentiment being remarkably muted. This can be seen across a number of sentiment indicators for several different markets, most of which are flashing decisively “neutral” signals.

The divide between value and growth stocks is widening, as the Nasdaq is now more than 5% off its highs after peaking in early June while the Vanguard Value Index ETF (VTV) is hovering near its late-June apex and is up 3% in the last month.

That can flip in an instant, of course, as we saw in April and May. But the bottom line is that value stocks have risen 15% year to date, compared to an 11% gain in the Nasdaq and a 9.5% boost in the S&P 500.

After a very strong run from the March lows, the market appears to be going through an uncomfortable but healthy rotation. Many of the biggest winners from the AI and semiconductor trade have come under pressure, while value stocks, equal-weight indexes and other areas that had lagged earlier in the year have held up much better.

Markets are facing more inflation as the Iran mess gets messier. Concerns over high AI capital spending are a cloud over a resilient market. On the bright side for our portfolio, however, International Business Machines (IBM) shares were up 7.4% this week following last week’s 8.9% gain. Sea Limited (SE) shares leapt 9.6% this week and are up about 20% over the past month. MercadoLibre (MELI) shares are up 11.6% over the last two weeks.

I remain bullish on stocks, but I am turning more cautious, winding down leverage, and letting some cash build up in my non-marginable accounts.

The reason is that spooky season lies just around the corner. September and October are typically the weakest months of the year. We also often see weakness in July and August, perhaps as investors get nervous about those looming difficult months.

After a very strong run since the March lows, the market appears to be going through a healthy, albeit somewhat uncomfortable, rotation.

The biggest winners from the AI and semiconductor trade are finally seeing some profit-taking, with Goldman Sachs (GS) noting that momentum stocks recently suffered their worst two-day decline since 2020. UBS (UBS) just said that the momentum factor is down roughly 20% from its June peak, marking the seventh-largest drawdown of the last decade and the fastest decline of that magnitude on record.

The S&P 500 was down in June after rising sharply in April and May. But that doesn’t tell the whole story.

Most stock sectors had a strong month in June. The four best-performing sectors and their returns over the last month include the following: health care (11.2%), financials (8.44%), industrials (6.87%), and utilities (6.64%). Information technology, which drove the S&P higher in April and May, is the worst-performing sector over the last month with a negative 8.75% return.

These two recommendations are Special Situations. The first, is a medical marijuana company, expected to post growth of more than 59% next year.

Four of our stocks reported first quarter earnings.

Apple (AAPL) has a good earnings report and a stock moves from Hold to Strong Buy.

Coverage of the shares of this global payments processor was just initiated by Bernstein with an ‘Outperform’ rating.

The market had another volatile day, with a big dip early but then with buyers showing up in the afternoon. The Model Portfolio has been holding a good-sized cash position recently, and came into this week with a cash position of 44%. And tonight we’re making a couple more moves that will boost our cash position further.

One of the stocks in our portfolio is involved in a merger. I virtually always advise investors to sell upon receiving buyout offers. However, I admit that owning a debt-free oilfield service company in today’s stock market is enticing. I’ll make my recommendation within a few days.

Today’s pick is a leader in recycling systems for the food retail industry in Europe and the U.S.

One of our portfolio stocks reported a huge earnings beat and moves from Strong Buy to Hold.

This cloud software company’s shares have been receiving Wall Street attention for the past couple of months: BTIG Research upgraded the shares to ‘Buy’.

CNBC is reporting that Boeing (BA) is close to announcing that KLX Inc. (KLXI) is agreeing to be acquired.

Yesterday’s $83 run-up in the share price of this stock outpaced analysts’ projected increase in 2018 and 2019 earnings, which resulted from the strong first quarter earnings report.

Wall Street is forecasting annual growth of 19.98% over the next five years for this homebuilder.

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.