Current Market Outlook


The overall market remains in good shape, with the major indexes and most leading stocks in uptrends. That said, today was a very bad day for growth stocks, as big investors hit the sell button almost from the get-go, leaving most of this year’s winners down sharply. Given the monstrous runs in many of these names and (in some cases) some recent stalling out action, we do take this as a yellow flag—however, to be fair, few have broken any key support and most non-growth issues look completely fine. Bottom line, if you have some good-sized profits and positions, we’re OK booking a couple of partial profits and honoring stops and loss limits going forward. On the buy side, we continue lean toward “fresher” titles, including many steadier growers that have come into favor.
This week’s list has a bunch of names that, until recently, have been marking time, but now look to have begun steady uptrends. Our Top Pick is Teradyne (TER), which leapt out of a huge base on earnings last week.

Stock Name	Price	Buy Range	Loss Limit
Chipotle Mexican Grill (CMG)	773.32	780-805	710-720
Etsy (ETSY)	112.97	67-69.5	59-61
Kirkland Lake Gold (KL)	51.30	43-46	38.5-40
Lithia Motors Inc. (LAD)	146.30	129-132	118-120
Meritage Homes (MTH)	102.20	60.5-63.5	54.5-56.5
New Oriental Education (EDU)	113.97	102-106	91-93.5
Sherwin-Williams (SHW)	526.09	490-505	455-460
Snap Inc. (SNAP)	16.68	16.8-18	14-15
Teradyne (TER)	82.83	55-58	48.5-50.5
TransUnion (TRU)	83.09	79-82	72-73.5

The cannabis sector remains in a correction, with both marijuana and CBD stocks trending lower, giving up some of their early-year gains—and perhaps building a bottom here.

In the meantime, more and more peripheral companies are getting in on the action, and we have been increasing our exposure to these in recent weeks while still holding substantial cash.

This week we’re selling one more of the pure-play marijuana companies, raising the portfolio’s cash level to about 27%.

Full details in the issue.

Our emerging market signal stays in positive territory. With our new global mandate in place, we move beyond emerging markets to a European quality play on technology. We also explore what the new Fortune Global 500 rankings can tell us about the changing landscape of investment opportunities.

The broad market remains in fine health, with the major indexes trending higher and sentiment measures still bullish. Thus I continue to recommend that you be heavily invested in a diversified portfolio of stocks that fit your investment needs.

Today’s recommendation is a well-known name on the consumer side, the biggest airline on the west coast. And, interestingly enough, it will be replacing our current airline stock, which is now being sold for a decent profit after less than four months.

Beyond that, there’s only one change to the portfolio today. Last week’s recommendation, which was bought at an unfortunately high point, will now be downgraded to Hold. Details in the issue.

Current Market Outlook


Bigger picture, nothing has changed with the market’s stance—the intermediate- and longer-term trends of the major indexes and most leading stocks look solid, sentiment (while heating up a bit) isn’t stretched and many background measures (like our 7.5% Rule) bode well for the months ahead. Short-term, though, things continue to look tricky, as earnings season combined with all the news/rumors out there surrounding the Fed, trade negotiations and even Iran is leading to daily wiggles and a ton of under-the-surface rotation. As we’ve been writing for a while, you shouldn’t get caught up in the day-to-day gyrations, but taking partial profits when offered and being choosy on the buy side (keeping positions small ahead of earnings, looking for good setups near support) makes sense as the myriad crosscurrents continue.

Reflecting the environment, this week’s list produced much more diverse than in recent weeks. Our Top Pick is ASML Inc. (ASML), a chip equipment maker that just broke out on earnings from a year-long base.

Stock Name	Price	Buy Range	Loss Limit
Ally Financial (ALLY)	30.44	32-33.5	29-30
Arrowhead Pharmaceuticals (ARWR)	32.16	28-30	24-25
ASML Holding (ASML)	350.01	222-229	200-204
CrowdStrike (CRWD)	105.02	84-88	70-72.5
EPAM Systems (EPAM)	188.24	190-195	173-175
Generac Holdings (GNRC)	86.60	69.5-72	63-64.5
Lululemon Athletica (LULU)	304.69	185-190	172-174
Match (MTCH)	0.00	75-78	67.5-69
Proofpoint (PFPT)	113.79	122-127	112-114
Wheaton Precious Metals (WPM)	34.43	26-27.5	23-23.5

In tonight’s letter, we share a couple of ideas for those of you that don’t like to hold all your stocks though earnings; we review a couple of new names that are on our watch list (ESTC is one we’re very intrigued by) and go over all our current Model Portfolio stocks as many are set to report earnings during the next two weeks.

The broad market remains in fine health, with all major indexes trending higher and sentiment measures still bullish. Thus I continue to recommend that you be heavily invested in a diversified portfolio of stocks that fit your investment needs.

Today’s recommendation is a leader in its field, with great long-term growth prospects—as well as dependable recurring revenue—as the U.S. transitions away from fossil fuels to renewable energy sources.

As for the current portfolio, most of our stocks are doing great, but we’ve got to sell one, and it’s a tough choice. Details inside.

Current Market Outlook


The most bullish thing the stock market can do is go up, so by that measure, the market looks pretty bullish right here—most major indexes, advance-decline lines and a bunch of leading stocks have hit new highs in recent days, keeping the major trends pointed up. Short-term, things are a bit too quiet, so some wobbles wouldn’t shock us, but the next two or three weeks will likely see stocks being pushed and pulled by earnings season, which is getting underway now. All in all, our advice remains the same: Hold your strong stocks (though booking partial profits on the way up makes sense) and remain mostly invested, but for new buying, focus on stocks that have shown strong recent accumulation and look for decent entry points, especially if the firm is reporting earnings soon.

This week’s list has a bevy of potential leaders, including a few names that are trying to emerge from multi-month rest periods. Our Top Pick is Elastic (ESTC), an IPO from last year that’s racing up the right-hand side of a four-month consolidation. Start small and look for dips.

Stock Name	Price	Buy Range	Loss Limit
Beyond Meat (BYND)	132.87	155-162	124-129
Blackstone Group (BX)	49.12	43.5-46	40-41.5
Boston Beer Company (SAM)	459.16	370-380	340-346
Carvana (CVNA)	82.90	63-67	55.5-56.5
Cornerstone OnDemand (CSOD)	51.01	60-62	55.5-56.5
Dexcom (DXCM)	421.36	147.5-152.5	134-137
Elastic (ESTC)	86.17	90-93	81-83
Haemonetics (HAE)	136.59	117-121	107.5-109.5
Sarepta Therapeutics (SRPT)	120.93	149-154	134-137
Yeti Holdings (YETI)	42.80	30.5-32.5	27-28

The results are in for the month of April. It was fabulous. The S&P rose 9.6%, making it the best single month for the market in six years. It hit an all-time high on Friday.

Sure, the war isn’t over. But the market doesn’t really seem to regard it as a war anymore, more like a blockade situation with the possibility of minor skirmishes. While there is still headline risk, investors have moved beyond this war and are focusing on earnings.

Now before you call me crazy concerning today’s newsletter headline, hear me out.

Even though large-cap names have garnered more than a fair share of attention among investors this year, I think a case can be made that companies with big capitalizations have a lot more room to run higher before they can be truly regarded as “overbought” or “played out.”

The market is digesting the push and pull of higher oil prices, a deeply divided Federal Reserve, prospects for a prolonged blockade of the Strait of Hormuz and fading momentum from the AI trade that helped push markets to all‑time highs earlier this month.

Despite the crosscurrents, the overall tone still tilts bullish, supported by investor comfort (for the time being) with the geopolitical tension, resilience in the U.S. economy, and improving visibility into earnings growth over the coming quarters.

Yesterday, four tech giants, Alphabet, Amazon, Meta and Microsoft, representing 22% of the S&P 500’s market value, reported strong quarterly earnings that highlighted the importance of AI.

You might think the above companies and their AI brethren are “asset light” companies but you would be very wrong.

It’s been a glorious April following a miserable March for the market. What happens in May may determine which direction stocks are headed for the rest of the year.

That’s probably overstating things a bit, but May should be crucial for the reasons we discussed last week: namely, the fate of the Iran war, but also the bulk of first-quarter earnings season and the introduction of a new Fed chair.

What war? This market is moving on. We may not be out of the woods yet, but investors are looking beyond the Iran war.

Stocks have already made up all losses from a rough March and then some. The S&P 500 had fallen 7.7% in the month of March by the 30^th. Since then, the index has rallied over 13%. The S&P is now at a higher level than before the war began and is hitting new all-time highs.

The other day I was paid a visit by a roving ISP salesman who was pitching his company’s fledgling internet service over the local monopoly’s. We struck up a conversation and he asked what I did for a living. When I told him, his eyes lit up and he asked, “Got any good stocks you can recommend?”

Without thinking I blurted out, “Anything AI-related. You can’t go wrong.” The advice was only semi-facetious, for there’s undeniably a degree of truth behind it. My instinctive response to that question also prompted me to consider the question: just how long can the broad market continue its “all things AI” run without broader sector participation

Note: I’m out of town this week, so I’ll be a bit briefer on the update today—but I’m still checking my laptop a couple of times a day if you have any questions or comments. I’ll be back at my desk come Monday. Cheers.

WHAT TO DO NOW: Remain optimistic. The market and some leaders have hesitated, but all of our market timing indicators are bullish, and most stocks we own or are watching are working. Last Friday, we bought a half-sized stake in Nebius (NBIS) and added a 3% additional stake in ProShares S&P 500 Fund (SSO); earlier this week, we sold our small remaining position in GE Aerospace (GE); and tonight, we’ll buy a half-sized position (5% of the portfolio ) in Cava (CAVA). We’ll still have 46% in cash or so after these moves.

Despite all the headline noise lately we’re marching deeper into first‑quarter earnings season with the market’s path of least resistance still pointing higher.

Optimism around the extension of the tentative ceasefire in the Middle East has reduced geopolitical anxiety to a seemingly manageable level. The U.S. economy continues to show resilience, and the corporate earnings outlook points toward meaningful growth in the coming quarters and years.

The old saying, “History doesn’t repeat itself, but it rhymes,” is an apt one for the stock market these last two years.

In early 2025, the S&P 500 raced to new all-time highs before peaking in late January/early February, only to get dragged down in March and April by a geopolitical crisis (tariffs/Liberation Day), before rallying in a V-shaped pattern as the severity of the crisis abated.

The market turned on the afterburners. The S&P 500 made up all the March losses and catapulted to a brand new high in a remarkably short time. It’s a market that sure looks like it wants to go higher. But stocks are being held back this week by more war uncertainty.

The current ceasefire with Iran expires on Wenesday night. Talks may not happen, and war talk is growing. The resumption of the war will almost certainly prompt a decline in the market. Aside from that near-term threat, investors are clearly looking past this war. Hopefully, it won’t last much longer.

The market came roaring back to new highs last week after a tough March. But the war isn’t over yet, and there could be more bouncing around in the weeks ahead.

Investors are clearly already looking past this war, as there is a high degree of optimism that hostilities will soon end. There is probably still a big rally or two left in the tank when the war actually ends. Sure, there is still headline risk in the meantime. But the war is clearly fading as the biggest market catalyst and giving way to earnings.

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

Aerospace and oilfield service supply company KLX Inc. (KLXI) reported a strong fourth-quarter 2018 earnings beat this week (January year-end). Non-GAAP earnings per share (EPS) were $1.00 vs. the expected $0.88.

This homebuilder beat earnings estimates by $0.03 last quarter, and forecasts for the next five years are for more than 26% annual growth.

The Chinese biotech market is heating up and the stock of this company is rapidly gaining momentum.

Following what seemed to be a perfectly successful quarterly report on Monday evening, YY opened up today but then plowed steadily lower all morning. The stock found support at 117, and rebounded slightly finishing the day near 120.

Stifel Nicolaus has recently upgraded this chemical company’s shares to ‘Buy’, and nine analysts have raised their earnings estimates for the company in the past 30 days.

The Boards of Directors of AXA and XL Group (XL) have unanimously agreed that AXA will purchase property & casualty insurer and reinsurer XL Group for $57.60 cash per share, a 33% premium to the March 2 closing price and a 59% premium to the XL share price when it joined the Buy Low Opportunities Portfolio on December 6, 2016.

Despite less-than-stellar media reports. analysts still expect this investment bank to post double-digit growth.

The selloff has put a fork in our brief Cabot Tides buy signal from earlier this week, telling us the correction that began in late January isn’t over. The recent bout of weakness isn’t totally surprising given the market’s V-shaped recovery.

This fund two times the inverse (-2x) of the daily performance of silver bullion as measured by the London Silver Price.

This restaurant operator reported record results for 2017: 32.6% sales growth and EBITDA increase of 42.7%. The company also declared a special dividend of $0.04 per share, payable on March 12, 2018, to shareholders of record on February 27, 2018.

Updates on two of our stocks that reported earnings this week.

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 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.