The market remains in a correction, and with the intermediate-term trend pointed down, we’re still advising a cautious stance. That said, we do think the pieces are in place for a new advance, from positive longer-term evidence, a big dip in sentiment and bullish action from many leading growth stocks.
In tonight’s issue we review all of our stocks, fine tune our watch list and we also look at the medical sector, which we think could be a leadership area going forward for a few reasons.

Tariff threats for China and Mexico continued to roil the markets this month. But yesterday, we saw a 500+ gain, on the heels of Fed Chairman Powell hinting at a rate reduction. Meanwhile, the economy is holding up well, with auto sales and construction spending rising and employment still strong.

Sentiment has turned a bit more cautious, as you will see in our Market Views, but most advisers think the market is oversold right now. And that’s good news for our pickings!

Within the Growth & Income portfolio, you’ll find a discussion of retail woes. The Buy Low Opportunities Portfolio features a comparison between two of the rare retailers that emerged from first-quarter earnings season unscathed. I was simply focused on retail stores throughout May. Lots of investors own these stocks, and I figured some of you might find the assessment interesting.

The month of May brought a much-needed market correction; will June bring the return of the uptrend? Technically, it’s certainly possible, and fundamentally, too, given that global events probably won’t unfold as negatively as investors now fear.

Current Market Outlook


Sometimes the simplest analysis is the best, and that continues to be the case for the current market—the intermediate-term trend is down for the major indexes and most stocks (we even saw the resilient software sector finally come under pressure today), so until that changes, you should remain cautious, holding a good-sized chunk of cash, limiting new buying and honoring stops. To be fair, there are many signs that the market might be close to a bounce—emotions are beginning to run high, many measures of breadth and sentiment are “oversold” and we still see a fair number of stocks building normal launching pads—but until the buyers actually step up to the plate, those don’t really mean much. (Indeed, today was the Nasdaq’s fifth heavy-volume down day of the past seven sessions.) Our Market Monitor falls to 4 this week.

None of that, though, tells you to stick your head in the sand. This week’s list is again full of solid charts and stories from a variety of sectors. Our Top Pick is Guardant Health (GH), which isn’t tearing up the charts but is in the middle of a nice, tight consolidation.

Stock Name	Price	Buy Range	Loss Limit
Advanced Micro Devices (AMD)	82.24	26.5-28	23.5-24.5
Anaplan (PLAN)	47.52	40-42	35-36.5
Beyond Meat (BYND)	132.87	87-94	72-76
Dynamic Materials (BOOM)	60.21	67.5-71	61-63.5
Guardant Health (GH)	88.34	75-79	65-67.5
Heico (HEI)	134.84	115-119	105-108
Novocure (NVCR)	0.00	50.5-53	45.5-47.5
Paycom Software (PAYC)	0.00	193-198	180-183
Smartsheet (SMAR)	44.12	41-43.5	37-38
Snap Inc. (SNAP)	16.68	11-12	9.6-10.2

While some restaurant chains regularly make adjustments and continue to prosper, others correct their mistakes in time. And some recognize their mistakes too late..

However, several casual dining restaurant chains that have lost their way have turnaround appeal. In this issue, we take a look at five.

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.

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 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

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.

Emerging from a scandal, this energy stock is still somewhat speculative, but two analysts have recently increased their EPS estimates, and most industry specialists expect the dividend to return.

Analysts at Piper Jaffray recently upgraded the stock of this chicken producer to ‘Overweight’.

One of our stocks reported earnings per share that beat analyst estimates. Revenue came in on target, expenses came in below estimates and operating income came in much higher than expected.

This medical device maker beat earnings estimates by $0.27 last quarter, and fourteen analysts have increased their EPS forecasts for the company in the past 30 days.

Three of our stocks reported fourth-quarter 2017 results this morning.

We sold half our WYNN shares in August for a 36% gain, and have an unrealized profit of 76% on our remaining position. I’m going to sell another half of our shares today, to protect some of our remaining profit.

This international wellness company beat analysts’ estimates by $0.14 last quarter.

Lots of uncertainty around marijuana, but the profit potential looks very attractive. Investors unsure of individual stocks may want to take a look at this ETF.

This auto seat supplier just formed a joint venture with Boeing to make airplane seats.

It remains a strong bull market, but below the surface, there are many crosscurrents, as some stocks run into trouble and others pile on big gains.

Updates on several of our stocks and one rating change.

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.