Issues
Current Market OutlookThe lagging action of the broad market finally caught up with the major indexes last Friday, with everything taking a big hit and, more important, small- and mid-cap indexes falling below their 50-day lines. Right now, most of the evidence remains positive, so we remain mostly bullish. But it’s fair to say our antennae are up and the next few days will be important—the intermediate-term trend is basically on the fence (another bad day could turn it down) and many leading stocks have been running for many weeks and are extended to the upside. Bottom line, we’re sticking with our current stance, but be sure to honor your stops and loss limits, take partial profits where available and, on the buy side, be discerning and aim to buy on weakness.
The good news is we’re seeing a decent amount of strong stocks that hit new highs recently and are pulling back normally. This week’s list is full of them, and our Top Pick is iRobot (IRBT), a stock with a solid growth story and a good-looking setup on the chart.
| Stock Name | Price | ||
|---|---|---|---|
| Forescout (FSCT) | 41.92 | ||
| Huazhu Group (HTHT) | 30.89 | ||
| Invitae (NVTA) | 32.06 | ||
| iRobot (IRBT) | 103.17 | ||
| ProPetro (PUMP) | 23.30 | ||
| Shopify (SHOP) | 585.00 | ||
| Sleep Number (SNBR) | 35.80 | ||
| StoneCo (STNE) | 27.54 | ||
| Wheaton Precious Metals (WPM) | 34.43 | ||
| Wix.com (WIX) | 302.53 |
We’ve seen a bit of turbulence in international emerging markets with speculation about trade talks and the perceived slower growth in China and Europe.
Apparently, institutional investors are underweighting Europe so we go against the grain for our new recommendation. This is a great brand that offers a nice combination of high quality, value price of entry, strong growth in emerging markets and a 7.8% dividend yield.
Apparently, institutional investors are underweighting Europe so we go against the grain for our new recommendation. This is a great brand that offers a nice combination of high quality, value price of entry, strong growth in emerging markets and a 7.8% dividend yield.
The market remains in an uptrend, and many of our leading stocks have been hitting new highs, even though the major indexes haven’t—yet. Thus I continue to recommend that you be heavily invested in a diversified portfolio of stocks—growth, value, dividend-paying and more. Someday, it will become appropriate to be more cautious, but that time is not now.
Today’s stock is a young technology stock with great growth prospects as it supplies its customers with the tools needed to secure digital operations of all types and sizes. It’s an aggressive, high-risk investment, but the trend is strongly up.
As for the current portfolio, six of our stocks have hit new highs in recent days, so we’re making great progress. The only changes this week are two downgrades from Buy to Hold. Details inside.
Today’s stock is a young technology stock with great growth prospects as it supplies its customers with the tools needed to secure digital operations of all types and sizes. It’s an aggressive, high-risk investment, but the trend is strongly up.
As for the current portfolio, six of our stocks have hit new highs in recent days, so we’re making great progress. The only changes this week are two downgrades from Buy to Hold. Details inside.
Current Market OutlookThe market’s snapback last week was very encouraging, with the major indexes and most leading stocks leaping back toward (or in some cases, out to) new highs. As we wrote last week, there are a couple of short-term issues to keep an eye on—namely, we saw some non-confirmations, as small- and mid-cap indexes didn’t bounce that much and far fewer stocks hit new highs even as the S&P and Nasdaq did. At this point, that action is more descriptive than predictive; it does raise the odds that the market could throw us another curveball over the next week or two, but it’s not something we’d necessarily trade off of. Big picture, we remain mostly bullish, though for new buying, we still favor entering on weakness.
This week’s list is just about all tech, med tech and biotech, and we’re happy to see some improved setups after the past two to three weeks of action. Our Top Pick is Zendesk (ZEN), which looks like it wants to continue its breakout from a few weeks back.
| Stock Name | Price | ||
|---|---|---|---|
| Amarin (AMRN) | 14.06 | ||
| Cree, Inc. (CREE) | 67.96 | ||
| Exact Sciences (EXAS) | 116.91 | ||
| iQIYI (IQ) | 0.00 | ||
| Paycom Software (PAYC) | 0.00 | ||
| Q2 Holdings (QTWO) | 80.81 | ||
| Ubiquiti Networks (UBNT) | 170.11 | ||
| Ulta Beauty (ULTA) | 331.95 | ||
| Xilinx (XLNX) | 134.50 | ||
| Zendesk (ZEN) | 82.19 |
After a well-deserved pullback during the past two weeks, the strong action this week from most major indexes and leading stocks is a good sign. Short-term, further wobbles are certainly possible after the strong nine-week advance off the market’s major bottom, but big picture, we remain very bullish and heavily invested.
In tonight’s issue, we write about a couple of simple tips for handling some off-the-bottom names in last year’s high-fliers, as well as reviewing our nine stocks and a couple others that look tempting.
In tonight’s issue, we write about a couple of simple tips for handling some off-the-bottom names in last year’s high-fliers, as well as reviewing our nine stocks and a couple others that look tempting.
Happy spring! The Bradford Pear trees and daffodils are beginning to flower here in Tennessee—one of my favorite times of the year!
And this year, with the market continuing to “bloom,” the unemployment rate steady at 3.8%, retail sales rising, and the housing market healthy, it sounds like spring is ushering in a happy period. Both investors and advisors agree, as you’ll see in our bullish barometer and Market Views.
And this year, with the market continuing to “bloom,” the unemployment rate steady at 3.8%, retail sales rising, and the housing market healthy, it sounds like spring is ushering in a happy period. Both investors and advisors agree, as you’ll see in our bullish barometer and Market Views.
The market remains in an uptrend, though the correction that started last week may do a little more damage. If so, try to take advantage of it, remembering that buying low is the goal.
Today’s stock is a name you know—a name all Americans know—and I think it’s a good buy here after correcting 39% last fall. Crista Huff is the Cabot analyst who recommended it most recently, in part on fundamental grounds, and my reading of the chart confirms her conclusion.
As for the current portfolio, we continue to make great progress, but there’s always room for improvement. The only changes this week are two upgrades from Hold to Buy. Details inside.
Today’s stock is a name you know—a name all Americans know—and I think it’s a good buy here after correcting 39% last fall. Crista Huff is the Cabot analyst who recommended it most recently, in part on fundamental grounds, and my reading of the chart confirms her conclusion.
As for the current portfolio, we continue to make great progress, but there’s always room for improvement. The only changes this week are two upgrades from Hold to Buy. Details inside.
Current Market OutlookAfter nine strong up weeks, the past two have seen most of the market hesitate (at first) and then pull back (the S&P 500 fell all five days last week), resulting in a few stocks hitting potholes along the way. In the short-term, we think some further consolidation could easily come, shaking out some weak hands. But bigger picture, the recent action looks normal to us—none of the major indexes and very few leading stocks cracked any meaningful intermediate-term support, and today’s sharp rally is a good sign that buyers are still lurking. Be sure to watch your stops and loss limits, and it’s a good idea to be discerning on the buy side, focusing on strong stocks that have pulled back to solid entry points. Market-wise, though, we remain bullish and are keeping our Market Monitor at a level 7.
This week’s list has stocks from all corners of the market, which we see as an encouraging sign. Our Top Pick is RingCentral (RNG), a leader in a new cloud communications field with a stock that’s acting great.
| Stock Name | Price | ||
|---|---|---|---|
| Carvana (CVNA) | 82.90 | ||
| EPAM Systems (EPAM) | 188.24 | ||
| Keysight Technologies, Inc. (KEYS) | 97.20 | ||
| Lending Tree (TREE) | 411.51 | ||
| Omnicell (OMCL) | 81.03 | ||
| Planet Fitness (PLNT) | 0.00 | ||
| Rapid7 (RPD) | 63.52 | ||
| RingCentral (RNG) | 238.73 | ||
| Sea Limited (SE) | 132.86 | ||
| Tandem Diabetes (TNDM) | 74.77 |
Updates
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.
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.”
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.
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.
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.
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 30th. 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.
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 30th. 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
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.
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.
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.
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 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.
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.
Alerts
Here’s an opportunity to pick up shares of a growing media company at a discount.
This multinational is facing several challenges, but our contributor believes the shares offer potential as its turnaround ensues.
A wave of selling took a bite out of growth stocks today, including every stock in the Cabot China and Emerging Market Investor’s portfolio. I am taking two actions in response to today’s weakness.
This video gaming company continues to lead the sector with innovations to extend game life and increase player engagement.
Three analysts have increased their EPS forecasts for this IoT company in the past 30 days.
The top five holdings of this video game ETF are Glu Mobile Inc (GLUU, 5.52% of assets); Take-Two Interactive Software Inc (TTWO, 5.04%); NEXON Co Ltd (NEXOF, 4.95%); Webzen Inc (069080.KS, 4.87%) and Ubisoft Entertainment (UBSFF.PA, 4.79%).
One of our stocks reported much better-than-expected third-quarter results yesterday afternoon. Investors reacted by pushing the share price up about 8% since the market opened this morning.
One of my top recommendations lost close to 30% on Tuesday after releasing disappointing Q3 earnings results. The quarterly loss was hard to predict because most of the loss was due to unforeseen circumstances.
The big picture is looking better this week. Small caps rode the momentum from the end of last week to a 52-week high yesterday. And early market action today suggests they’ll be able to hold onto those gains.
This jeweler handily beat earnings forecasts, crushing analysts’ estimates by $0.29.
One of our stocks is now rated Sell, simply because it has come so far so fast.
This miner beat analysts’ estimates by $0.05 last quarter and in the last 30 days, 10 analysts have increase their EPS estimates for this year.
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 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.