We’ve had an up and down week for emerging markets with a big day yesterday followed by weakness today. Our EEM signal stays positive so we are adding a half position today and moving one stock from buy to hold.

With today’s recommendation, I leave the U.S. to return to the fast-growing giant that China has become, with a company that will join Tesla in the fast-growing electric car industry. It’s a low-priced stock, so it’s not for everyone, but it does have enormous growth potential.

Current Market Outlook


The overall action from the major indexes and leading stocks remains about as good as you could hope for considering we’re two months off a major bottom—we’re nudging up our Market Monitor another notch (to 8) in this issue to respect the continued improvement in the overall evidence. That said, after a strong eight-week run, we’re starting to see a bit of greed set in, as well as a bit of rotation, with some left-behind areas (like energy and regional banks) perking up. To be clear, such action is not negative—if anything, it’s probably a good thing—but it could lead to some ups and downs among individual stocks and sectors, especially those that have had good runs. Overall, though, you should continue to put money to work as opportunities arise.
This week’s list is still heavy on growth, though with a couple of new areas popping up, too. Our Top Pick is Chart Industries (GTLS), a little-known name that looks like a great way to play the booming LNG infrastructure area.

Stock Name	Price	Buy Range	Loss Limit
Chart Industries (GTLS)	72.05	83-87	72-75
Chegg (CHGG)	74.21	36-38	33-34
CyberArk (CYBR)	111.74	96-101	85.5-88
Guardant Health (GH)	88.34	47-50	41.5-43.5
Incyte Corporation (INCY)	76.98	81-84	74-76
iRobot (IRBT)	103.17	114-120	101-104
Netflix, Inc. (NFLX)	423.92	340-355	320-330
Okta, Inc. (OKTA)	148.41	81-84.5	72-74
Trade Desk (TTD)	468.02	152-160	135-140
TransDigm (TDG)	599.41	420-435	385-395

The market remains in good shape, generally shrugging off a stream of bad news by marching higher. Pullbacks are certainly possible, but most investors are positioned cautiously, which is another arrow in the bulls’ quiver when looking down the road.
In tonight’s issue, we’re putting another chunk of money to work by adding two half-sized positions (one in a stock we already own). That will leave us with 25% in cash.
Elsewhere in the issue, we write about a couple of additional positive longer-term signs for the market (one based on money flows, one based on the market itself), look at some new ideas and review all of our Model Portfolio holdings.

The market contributed to the bullish mien of the show, with the Dow Jones Industrial Average kicking in an 8.5% gain since our last issue. The economy also did its part; rates are stable right now, and the job market continues to improve. There is currently, on average, less than one potential employee for every job opening in our country.

Our contributors continue to be bullish, although with a cautious stance, as you’ll see reflected in our Advisor Sentiment Barometer and Market Views.

Market trends remain quite positive, and I continue to recommend that you work to get more invested. According to our market timing indicators, the odds are still very good that months from now, the market will be higher.
With today’s recommendation, I jump back on the growth track, with a stock that we sold for a 61% profit last year. The company has one of Mike Cintolo’s favorite growth stories, and if you owned it then, maybe you’d like to own it again, too.
As for the current portfolio, overall, we’re making great progress as the bull market pulls our stocks along; four are hitting new highs! But not all stocks are participating, and now it’s time to sell one. Details inside.

Current Market Outlook


Most major indexes have finally taken a bit of a breather during the past few trading days, with the 200-day moving average providing a bit of logical resistance. So far, the damage has been very limited and, in fact, many leading growth stocks actually hit new highs today. Without predicting any specific path, the big prior run, overhead resistance and still-iffy longer-term trend probably means more choppiness and potholes are on the way, especially as earnings season continues. But the overall evidence (which, by the way, includes a lack of meaningful pullbacks so far) continues to impress. We still think the next big move from here is up, but be sure to pick your spots (and your stocks) on the buy side, and practice patience with your strongest performers, giving them a chance to continue advancing.

This week’s list sports a bunch of recent earnings winners from a variety of industries. Our Top Pick is Array Biopharma (ARRY), which has shown fantastic accumulation pre- and post-earnings as it lifted to all-time highs.

Stock Name	Price	Buy Range	Loss Limit
Array Biopharma (ARRY)	46.35	20-21.5	17.5-18.5
Chipotle Mexican Grill (CMG)	773.32	575-605	530-540
Columbia Sportswear (COLM)	102.15	103.5-107.5	95-97
Glaukos Corp. (GKOS)	67.84	65.5-68	59-61
Kirkland Lake Gold (KL)	51.30	30-32	27-28.5
LPL Financial Holdings (LPLA)	85.22	74.5-77	67.5-69.5
Palo Alto Networks (PANW)	236.92	213-220	193-199
Paycom Software (PAYC)	0.00	163-170	146-151
Spirit AeroSystems (SPR)	92.54	90-93	83.5-85
Zendesk (ZEN)	82.19	73.5-77	65-67

With war being one of the most dominant themes of the last four years, it stands to reason that investors should position their portfolios to account for this conspicuous (and unwelcome) trend.

And lest one be tempted to think that the warfare theme will diminish anytime soon, last week’s article by NPR deflates that illusion: It revealed that global military conflicts are at their highest level since WWII.

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.

Today brought a wave of selling that took the major market indexes (and most of the stock in our portfolio) down a peg or two. Despite the selloff, most of our stocks remain in their recent trading ranges and look like they will do just fine unless the market takes another leap off the end of the dock tomorrow.

The market and especially leading growth stocks were trounced today. In response, we’re selling half our shares in two stocks.

Shares of one of our stocks have been under pressure since Friday due to a short attack from a Seeking Alpha author. His article was published this morning, but I suspect a group of investors knew about it on Friday and got the action going early.

This tech stock’s relative strength was just upgraded by IBD. The company beat analysts’ EPS estimates by $0.04 in its latest quarter.

This healthcare stock beat analysts’ estimates by six cents last quarter, and analysts are forecasting double-digit growth for the company for the next five years.

Trade suggestion for Chevron (CVX) shareholders, and additional news and price changes on six other stocks.

This solar company was just upgraded to ‘Buy’ by Cabot and by Deutsche Bank, and Deutsche raised its price target for the stock to $65 per share (from $50).

This energy company’s shares just crossed above their 50-day moving average, a bullish sign.

Here’s the update on one of our stocks. The company’s earnings outlook changed after I recommended it.

This tech company issued a great quarterly earnings report and the stock price has edged up. Watch for brief dips before buying.

Here is a special update on two of our stocks.

Our first idea is a semiconductor company that beat analysts’ earnings by $0.15 last quarter.

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.