Current Market Outlook


We have a few main thoughts when it comes to the market. First, of course, the intermediate-term trend remains up, and most stocks are acting well, thus we continue to advise a bullish stance. Second, though, divergent action is still in evidence, with small caps and growth stocks racing up the charts, while many sectors and indexes (the NYSE Composite is down 1% this year!) are stuck in the mud. And third, we’ve seen a bit of froth emerge, with some IPOs and other growth names going vertical, whether it’s on news or not. Like we said, we remain bullish—it’s hard not to be when the leading indexes (Nasdaq, S&P 600 SmallCap) and stocks are acting well. That said, given some of the froth we see out there, be sure to keep your feet on the ground, looking for decent entry points and taking some partial profits on the way up.

This week’s list is chock-full of rapidly growing companies with super-strong charts. Our Top Pick is Nutanix (NTNX), which blasted off in March and, after months of up-and-down action, looks to be resuming its uptrend here.

Stock Name	Price	Buy Range	Loss Limit
Canada Goose Holdings (GOOS)	46.21	60-64	53-56
Dropbox (DBX)	31.80	39-41	33-34
Etsy (ETSY)	112.97	40-43	35-36.5
Exact Sciences (EXAS)	116.91	65-69	58-61
HealthEquity, Inc. (HQY)	70.70	77-80	70-72
HubSpot (HUBS)	582.89	135-140	123-126
Inogen (INGN)	210.84	182-189	165-170
Nutanix (NTNX)	55.91	61-64	54.5-56.5
RH Inc. (RH)	252.93	148-156	123-130
Twilio (TWLO)	183.39	57-60	50-52

The market continues its good news/bad news behavior, with emerging market stocks as a whole not doing well but Chinese stocks performing strongly. So, while we don’t have a formal Buy signal, we’re taking advantage of Chinese strength to inch a little deeper into the market. Today’s featured stock is another old friend that we’ve made money on before that has broken out of a nice consolidation pattern.

We have a great variety of sectors and companies for your review this month, beginning with our Spotlight Stock, a Real Estate Investment Trust, paying a high yield, that operates in non-urban locales—a pretty rare find, indeed—as most REITs concentrate their holdings in large cities.

Today I’m leaning back toward the low-risk end of the spectrum with a recommendation of a stock that is a potential takeover candidate; I think you’ll like the story.

Current Market Outlook


The major indexes and (to a greater extent) leading stocks hit a pothole late last week, but while we see smatterings of abnormal action here and there, the vast majority of stocks are simply undergoing normal rests after what’s been a solid five weeks. Of course, this week has plenty of events on the schedule, including the Singapore Summit Tuesday and the Fed’s likely interest rate hike (and accompanying statement) on Wednesday, both of which could result in some news-driven moves. But we’re just going with the evidence today; the trends of the market and most stocks are up, so we advise sticking with a bullish stance.

As for this week’s list, it’s interesting in that we see a handful of turnaround-type plays that were left for dead until a few weeks ago. A good example is our Top Pick this week: Twitter (TWTR), which just emerged from its first proper launching pad since coming public.

Stock Name	Price	Buy Range	Loss Limit
Advanced Micro Devices (AMD)	82.24	14.2-15.5	12.5-13.2
Coupa Software (COUP)	262.20	57-60	51-53
G-III Apparel (GIII)	45.25	45.5-48.5	41.5-43.5
Kohl’s (KSS)	70.62	74-77.5	67-69.5
Momo Inc. (MOMO)	44.65	49-52	43-45
MongoDB (MDB)	156.56	49-52	43.5-46
Peabody Energy Corporation (BTU)	43.32	44.5-46	40.5-41.5
PTC Therapeutics (PTCT)	0.00	35-37.5	31-32.5
Twitter (TWTR)	40.37	39-41	35.5-36.5
Williams-Sonoma (WSM)	64.96	59-61.5	54.5-56

Wide swaths of the market are still in no man’s land, including a handful of major indexes. But the growth areas of the market are looking great, with individual stocks, the Nasdaq and small-cap indexes hitting new highs.

Bottom line, while the picture isn’t perfect, there’s no question the evidence has improved enough to continue extending our line. In the Model Portfolio, we’re adding one familiar name tonight, bringing our cash position down to 20%, and are looking at more potential buys in the days ahead.

In addition to reviewing all our stocks, in tonight’s issue we also talk a bit about surviving shakeouts, something that has been (and will likely continue to) be key as the bull market progresses.

After a brief shakeout last Monday, supposedly on fears that Italy would leave the EU, the market reversed course and has been pushing higher and higher since, supposedly cheering on the continued strong performance of the U.S. economy.

I’m enjoying the ride, and I assume you are, too. But I must remind you that good news is prevalent at market tops, while bad news is what you wallow in at market bottoms. So keep your eyes on the exits—while continuing to hold the best stocks as long as the market supports them.

The introduction features a few international trade issues, including disputes about international court systems within NAFTA and CETA, and a potential sunset clause in NAFTA. I’d go on to itemize which steel companies might benefit or be harmed by the latest round of steel tariffs, but I frankly believe that last week’s newest steel tariffs are simply a temporary negotiating ploy pertaining to NAFTA. Therefore, I thought it might be more useful to discuss what’s currently happening with NAFTA negotiations.

What a difference a month can make! What an April! The S&P rose 9.6% in April, 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 some skirmishes. While there is still headline risk, investors have moved beyond this war and are focusing on earnings. And for good reasons.

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 top five holdings of this 3-star-rated fund are Credit Suisse Group AG (CSGKF, 4.72% of assets); CNH Industrial NV (CNHI, 4.71%); Lloyds Banking Group PLC (LLDTF.L, 4.68%); Allianz SE (ALIZF.DE, 4.50%) and Bank of America Corporation (BAC, 4.44%).

This is just a quick note to let you know that LATAM Airlines Group has changed its trading symbol. The old symbol was LFL. The new one is LTM.

This medical tech company beat analysts’ earnings estimates by $0.22 last quarter. The company is expected to grow at double-digit rates for the next five years.

Here’s a comprehensive analysis of one of our holding’s Q1 earnings and some very interesting commentary from management regarding something I speculated about back in mid-January.

The top five holdings of this fund are Amazon.com Inc (AMZN, 2.96% of assets); Alphabet Inc C (GOOG, 2.31%); Tesla Inc (TSLA, 1.89%); SM Investments Corp (SVTMF, 1.63%) and Roper Technologies Inc (ROP, 1.49%).

One of our stocks reported Q1 results this morning that came in better than expected. Even though the stock ran up 20% in the week leading up to the earnings report, shares blew through their prior all-time high following the report. Shares are trading between 10% and 15% higher at mid-day today, which pegs our current gain at 30% to 35%.

We have non-urgent news and price action today: a few trading ideas, and a possible new CEO.

Taiwan Semiconductor (TSM) reached its Minimum Sell Price of 35.69 today. First-quarter sales and earnings were strong, which sent the stock higher. Now is a good time to take profits.

This company, helmed by legendary investor Warren Buffett, is a conglomerate that owns and invests in dozens of other businesses.

One of our stocks reported results on Thursday and investors didn’t care for the results.

Here are earnings updates on three of our stocks, including a rating change, plus minor updates on three others.

A recent Reuters survey of 24 brokerage companies showed strong support for the shares of this medical products company, with 79% of analysts giving it a ‘Buy’ rating, and 21% rated the shares a ‘hold.’

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.