Issues
Cabot’s intermediate-term market timing indicator has swung back to the positive side, lending a bit of ammunition to the bulls, but a look at the bigger picture reveals that the market remains in the sideways trading pattern that has defined it since the market’s initial selloff at the start of February.
Current Market OutlookAfter the umpteenth test of their February lows and 200-day moving averages, the major indexes have surged over the past couple of days, with many potential leading stocks going along for the ride. Put together, the action is very encouraging and raises the odds that we’ve seen a tradeable bottom. However, despite the uptick, we haven’t yet gotten a green light from our intermediate-term—a good day or two from here could do the trick, but we don’t anticipate signals. Thus, right here, we’re sticking with our current, cautious stance, though we’re keeping our eyes open for definitive signs that a new intermediate-term uptrend has begun.
This week’s list is chock-full of stocks that look like they want to move higher if this rally is the real McCoy. Our Top Pick is Shake Shack (SHAK), which catapulted higher on earnings last week on its heaviest volume ever. Keep positions small and use a loose leash.
| Stock Name | Price | ||
|---|---|---|---|
| Box Inc. (BOX) | 0.00 | ||
| Ecopetrol (EC) | 22.17 | ||
| Interactive Brokers (IBKR) | 0.00 | ||
| Realpage (RP) | 0.00 | ||
| Sarepta Therapeutics (SRPT) | 120.93 | ||
| Shake Shack (SHAK) | 92.08 | ||
| Shutterfly (SFLY) | 94.71 | ||
| Splunk (SPLK) | 207.67 | ||
| Valero Energy (VLO) | 97.40 | ||
| Zendesk (ZEN) | 82.19 |
If you want to invest in the whiskey trend, and a select few food trends, there’s really only one way to do it. That’s to buy shares in the company I’m profiling in this month’s Issue of Cabot Small-Cap Confidential. All the, oaky, spicy, and bold details are inside.
The intermediate-term trend in emerging market stocks remains down, and we continue to advise a substantial degree of caution. At the same time, the fact that the indexes (both emerging markets and domestic) have been able to hold above their February lows means there’s a chance that a renewed advance can begin at any time. But we won’t predict; we’ll just follow the market’s lead, while keeping you apprised of the action in the highest potential emerging markets stocks we can find. Today we add another name to the watch list; it’s an old friend that just hit a new high a couple of days ago.
There’s quite a bit of discussion on stock market trends pertaining to energy stocks, financial stocks and takeover stocks.
Last week I downgraded four stocks to Hold, and this week I recommend selling two—one for a fat profit and one for a quick loss. Still, because I keep adding a new stock every week, that leaves nineteen stocks in the portfolio, and most of them are acting very well!
As to this week’s recommendation, it’s a real wild card, a recent Chinese IPO that has been spun off from one of the big Chinese leaders. Risk-averse investors might want to give it a pass, or at least wait until there’s an established uptrend, but if you can handle the risk, buying down here might work out really well!
As to this week’s recommendation, it’s a real wild card, a recent Chinese IPO that has been spun off from one of the big Chinese leaders. Risk-averse investors might want to give it a pass, or at least wait until there’s an established uptrend, but if you can handle the risk, buying down here might work out really well!
Current Market OutlookThe broad market continues to be challenging, with last week’s low having the potential to kick off a renewed market uptrend and at the same time holding the potential to establish a floor that—if it collapses—could bring a fresh round of pain. In short, the path ahead is foggy and continued caution is advised. But don’t put your head in the sand! Our OptiMo system continues to dig up top-performing stocks with the potential to bring you substantial profits, if you play your cards right—and one of the most promising characteristics of these stocks is that they tend to be under-owned, meaning far more institutional money could arrive to boost them higher over time.
Today’s roster includes some strong breakouts and a handful of set-ups, and our Top Pick is AMN Healthcare (AMN), which has a steadily growing business in the field of healthcare staffing.
| Stock Name | Price | ||
|---|---|---|---|
| AMN Healthcare Services Inc. (AMN) | 0.00 | ||
| Chipotle Mexican Grill (CMG) | 773.32 | ||
| Dexcom (DXCM) | 421.36 | ||
| Integra LifeSciences (IART) | 0.00 | ||
| Michael Kors Holdings Limited (KORS) | 73.22 | ||
| Novocure (NVCR) | 0.00 | ||
| Oil States International (OIS) | 0.00 | ||
| Phillips 66 (PSX) | 0.00 | ||
| SVB Financial Group (SIVB) | 0.00 | ||
| Transocean Ltd. (RIG) | 0.00 |
The market had a great, bullish setup a couple of weeks ago, but that rally has fallen flat, which is a red flag. Our Cabot Tides and Two-Second Indicator remain negative, and we’re now seeing the selling spread even to resilient growth stocks.
Updates
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.
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.
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.
Alerts
This stock reported earnings that met estimates this morning, but revenue fell short of expectations and the stock is about 3% lower mid-morning.
This stock reported first-quarter EPS that fell well short of expectations last night and the stock is trading 6% lower pre-market.
This vehicle reseller just opened its sixth location in Brazil. Its shares recently crossed their 50-day moving average, a bullish indicator.
Verizon (VZ) reported earnings that missed estimates this morning. U.S. Bancorp (USB), on the other hand, reported estimate-beating earnings.
The top five holdings in this fund are Oracle Corp (ORCL, 3.70% of assets); Tencent Holdings Ltd (TCTZF, 3.53%); United Technologies Corp (UTX, 3.22%); American International Group Inc (AIG, 3.19%); and Citigroup Inc (C, 2.98%).
This financial company beat earnings estimates by $0.03 in the last quarter, and two analysts have recently increased their forecasts for this year and next.
This healthcare company beat analysts’ earnings estimates by $0.07 last quarter, and is on target for double-digit growth in the next five years.
This home builder beat analysts’ earnings estimates by $0.07 last quarter, and its shares were recently upgraded by RBC Capital Mkts to ‘Outperform’.
The stock market weakened in recent days, with many industries spiking downward. The only industry that anybody’s been asking me about is steel, so let’s get right to that.
The Chinese internet company beat earnings estimates by $0.19 last quarter and Barclay’s recently upgraded its shares to ‘Overweight’.
This technology company’s shares were just initiated at Macquarie with an ‘Outperform’ rating.
In addition to Barron’s, JP Morgan analysts have ranked this solar company’s stock ‘Outperform’.
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.