We haven’t yet seen the buyers retake control (the intermediate-term trend is down and few stocks are moving up), so we’re sticking with a cautious stance. In the Model Portfolio, we are restoring one Buy rating, but we’re standing pat with 45% cash and are waiting patiently for the trend to turn up.

As we leave behind last week’s market lows—as well as the peak fears of tariff wars—it remains critically important to focus on the action of the market itself, and not be swayed by the news of the day. Which brings me to today’s recommendation, a fast-growing company with a revolutionary product whose stock hit new highs recently and is primed to do so again. You’ll find full details in the issue.

Current Market Outlook


While the major indexes took another hit last week, we actually saw a few encouraging signs from the market—the broad market, for instance, continues to display some positive divergences (i.e., it’s in better shape now than back in February, when the indexes were at a similar level) and many leading stocks held key support (often near their 50-day lines), with a few actually shooting to new highs. All of that is a good reason to keep your antennae up—but with the major indexes still in intermediate-term downtrends, we’re keeping our Market Monitor in neutral territory. If this is the start of a sustained rally, there will be plenty of opportunities to jump on, but right now it’s best to mostly stand pat, holding resilient stocks but also keeping some cash on the sideline.

This week’s list is a mixed bag, with lots of turnarounds and some growth stocks sprinkled in. Our Top Pick is Etsy (ETSY), which, despite a big run, has refused to budge during the market’s latest downdraft.

Stock Name	Price	Buy Range	Loss Limit
BofI Holding (BOFI)	42.93	39-41	36.5-38
Delek (DK)	0.00	39.5-41.5	36-37.5
Etsy (ETSY)	112.97	26-27.5	23.5-24.5
Kirby (KEX)	0.00	79-81.5	73.5-75
LGI Homes (LGIH)	86.04	69-73	64-66
NetApp (NTAP)	0.00	61-64	56-58
New Relic (NEWR)	103.70	72-74.5	65.5-67
Planet Fitness (PLNT)	0.00	37-39	34-35.5
Proofpoint (PFPT)	113.79	113-118	104-106.5
Urban Outfitters (URBN)	0.00	36.5-38.5	33.5-35

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All the details are inside this month’s issue of Cabot Small-Cap Confidential. Enjoy!

The major market indexes have talked themselves off the ledge over the past couple of days, not exactly roaring back to health, but showing signs that buying interest isn’t completely gone. Headlines about a trade war between the U.S. and China have been a major disruptor, and I have some thoughts about that in this week’s commentary. I also have a Chinese stock that’s been ignoring the market’s wobbles and etching a great rally.

Today, most major indexes have pulled back to nearly their early February lows, so short-term, a bounce from here would be quite normal, though longer-term, further weakness cannot be ruled out. But we don’t need to know where the market is going. We only need to know what it’s doing now—and watch carefully what our own stocks are doing—and react appropriately. Today that means selling two stocks, downgrading one to hold, and upgrading one to buy. Details inside.

I don’t tend to get very worked up about stock market volatility, and instead prefer to buy stocks during market dips. The S&P 500 keeps bouncing at 2,600, which means there’s good price support there that gives me confidence to buy low. Keep buying high quality stocks while the prices are low, so that your capital gain potential during market run-ups can get a head start!

Current Market Outlook


The major indexes bounced decently last week, though that was quickly given back today as the sellers reappeared. Day-to-day volatility is likely to remain high as the market remains news-driven (the 50-day average of the VIX volatility index is the highest in two years), but the bottom line for the overall market is simple: All of the major indexes we track are below their key intermediate-term moving averages, so until proven otherwise, the trend is down and you should remain cautious. As for individual stocks, many are still in good shape, but with the sellers in control, any buying should be kept small and all stops should be honored. We’re nudging down our Market Monitor another notch to reflect the growing selling pressures we see.

This week’s list does contain a bunch of solid charts despite the market’s carnage, which is an encouraging sign. Our Top Pick is Lululemon (LULU), which is one of many resilient retail names and has just gapped up on earnings.

Stock Name	Price	Buy Range	Loss Limit
Energen (EGN)	77.04	59-61	55-56
Five Below (FIVE)	134.58	70-73	64.5-66.5
Guess (GES)	0.00	19.5-20.5	17.5-18
Kohl’s (KSS)	70.62	61-63	56-58
Lululemon Athletica (LULU)	304.69	85-88	80-82
Okta, Inc. (OKTA)	148.41	37.5-39.5	34.5-36
Petrobras (PBR)	14.78	13.2-14.2	12.1-12.8
Shutterfly (SFLY)	94.71	76-79	70-72
Smart Global (SGH)	0.00	46.5-49.5	42-44
Wix.com (WIX)	302.53	74-77.5	68-71

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.

General Motors (GM) is trading nearly 4% lower today after March auto sales data fell short of estimates.

This resources company beat analysts’ estimates by $0.11 last quarter and five analysts have increased their forecasts for this year.

Three analysts have raised their 2018 earnings forecast for this animal health company. Wall Street expects double-digit growth for the next five years.

There’s no change in our overall market view from yesterday, as our market timing indicators are split, but many growth stocks are acting well.

I review hundreds of stocks on a regular basis for possible inclusion in the Cabot Undervalued Stocks Advisor portfolios. Many companies that didn’t previously make the grade will, at some point, gain a stronger balance sheet or earnings growth prospects. Such is the case with Chipotle, the restaurant chain.

More than three quarters of the analysts following this energy company rate it a ‘Buy’. In the midst of a turnaround, the company looks cheap.

Shares of Vertex Pharmaceuticals (VRTX) rose 22% this morning on reports of successful results of Phase III studies of VX-661, a cystic fibrosis combination treatment.

This tech giant continues to post double-digit growth, and with its unparalleled R&D chops, shows no sign of slowing down.

The recent rough patch in the market has taken a toll on two of our stocks. And while the Cabot Emerging Markets Timer is still positive, the iShares MSCI Emerging Markets ETF on which it is based experienced a reversal on March 21, and has been trading flat and tight for more than a week. Accordingly, we are going to sell one of our holdings that has buckled under selling pressure and put another on Hold.

This mining company’s EPS estimates are rising. Six analysts have increased their forecasts in the past month, and they expect the company to post triple-digit growth this year.

The stars don’t always spell success, as this foreign fund—our first idea today—demonstrates.

Our recommendation is a sale of a biotech with disappointing quarterly results.

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.