The market has been terrific. But uncertainty is growing, particularly with regard to the economy and artificial intelligence.

The government shutdown is over. Tariffs are increasingly less of an issue in the market. But the economy is about to take center stage. There haven’t been the usual economic reports during the shutdown and there is a risk that when they do finally come out the market could be startled.

At the same time, there has been a tug-o-war regarding the AI trade, and Wall Street doesn’t know what to think. AI has driven the market higher for most of the last three years. The future direction of AI and technology will determine the future direction of the overall market.

Fortunately, there are trends and stocks that are not overly dependent on the unpredictable technology sector or the state of the economy. Electricity demand is soaring because of artificial intelligence data centers, electric vehicles, and manufacturing onshoring. The best health care companies will thrive with the enormous tailwind of the aging population megatrend.

Electricity demand will boom, and people will get sick and need medicine regardless of the near-term gyrations of the economy or the market. In uncertain times like this, I like to go with bankable trends.

In this issue, I highlight two of the very best stocks to buy in the areas of utilities and health care.

Despite a promising start, last week turned into a rough one for the market. A mix of rising economic uncertainty and heavy tech-valuation concerns weighed on sentiment, driving the market to a risk-off environment. By week’s end the S&P 500 had fallen 1.6%, the Dow Jones had slid 1.2%, and the Nasdaq Composite had dropped 3%.

On balance, there’s little doubt the evidence worsened last week, and yet, most leaders didn’t crack, and the big-cap indexes didn’t either, so the question was whether a “real” correction was getting underway … or this would be yet another shakeout-type decline that gives way to higher prices. So far, of course, it’s looking like the latter. On Friday’s update, we dropped our Market Monitor to a level 6, but we’re going to quickly change course and go back to 7 today—and then stay flexible as we see whether a year-end run is getting underway or whether more volatility is coming.

This week’s list again has a growth tilt to it, which we find encouraging given the selling we saw in many areas of the market of late. Our Top Pick is a steadier leader in the AI (and solar) space and is testing its 10-week line for the first time—look to enter on strength and use a tight-ish percentage stop.

The market took a few lumps last week but is recovering nicely today. We’ll see which direction it goes from here now that third-quarter earnings season is winding down. Yet again, earnings did more help than harm, providing a floor for stocks to help counteract some of the unfavorable headwinds (high valuations, record-long government shutdown, accelerating job cuts by major corporations) threatening to derail them. Today, we add one of the bigger earnings season winners, a mid-cap biotech that has been beaten up for a couple years but is staging a comeback that got a welcome boost from its late-October report. It’s a stock that got Mike Cintolo’s attention in Cabot Top Ten Trader.

Details inside.

Despite a promising start, last week turned into a rough one for the market. A mix of rising economic uncertainty and heavy tech-valuation concerns weighed on sentiment, driving the market to a risk-off environment. By week’s end the S&P 500 had fallen 1.6%, the Dow Jones had slid 1.2%, and the Nasdaq Composite had dropped 3%.

Despite a promising start, last week turned into a rough one for the market. A mix of rising economic uncertainty and heavy tech-valuation concerns weighed on sentiment, driving the market to a risk-off environment. By week’s end the S&P 500 had fallen 1.6%, the Dow Jones had slid 1.2%, and the Nasdaq Composite had dropped 3%.

Nuclear energy is a $2 trillion industry waiting to explode. And while some of the bigger-name providers of it have seen their share prices rise manyfold over the last year, other companies that provide nuclear power have remained under the radar – and undervalued.

That includes this month’s new addition. It’s a California utility company that’s one of the largest electricity providers in the country – and it has a nuclear plant that’s starting to get into the (you guessed it) artificial intelligence game.

Details inside.

Today we’re taking a half-sized position in an emerging MedTech company disrupting the insulin market. It has developed a fully automated device that removes many of the headaches associated with insulin pumps, which have kept adoption of those systems in check.

It’s a rapid-growth company with one product already approved by the FDA, and more solutions in the pipeline.

All the details are inside the November Issue of Cabot Small-Cap Confidential.

The market’s momentum continued last week as a benign inflation print and another round of solid earnings backed up bullish sentiment—with virtually all of the major indexes moving higher. For the week the S&P 500 rose 0.7%, the Dow Jones Industrial Average advanced 0.8%, the Nasdaq Composite jumped 2.2%, but the Russell 2000 slipped 1.4%.

The big-cap indexes have been leading for a while now, but more recently, we’ve seen an even greater dichotomy out there, with the broad market actually coming under pressure and with most (non-big-cap) indexes testing or breaking intermediate-term support. On the flip side, the number of growth-y stocks in good shape has actually increased. As we wrote last Friday, these sorts of divergences tell us the risk of some unpleasantness has increased, though that doesn’t guarantee it will happen and, if it does, when. Thus, it’s best to go with the flow right here—aiming to buy strong, fresh leaders at decent entry points, but also being willing to book partial profits on the way up and raise stops when needed. We’ll again leave our Market Monitor at a level 7.

This week’s list has a major growth tilt, which goes along with the emergence of many growth stocks from multi-week (or, sometimes, multi-month) consolidations. Our Top Pick is getting going from a two-and-a-half-month rest following another great quarterly report.

The major indexes continue to hover near all-time highs, even as more issues beneath the surface crop up. Another strong earnings season, dwindling U.S.-China trade tensions, and another interest rate cut are helping prop stocks up, even as volatility begins to creep higher again. So today, to account for a possible pullback, we opt for a stock that’s a household name but one that has become so undervalued that Clif Droke just added it to his Cabot Turnaround Letter portfolio.

Details inside.

The market’s momentum continued last week as a benign inflation print and another round of solid earnings backed up bullish sentiment—with virtually all of the major indexes moving higher. For the week the S&P 500 rose 0.7%, the Dow Jones Industrial Average advanced 0.8%, the Nasdaq Composite jumped 2.2%, but the Russell 2000 slipped 1.4%.

As expected, the Federal Reserve cut interest rates by a quarter point yesterday. This was largely already baked into the market. Looking ahead, Fed Chairman Jerome Powell had an impactful comment: “What do you do if you are driving in the fog? You slow down.”

This comment is consistent with our strategy of alternating aggressive and conservative stocks, taking partial profits to build cash, and seeking international diversification.

This Halloween, there’s nothing to fear. At least not for investors.

OK, nothing is a bit of an exaggeration. Today’s anticipated meetup between President Trump and Chinese President Xi Jinping could go sideways, putting high tariffs between the two mega-powers back on the menu. There could be some key earnings blowups ahead as we remain in the thick of third-quarter reporting season. And the government shutdown is more than a month old at this point, which could take a toll on the market.

The market just keeps on going. So far this week, the S&P 500 has hit a new high on both Monday and Tuesday.

The S&P 500 is now up about 17% year to date with more than two months left in 2025. There is a good chance that the index delivers another 20%-plus return year, which would make it three consecutive years of such returns for the first time in nearly 30 years. Sure, we’re in a Fed rate-cutting cycle. Investors love that. But artificial intelligence is the main force driving the market higher.

One of the most attractive industries right now for turnaround-focused investors is chemicals, with the share prices for many major producers in this group hovering at or near multi-year lows.

The reasons for this collective underperformance vary, and while not all chemical companies are in a classic turnaround situation, many of them are under serious margin pressures and are implementing strategic plans aimed at improving their company’s fortunes and reversing the stock price declines.

WHAT TO DO NOW: The market continues to hang in there, but growth stocks have been far trickier, with many pulling back sharply, others testing support and a few breaking down. Still, it’s mostly mixed, with some names perking up, so we’re staying flexible, especially as earnings season plows ahead. This week we sold two names that cracked—MP Materials (MP) and GE Vernova (GEV)—which leaves us with 43% in cash. We’ll stand pat tonight, though we could redeploy some of the money into stronger names if growth stocks continue to stabilize.

There’s been a jump in volatility among individual stocks and some sectors (gold, oil, retail investor favorites, etc.), but at an index level, things continue to be pretty smooth. The S&P 600 SmallCap Index is trading higher than it was a week ago.

Let’s talk about bubbles.

There’s been a whole lot of investor speculation of late over whether we’re near an artificial intelligence bubble, akin to what we saw from the dot-com bubble at the turn of the century or the housing bubble that led to the 2008-09 Great Recession. Indeed, with AI spending (an estimated $300 to $400 billion this year) outpacing revenue (an estimated $60 billion this year) by roughly a 6-to-1 ratio – about double the capital expenditures-to-revenue ratio just before the dot-com bubble burst – the angst over an AI bubble is understandable, and perhaps warranted.

Looking good. The bull market is enduring the historically troubling months of September and October with nary a sign of resistance.

The S&P 500 is up about 15% year to date and within a whisker of the all-time high, as investors are more excited about earnings than worried about tariffs or the government shutdown. And why shouldn’t they be? Government shutdowns are always temporary. And tariff negotiations always culminate in an arrangement that satisfies the market.

Stocks started this week on a strong note. After sluggish performance over the past month, the S&P 500 is gaining steam.

Investors are focusing on the promising earnings season and a tamping down of tensions with China. The Trump administration has moderated its stance on China and will meet with them in the weeks ahead. Meanwhile, earnings season is heating up with Tesla (TSLA), Intel (INTC), Netflix (NFLX), and Coca-Cola (KO) reporting this week.

The introduction of fear to the financial market can be either a good thing or a bad thing—but seldom is it neither.

In the first case, increasing fear among investors in an environment characterized by fairly limited public participation (i.e. an uncrowded market), relatively unstretched valuations and plenty of liquidity often results in the “wall of worry” phenomenon in which stocks actually benefit from the rising fear levels.

Both the S&P 600 SmallCap Index and the Russell 2000 are trading higher than they were a week ago, making the ugly selloff last Friday look like a one-off event.

That said, it’s totally valid to be at least a little concerned about the trade war heating up again. And while it sounds like progress could soon be made in the government shutdown (Senate Majority Leader Thune is rumored to be talking with Democrats about extending ACA subsidies in exchange for reopening the government), there’s little doubt that the longer the shutdown goes on the greater the risks are to the market.

Explorer stocks were mixed this week as Asian stocks struggled amidst increased U.S.-China economic tensions and concern over Chinese economic growth.

Commodities are back but something to keep in mind was mentioned to me by a friend in the energy business: “America is running out of shale oil.” This has big implications for world oil markets and America’s energy mix since if we are running out of the shale oil that can be extracted at about $60/barrel, higher oil and energy prices are around the corner.

Karman Holding (KRMN) got whacked this morning after reporting a mixed quarter but has climbed back somewhat through the early afternoon. We’re standing by it, for now.

Warrior Met Coal (HCC), Primo Brands (PRMB) and Millicom (TIGO) Report

It’s required patience to live with the ups and downs of owning Enovix (ENVX) for as long as we have. And the timeline here serves as another reminder that building a company to bring a new product to market is no small feat. In this case, the launch of high-volume sales keeps getting pushed out, which also pushes out performance of the stock. But we’re sticking with ENVX because those better days should still arrive. And when they do, I think the stock can capture investors’ imagination and push it to levels that will seem, at times, totally ridiculous. We have seen that time and time again with these types of stocks.

WHAT TO DO NOW: While the market is in decent shape, our indicators are worsening, the broad market is weak and growth stocks remain very tricky—many look fine, but volatility is insane and, this week, we’ve seen more than a few air pockets after earnings. We’re still taking things on a stock-by-stock basis, which today means cutting bait on Arista Networks (ANET), which looks toppy after a poor earnings reaction. We’ll sell and hold the cash, which will be around 45% of the portfolio.

Hello from Senegal! While there is no regular Cabot Explorer issue this week as I am halfway around the world, I do have two new Sell alerts today.

I want to point out a problem that I foresee, potentially on the scale of the technology bubble in 2001 and the housing bubble in 2007. I think we’re going to have an “inverse ETF bubble.”

The fundamentals of value investment have been time tested. Followers of the value philosophy such as Warren Buffett, Seth Klarman and Howard Marks have amassed billions of dollars in their lifetimes. In a nutshell, here are the basic tenets of value investing.

One of the things many investors like best about dividend income is that it can qualify for the lower Federal capital gains tax rate. But not all dividends and distributions qualify.

We recently added a new real estate investment trust (REIT) to the High Yield Tier. REITs can be a great source of high income, but they have some unique features that investors should be aware of.

For growth stocks, buying low usually doesn’t mean you’re getting a bargain. It usually means you’re buying a laggard! That’s right—believe it or not, in the market, strength tends to lead to strength, while weakness tends to lead to weakness.

So how can you pick stocks that have a good chance to become winners? Interestingly, the best way is by looking backwards!

Here’s how Cabot Trend Lines, Cabot Tides and the 7.5% Rule can keep you on the right side of every market.

Our entire selling philosophy, especially when it comes to growth stocks, revolves around a concept we call “Tight to Loose.” We’re also big fans of a few key chart-based sell signals that tell you a stock is coming under distribution by deep-pocketed investors.

I’ve heard from a few subscribers recently who want to know if it’s time to sell their big winners, like Wynn Reports (WYNN), which is up 48% since I recommended it in April of last year.

Some stocks in the Model Portfolio and others we’ve recommended have had great runs during 2017 but have come under pressure recently. And that’s naturally led to a lot of questions about how exactly to handle big winners, so that’s what we’ll dive into today.

Here are some of the sources that I have found most useful, reliable and unique. One of them may be able to give you a new perspective on some of the stocks you own.

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.