In today’s issue, I dig into the reasons behind this painful correction, finding an aggravating Chinese government regulatory shift that can account for a large part. Despite the turmoil, the Cabot Emerging Market Timer is still positive, and I have a fresh, young Chinese tech stock that has enormous potential as the development of the Chinese cloud continues.

In today’s issue, we’re adding a reliable new stock to the Safe Income Tier. I also review why you might want to own preferred stock in today’s educational section, and provide updates on all our holdings.

Today’s recommendation is a chain restaurant—a chain I’d never even heard of—but the company is growing fast and the chart is very constructive.

In tonight’s issue, we dive into some education, revealing a long-term chart pattern that bodes well (including one stock that’s at the top of our Watch List now). We also give you all our latest thoughts on the market and our recommended stocks, and present the usual crop of new ideas if you have some cash on the sideline.

Current Market Outlook


The market’s not all peaches and cream, as many sectors have been doing more gyrating than advancing, the broad market is iffy and the number of stocks hitting new highs has been falling on each push higher. But we always place most of our emphasis on the primary evidence—the trend of the major indexes and the action of leading stocks—and on that front, the evidence is clearly positive, so we remain heavily invested. The goal from here is to simply follow the system—hold on to your strong performers (though taking partial profits here or there is fine), honor your stops with any stocks that hit potholes and look for new leaders that show explosive strength.

This week’s list is again heavy on recent earnings winners, though it has more of a small- and mid-cap flavor to it. Our Top Pick is Splunk (SPLK), a leading Big Data software firm that has gotten going after a long consolidation.

Scheduling Note: Due to the Thanksgiving holiday, there will be no Movers & Shakers this Friday or Top Ten issue next Monday (one of our two scheduled weeks off all year). Have a great holiday weekend!

Stock Name	Price	Buy Range	Loss Limit
Bluebird Bio (BLUE)	0.00	153-161	137-141
Canada Goose Holdings (GOOS)	46.21	24.5-26	22-23
Cypress Semiconductor (CY)	0.00	26-17	15-15.5
ICU Medical (ICUI)	0.00	202-207	188-192
Nutanix (NTNX)	55.91	28.5-30	25-26
Red Rock Resorts (RRR)	34.70	27-28	25-25.5
RH Inc. (RH)	252.93	96-101	86-90
Splunk (SPLK)	207.67	78-82	71.5-73.5
Westlake Chemical Corp. (WLK)	0.00	90-93	84-86
Wingstop (WING)	121.52	37-39	34.5-35.5

There has been plenty of action in emerging markets recently, but today’s strong rally pushed the Cabot Emerging Markets Timer to a clear buy signal. Part of this may be the continuing effect of a great Singles’ Day splurge in China, and I write about that. We’re making some adjustments to the portfolio to put the spotlight on the winners and switch out of one laggard.

If you bought a basket of my 10 Best Marijuana Stocks when the report was originally published in August, you’re off to a great start. Since that report was written, the average of the 10 stocks is up 32%, with the best stock up 131% and the worst down just 4%. Read on for more details.

Most of our contributors remain bullish for now, and are still finding pockets of opportunities for our subscribers. We begin this issue with our Spotlight Stock, a company that is steeped in a variety of technology channels, including some very disruptive technologies that I discuss further in my Feature.

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.

I’m adding Mattel (MAT) to the Buy Low Opportunities Portfolio, and selling Carnival (CCL) from the Growth & Income Portfolio.

The rotation out of growth stocks and into cyclical stocks continues to take a toll on emerging market stocks, and we’re selling two of the portfolio’s holdings that have taken turns for the worse: Tencent Holdings (TCEHY) and Melco Crown (MPEL).

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.