Today’s stock is from one of the hottest sectors of the market, China, and it’s got a big growth story—as well as the beginnings of a move to expand outside of China. As for our current stocks, in general all is well, not least because of the market’s recent rebound. In fact, we’ve got several stocks hitting new highs!

Current Market Outlook


Most major indexes have recouped a bit more than half of what they lost in the recent two-week plunge and are now standing above or just below their 50-day moving averages—so what happens from here will be vital. A continued rally would turn the intermediate-term trend positive and tell us to become more aggressive, but renewed weakness would be a sign that the sellers are still lurking. Meanwhile, it’s hard not to be encouraged by the action of leading stocks, many of which have rebounded nicely, with some (including a few in this issue) pushing to all-time highs. We’re nudging our Market Monitor back to neutral, and will take our cues from the market and leading stocks in the days ahead.

This week’s list is the second straight that’s featured a bunch of resilient growth stocks, which tells you where big investors are putting money to work. Our Top Pick is Weibo (WB), the Chinese social media giant that broke out to new highs last week.

Stock Name	Price	Buy Range	Loss Limit
HubSpot (HUBS)	582.89	102-106	93-96
Okta, Inc. (OKTA)	148.41	32-34.5	30-31
Paycom Software (PAYC)	0.00	90-95	83-86
Sangamo BioSciences (SGMO)	0.00	21.5-23.5	18.5-20
Shopify (SHOP)	585.00	130-138	117-123
SolarEdge Technologies Inc. (SEDG)	124.37	42-45	39-40.5
Steel Dynamics (STLD)	0.00	47-49	43-44
Weibo (WB)	98.16	130-135	112-117
Workday (WDAY)	194.88	119-124	110-113
Yandex (YNDX)	0.00	40-41.5	36.5-38

Your Spring issue of Cabot’s 10 Best Marijuana Stocks is ready, with updates on the 10 stocks we’ve been following and two new stocks I’ve added to the mix.

And it’s a great time to take a fresh look at all of them, as the market’s recent correction has brought most of them down to what look like good buying areas. Yes, the correction is deep, but it was overdue, and long term, I remain very optimistic about the sector.

Do you feel like you’ve been on a roller-coaster lately? Well, you’ll probably need to hold on tighter to your seats this year, as it looks like market volatility is here to stay. After several multi-hundred point swings in the past month, and surging past the 26,000 mark, the Dow Jones Industrial Average’s net loss since our last newsletter was some 745 points. And while the overall market sentiment remains bullish, the bears have gained some steam—for longer-term prognostications.

After a two-week correction that prompted us to axe some stocks from the portfolio and reduce our exposure to others, markets have staged an abrupt about-face and staged a four-day rally. It’s not enough to turn our shorter-term indicators positive, but it’s a welcome relief. If the rally continues—which would be unusual given the history of similar corrections—we will change our tactics accordingly.

Today’s bargain is a little-known stock in the fast-growing industry of marijuana farming, production and distribution, which recently was selling at a discount of more than 50% from its recent high. It’s rebounded a bit since then, but is trading calmly, and I think this is a decent entry point.

Current Market Outlook


After a 10-day, 11% plunge for the major indexes, the market has stabilized for the time being. When looking at the evidence, we see that the longer-term trend is still up, but there’s no doubt the intermediate-term trend is down, the broad market is unhealthy and many stocks have cracked. A bounce could easily get underway at any time, but until the intermediate-term trend turns up (indexes back above their 50-day lines and some stocks acting better), you should play some defense by holding cash, cutting back on new buying and, if you own some broken stocks, using any market rebound to pare back. On the flip side, we still advise holding your resilient stocks—if they’ve held up so far, they have a good chance of doing well whenever the correction finishes up.

What’s interesting is that, despite the market carnage, we saw a ton of positive earnings surprises last week—which is a good way to spot potential leaders down the road. Our Top Pick is Grubhub (GRUB), which has the look of an emerging blue chip.

Stock Name	Price	Buy Range	Loss Limit
Array Biopharma (ARRY)	46.35	16-17	14-14.5
BeiGene (BGNE)	170.20	116-124	103-107
Century Aluminum Co. (CENX)	17.24	20.5-22	18.5-19.5
Fortinet Inc. (FTNT)	137.53	45.5-47	43-44
GrubHub (GRUB)	140.03	81-86	72-75
New Relic (NEWR)	103.70	61-63	56-58
Snap Inc. (SNAP)	16.68	17-19	15-15.5
Twitter (TWTR)	40.37	29.5-32	26.5-28
W.W. Grainger, Inc. (GWW)	311.99	253-270	225-230
Wayfair (W)	167.03	88-92	81-83

In the last two weeks we’ve seen unusual volatility in the stock market coupled with rising interest rates. However, the fundamentals remain strong and our long-term view is positive.

While flashier, more star-studded teams like Lionel Messi’s Argentina, Kylian Mbappe’s France and Erling Haaland’s Norway garnered most of the headlines at the just-completed World Cup, Spain was the best team. There was nothing flashy about Spain: no mega-stars, not a ton of goals, no relentless attack. Instead, they dominated the tournament with precision passing, immaculate ball control and near-impenetrable (just one goal allowed all tournament!) defense.

The market rolls sideways amidst a slew of conflicting forces.

The S&P 500 has bounced around and is at the same level it was in the middle of May. The primary culprit is technology. That sector has been in a funk. The S&P 500 is hard-pressed to generate any lasting traction while this massive sector, accounting for over 40% of the index, flounders.

The market has gone sideways since May. It seems to be deciding what to do.

It’s encouraging that the resumption of hostilities with Iran has not sent the market lower. It’s also positive that oil prices aren’t rising back to the $100 level earlier in the war, although prices have risen. It’s also another earnings season and analysts expect a big one.

With war being one of the most dominant themes of the last four years, it stands to reason that investors should position their portfolios to account for this conspicuous (and unwelcome) trend.

And lest one be tempted to think that the warfare theme will diminish anytime soon, last week’s article by NPR deflates that illusion: It revealed that global military conflicts are at their highest level since WWII.

Price targets are standard practice on Wall Street. But sometimes, they can act as an artificial ceiling.

For example, say Truist sets a price target on an up-and-coming growth stock that’s 25% higher than its current share price. For a growth stock, a 25% return isn’t much. But then again, the stock could be a total flop, which is the natural boom-or-bust tradeoff growth investors must endure in trading off increased risk for massive upside. So, a price target on a growth stock seems almost like an unnecessary cap on a stock that has the potential to go through the roof.

WHAT TO DO NOW: Continue to trim your sails. In the Model Portfolio, we’ve been getting closer and closer to shore as growth funds and indexes are under pressure and AI stocks cascade lower. Tonight we’re going to further trim Marvell (MRVL) given its ugly action, selling a third of what we have left. That will leave the portfolio with a big 58% cash position. We could put some of that to work if growth names find support, but we want to see key growth measures firm up before buying.

After a brief pause last week, small caps are once again leading the pack.

Through Wednesday’s close, the S&P 600 Small Cap Index is up roughly 21% year to date, compared to gains of about 15% for the S&P 400 MidCap Index, 17% for the Nasdaq and 11% for the S&P 500.

Its earnings season again! That’s a good thing. Earnings just might save the day in an otherwise confusing and uncertain market.

The market is causing whiplash. The Iran peace deal changed things. Stocks held back by high oil prices, and the resulting higher inflation and interest rates, reignited as oil prices came back down after the peace deal. But hostilities with Iran have resumed.

The peace deal may be on hold again. But stocks are hanging in there so far.

The ceasefire with Iran is over and hostilities have resumed. That sounds like a bigger bummer than it’s been in the market so far. Falling oil prices enabled previously beleaguered stocks to soar higher again as the prognosis for inflation and interest rates simultaneously improved. But that rally is over if oil prices spike higher again.

It’s no surprise that summer often brings lower market volatility levels as Wall Street heads to the Hamptons and participation rates diminish.

Indeed, what we’re seeing right now has all the classic symptoms of a low-participation environment, with investor sentiment being remarkably muted. This can be seen across a number of sentiment indicators for several different markets, most of which are flashing decisively “neutral” signals.

The divide between value and growth stocks is widening, as the Nasdaq is now more than 5% off its highs after peaking in early June while the Vanguard Value Index ETF (VTV) is hovering near its late-June apex and is up 3% in the last month.

That can flip in an instant, of course, as we saw in April and May. But the bottom line is that value stocks have risen 15% year to date, compared to an 11% gain in the Nasdaq and a 9.5% boost in the S&P 500.

After a very strong run from the March lows, the market appears to be going through an uncomfortable but healthy rotation. Many of the biggest winners from the AI and semiconductor trade have come under pressure, while value stocks, equal-weight indexes and other areas that had lagged earlier in the year have held up much better.

I’m moving two growth stocks from Hold to Buy today, Boise Cascade (BCC) and Goldman Sachs (GS), and provide an update on General Motors (GM)—which is no longer in the Cabot Undervalued Stocks Advisor portfolios—and recommendations on the best stocks to buy today.

Before the opening bell today, one of our stocks issued preliminary Q4 2016 results that came in below expectations.

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 Momentum 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 Momentum Trader features.