In today’s issue, we’re adding a unique play on financial markets to the Dividend Growth tier. I also have a write-up on interest rates—the driving force behind many of this month’s sector rotations—at the end of the issue.

Today’s selection is a company you’ve probably not heard of, but it provides a valuable medical technology that should see increased use in the years ahead. Also, it’s growing by acquisition.

Current Market Outlook


During the past two-plus weeks, we’ve seen the Nasdaq and most leading growth stocks lag most other indexes, and things came to a head today, with the sellers unloading on many of the market’s biggest winners this year. As for the overall market, there are plenty of areas of strength as money rotates into both turnaround situations and some growth-oriented ones, too. So what should you do? For the stocks you own, follow your plan and honor your stops; it’s OK to take a couple of partial profits, too, if you are holding some long-time winners. As for new buying, you should focus on areas that are working and stocks that have shown good-volume buying recently. We’re moving our Market Monitor back down to a level 7 tonight.

This week’s list has many such possibilities, including a few with solid stories. Our Top Pick is Guess? (GES), which looks like a solid turnaround story as it’s seeing excellent growth overseas.

Stock Name	Price	Buy Range	Loss Limit
Alnylam Pharmaceuticals (ALNY)	143.58	107-113	97-99
Blue Buffalo Pet Products (BUFF)	0.00	26.5-27.5	24.5-25.5
Guess (GES)	0.00	15.6-16.4	14.2-14.8
Juno Therapeutics (JUNO)	0.00	40.5-44	35-37.5
Lending Tree (TREE)	411.51	230-240	215-220
Navistar International (NAV)	0.00	38-40	35-37
RPC Inc. (RES)	0.00	22.5-23.5	20.5-21.5
Sociedad Quimica (SQM)	0.00	51-54	46-48
Ultra Clean Holdings, Inc. (UCTT)	0.00	26.5-28.5	23.5-24.5
Weibo (WB)	98.16	94-97	85-87

Despite a hiccup in the past couple of days from Chinese stocks, the U.S. market and the emerging markets continue to outpace their moving averages by comfortable margins. In today\'s issue, I talk about how little profit taking in a couple of our strongest stocks can protect your portfolio while maintaining your exposure.

This month’s Spotlight Stock is a technology company that is a leader in the all-important cloud business, and Nancy’s Feature further explores that cloud industry and the up-and-coming applications that should see it expand greatly in the near future.

Today’s featured recommendation is a low-risk financial stock that will give the portfolio some stability (and income). And since the portfolio doesn’t currently own a bank stock, this will provide some healthy diversification.

Current Market Outlook


The market’s gradual improvement since mid-August continued last week, with the intermediate-term trend of the major indexes turning back up and individual stocks (including both leading growth stocks, as well as many sectors bouncing strongly off prolonged corrections) acting well. We’ve even seen an impressive rebound in the broad market, with the number of stocks hitting new lows drying up drastically. We can’t say the major indexes are incredibly powerful, as many are at or just above their prior highs, but overall, the most bullish thing a market can do is go up, and that’s what we’re seeing. We’ll push our Market Monitor up another notch this week to a level 8 (out of 10) and will continue to put money to work as the evidence improves.

This week’s list has a bunch of strong charts from a variety of industries, including three chip names as that sector reasserts itself. For our Top Pick, we’ll keep it simple and go with one of the market’s liquid leaders—Nvidia (NVDA) has exploded out of a tight base on big volume over the past two days. You could start a position here or on dips.

Stock Name	Price	Buy Range	Loss Limit
Adient (ADNT)	0.00	76-79	71-73
Allegheny Technologies (ATI)	27.78	21.5-22.5	19-19.5
Bitauto Holdings (BITA)	0.00	42-45	36.5-38.5
Celgene (CELG)	0.00	139-143	131-133
Lear Corp. (LEA)	0.00	160-166	149-152
Micron Technology, Inc. (MU)	43.31	33-35	30.5-31.5
NVIDIA Corporation (NVDA)	242.42	177-188	164-170
ON Semiconductor (ON)	24.07	16.7-17.4	15.2-16.
Square, Inc. (SQ)	91.04	27-28.5	24.5-25.5
Terex (TEX)	0.00	41.5-43.5	37.5-39

Our contributors are staying mostly on the safe side this month—with recommendations paying solid and rising dividends, but we also offer several stocks with a more adventurous bent.

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.

USA Technologies (USAT) reported quarterly results this morning that came in just about as expected.

I’ve steered clear of small caps that would have been heavily influenced by either a Trump or Clinton victory, so I don’t expect to make any moves in our current portfolio based solely on today’s results.

While many investors will be selling stocks in panic today, fearful of the unknown, I recommend that you sit calmly. Wait for the panic to pass and the dust to settle.

Southwest Airlines (LUV) reported weak sales and earnings, and increasing costs could put a damper on earnings for an extended period. I recommend selling your LUV shares now.

Momo Inc. (MOMO) reported earnings before the open today and the results looked great, with revenue, earnings and guidance all coming in ahead of analysts expectations.

Universal Electronics (UEIC) is being added to the Buy Low Opportunities Portfolio at Strong Buy. We have an opportunity to buy a stock that fell a ridiculous amount based on minor news at a low price today.

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.