Current Market Outlook


Last week made it five weeks up in a row for the major indexes, which keeps the intermediate-term trend solidly up. Moreover, the broad market is now clearly healthy, with many stocks and sectors showing excellent accumulation. All of that is why we’re nudging up our Market Monitor another notch; you should probably be more invested than not, given the evidence. However, we’re going to stay in the upper reaches of neutral until we see growth stocks get going—many of them are set-up nicely, but until they actually break out (and until the market’s longer-term trend turns up, which it has yet to do), it’s best to keep some powder dry.

This week’s list has a strong flavor of industrial and cyclical stocks, though many have excellent earnings estimates so they aren’t pure turnarounds. Our Top Pick is HD Supply (HDS), which has surged higher after a big correction, and is likely to post humongous earnings and cash flow growth in the quarters ahead.

Stock Name	Price	Buy Range	Loss Limit
Whirlpool (WHR)	0.00	168-173	153-155
Trex Company (TREX)	117.56	43.5-45.5	40.5-41
Reliance Steel & Aluminum Co. (RS)	117.45	66-69	60.5-61
HD Supply Holdings, Inc. (HDS)	0.00	30-31.5	27.5-28
Hawaiian Holdings Inc. (HA)	0.00	44-46	39-39.5
Dollar Tree (DLTR)	0.00	81-84	75-76
Communication Sales & Leasing (CSAL)	0.00	20.5-21.5	18.5-19
Cirrus Logic Inc. (CRUS)	0.00	34-36	32-32.5
Copa Holdings (CPA)	0.00	65-68	60-61
Adobe Inc. (ADBE)	315.23	90-93	84-85

Current Market Outlook


There’s no question the rally of the past four weeks has done the market a lot of good—the intermediate-term trend remains up, the broad market has returned to health and many stocks are setting up nicely. However, we’re sticking with a relatively neutral stance until we see the final pieces fall into place—many stocks lifting to new highs while the longer-term trend turns up. We’re optimistic that can happen soon (though possibly after a little digestion phase), but we want to actually see it occur before advising you to become heavily invested. For now, then, we’ll leave the Market Monitor where it is and will be watching the action of potential leaders closely for signs the buyers are stepping up in a big way.

This week’s list is another batch of high-potential stocks from a variety of industries. Our Top Pick is Blue Buffalo Pet (BUFF), a maker of organic pet food whose stock came public just last July. It addresses a huge market and is just beginning to attract institutional investors.

Stock Name	Price	Buy Range	Loss Limit
Ulta Beauty (ULTA)	331.95	185-190	172-174
Steel Dynamics (STLD)	0.00	20-21	17.5-18.5
Silver Wheaton (SLW)	0.00	16-17	15-15.5
Las Vegas Sands Corp. (LVS)	0.00	50-52	46-47
Hewlett Packard Enterprise (HPE)	0.00	15-16	13.5-14.5
Barrick Gold (GOLD)	27.20	87-89	80-82
Express (EXPR)	0.00	19.5-20.5	17.5-18
Ellie Mae (ELLI)	0.00	78-83	70-72
Blue Buffalo Pet Products (BUFF)	0.00	21.5-22.5	18.5-19
Briggs and Stratton (BGG)	0.00	22-23.5	19.5-20.5

Current Market Outlook


The market has put on a good show during the past three weeks, with the major indexes pushing to two-month highs, turning the intermediate-term trend positive. And many sectors (including the most beaten-down sectors like commodity, industrial and transport stocks) have bounced extremely well. All of that is encouraging … but the question is what comes next. Some indexes are starting to butt up against major overhead resistance (the 2,000 to 2,100 area on the S&P 500 has been a thorn in the market’s side for more than a year), and all indexes are still stuck below their longer-term 200-day lines. Overall, we remain neutral—if you see a good set-up, by all means take it, but we would hold off on flooring the accelerator until we see more breakouts and a longer-term uptrend in the general market.

This week’s list has a mix of stocks and sectors—some new, some old, some growth-oriented while others are turning around. Our Top Pick this week is Lumentum (LITE), which is enjoying a round of analyst upgrades on double-digit earnings growth.

Stock Name	Price	Buy Range	Loss Limit
Zoës Kitchen (ZOES)	0.00	35-37	31.5-32.5
Wayfair (W)	167.03	42-44	39-40
Vulcan Materials Company (VMC)	137.10	98-102	88-89
Sturm, Ruger & Co. (RGR)	0.00	70-73	62-65
MaxLinear (MXL)	0.00	16-17.5	14-15
MACOM Technology Solutions (MTSI)	0.00	41-43	37-38
Lumentum (LITE)	87.00	23-24	20-21
Kate Spade & Company (KATE)	0.00	21.5-23	19-19.5
Credicorp (BAP)	0.00	120-125	110-115
Broadcom Limited (AVGO)	266.26	142-146	127-131

Current Market Outlook


Our job as investors isn’t to forecast where the market will be in two or three months, but to follow the current evidence and stay on the right side of the market’s trends. The intermediate-term trend turned positive last week for the first time in more than two months, so it’s time to take a couple of steps back into the market’s waters by purchasing some strong stocks with big potential. That said, it’s best to go slow, partly because the longer-term trend remains down, and partly because many stocks are still repairing the severe damage they suffered in recent months. Our Market Monitor remains in neutral territory, and we’ll be looking for more bullish action from leading stocks to tell us to shift to a more aggressive stance.

This week’s Top Ten has a bit more of a growth flavor, which we like to see, with many stocks expected to grow earnings nicely. Our Top Pick is Texas Roadhouse (TXRH), a full-service restaurant operation that should see its bottom line accelerate this year. Even better, the stock just exploded out of a multi-month base.

Stock Name	Price	Buy Range	Loss Limit
WellCare Health Plans, Inc. (WCG)	271.83	87-90	82-83
Texas Roadhouse (TXRH)	0.00	40.5-42	36.5-37
Stamps.com (STMP)	0.00	112-117	106-107
Sprouts Farmers Market (SFM)	19.00	26-27.5	23.5-24
Motorola Solutions (MSI)	0.00	71-73	66-67
Mellanox Technologies (MLNX)	92.00	49-51	45-46
Lennox International (LII)	270.56	127-129	120-121
First Solar (FSLR)	83.74	68-70	60-61
Franco-Nevada (FNV)	125.51	57-59	52-53
()	0.00	-	-

This is a TOC.

Current Market Outlook


The market continues to face many headwinds, the largest of which is the fact that the major indexes and the vast majority of individual stocks remain in longer-term downtrends. However, let’s give the market credit where it’s due—after a panic selloff on January 20, the major indexes chopped around, retested those lows during the following three weeks, and now, have nearly risen to their highest levels since early January. By our measures, the intermediate-term trend is starting to turn up, so after many weeks in a defensive stance, it’s OK to loosen the purse strings and put some cash to work—though we do advise going slow on the buy side and continuing to hold a good-sized cash position. Our Market Monitor will move up a couple of notches into neutral territory.

This week’s list is still a bit light on true growth stocks, but there are other interesting ideas to consider. Our Top Pick is TAL Education (XRS), a stock we’ve recommended before that’s now showing excellent relative strength.

Stock Name	Price	Buy Range	Loss Limit
TAL Education (XRS)	0.00	48-50.5	43.5-44
Wynn Resorts (WYNN)	121.08	76-79	69-70
The Priceline Group Inc. (PCLN)	0.00	1220-1300	1080-1100
NVIDIA Corporation (NVDA)	242.42	30-32	27-28
Hawaiian Holdings Inc. (HA)	0.00	38-40	34-35
Five Below (FIVE)	134.58	35.5-37.5	32.5-33
CenturyLink (CTL)	22.88	28-29.5	26.5-27
CyrusOne Inc (CONE)	0.00	36.5-38	34-34.5
Coherent, Inc. (COHR)	0.00	78-82	72-73
Burlington Stores (BURL)	193.95	52-54	47.5-48

Current Market Outlook


The market spent most of last week testing its late-January low, and the combination of some positive breadth divergences (about 1,200 stocks on the NYSE and Nasdaq hit new lows last Thursday, versus 2,300 on January 20) and Friday’s big upmove could mean it’s time for another rally attempt. We’ll be watching the 1,950 level on the S&P 500 and 4,650 level on the Nasdaq—pushes above both levels could turn the intermediate-term trend back up. But that’s looking far down the line; right now, the market’s major trends remain down, and while some stocks and sectors have shaped up, most are still in the mud. Thus, a defensive stance is advised, though we’ll be keeping a close eye on the action in the days ahead.

This week’s list has some enticing names, including a few that reacted well to earnings. Our Top Pick is Sabre (SABR), a behind-the-scenes player in air travel and hotel bookings that has steady growth, booming cash flow and a stock that showed unusual power following its recent quarterly report.

Stock Name	Price	Buy Range	Loss Limit
WellCare Health Plans, Inc. (WCG)	271.83	78-81	72-73
Sabre Corp. (SABR)	0.00	24.5-26	22-22.5
Rovi Corp. (ROVI)	0.00	19-20	16.5-17
O’Reilly Automotive (ORLY)	0.00	245-255	227-229
Nasdaq (NDAQ)	0.00	58-61	55-55.5
Vail Resorts (MTN)	0.00	116-122	109-110
Barrick Gold (GOLD)	27.20	84-88	76-77
Goldcorp (GG)	0.00	14-15	12-12.5
Ellie Mae (ELLI)	0.00	69-73	62-62.5
CH Robinson (CHRW)	0.00	67.5-70	62.5-63

Current Market Outlook


Trend following is our preferred method of market timing for two major reasons: If you follow the system, you’re guaranteed never to remain heavily invested in serious downtrend, and you’re also guaranteed never to miss out on a major uptrend. We’ve seen that play out in recent months—our Market Monitor shifted to neutral in mid-November and to bearish at the start of January, and we continue to advise a defensive stance as the market remains under pressure. We do think stocks could snap back some in the short-term, partially because the broad market isn’t in nearly as bad shape as it was on January 20, when the indexes initially dipped to these levels. But, bounce or not, it’s best to stick with the system, which means remaining defensive until the intermediate-term trend turns up.

This week’s list is a hodgepodge of stocks and sectors, but we feel many can do well once the market finds its footing. Our Top Pick is Michael Kors (KORS), which, after a multi-month bottoming effort, reacted well to earnings last week as results weren’t as bad as feared. The stock is dirt cheap, too.

Stock Name	Price	Buy Range	Loss Limit
Vantiv (VNTV)	0.00	43.5-45.5	41-42
Vulcan Materials Company (VMC)	137.10	86.5-90	81-82
Super Micro Computer (SMCI)	0.00	29-31	26-27
PayPal (PYPL)	147.00	32-34	29-29.5
Universal Display (OLED)	187.54	40-43	37-38
Newmont Mining (NEM)	57.31	23.5-25	21.5-22
Mattel, Inc. (MAT)	0.00	30-31	28-28.5
Michael Kors Holdings Limited (KORS)	73.22	47.5-50.5	43-44
First Solar (FSLR)	83.74	62-64	57.5-58
Agnico Eagle Mines (AEM)	79.05	31-33	28-28.5

Current Market Outlook


First, the good news: By last week’s end, the major indexes had extended their bounce, with many recouping about 45% or more of their December 29-January 20 meltdowns. And this bounce probably has further to run, especially as earnings season has helped a few stocks show excellent strength. All of that said, the onus remains on the bulls to prove this bounce can morph into a sustained rally—the intermediate- and longer-term trends are still pointed down for all indexes and the vast majority of stocks, and to this point, most of the “action” has been in defensive and interest rate-sensitive sectors (utilities, REITs, tobacco, etc.). That can always change, and we hope it does, but right now it’s best to remain defensive and allow the market to prove itself on the upside.

This week’s list contains some turnaround situations, but we’re encouraged to see some real growth stocks as well. And the Top Pick this week is the flag-bearer for all growth stocks—Facebook (FB) is well owned, but remains one of the best stories around, and last week’s earnings report revealed accelerating growth.

Stock Name	Price	Buy Range	Loss Limit
TAL Education (XRS)	0.00	45-47	41-42
Under Armour (UA)	0.00	80-83	74-76
T-Mobile US (TMUS)	0.00	38-40	35-36
SolarEdge Technologies Inc. (SEDG)	124.37	27-29	24-24.5
Facebook, Inc. (FB)	0.00	110-115	102-103
Diamondback Energy (FANG)	0.00	70-74	63-64
Dollar Tree (DLTR)	0.00	78-81	72-73
Cirrus Logic Inc. (CRUS)	0.00	33-35	30-30.5
Align Technology (ALGN)	316.20	64-67	61-61.5
Barrick Gold (ABX)	0.00	9.5-10	8-8.5

Current Market Outlook


Last Wednesday appears as if it will mark a short-term low for stocks—there were many extremes in sentiment (fewest number of bullish investors in 10 years) and breadth (most stocks hitting new 52-week lows since 2008), which, combined with the big turnaround that day (and the big relief rally on Friday), increases the odds that we’re now in bounce mode. This bounce could continue for a while, so if you want to nibble on a couple of strong names (especially those that react well to earnings), that’s fine. But our bigger message remains the same: The market’s intermediate- and longer-term trends are clearly down, so it’s likely any bounce will eventually lead to a retest (or worse) of the recent lows.

The good news is that any bounce will allow us to separate the wheat from the chaff, and that process has already begun. This week’s list has a few intriguing growth stories to consider. Our Top Pick is Ligand Pharmaceuticals (LGND), a small, little-known biotech firm with a very unique business model. Put it near the top of your watch list.

Stock Name	Price	Buy Range	Loss Limit
Take-Two Interactive (TTWO)	123.32	32-34	29.5-30
STORE Capital (STOR)	0.00	22.5-23.5	21-21.5
Seaspan (SSW)	0.00	15.5-16.5	14-14.5
Lululemon Athletica (LULU)	304.69	53-57	47-48
Ligand Pharmaceuticals (LGND)	267.14	99-104	90-91
First Republic Bank (FRC)	0.00	64-66	59-60
Edwards Lifesciences (EW)	228.06	76-79	70-71
Cree, Inc. (CREE)	67.96	26-27.5	24-24.5
CoreSite Realty (COR)	0.00	57-59	53-54
Burlington Stores (BURL)	193.95	49-51	46-47

Current Market Outlook


After another week of major selling in the market (the S&P 500 is down 8% this month, while the Nasdaq is off 10.3%), there’s not much left to say except the obvious—the sellers remain in control of nearly every stock and sector, and thus we continue to advise a highly defensive stance. Of course, the market is also very oversold, and at some point there will be a snapback rally (likely to last more than just a few days) that will take the indexes and many stocks higher. But until we see some definitive signs of support, it’s best to stay mostly on the sideline and wait patiently for legitimate set-ups to occur.

This week’s list has a variety of resilient names; some are defensive, some have solid growth stories and others are special situations. Our Top Pick is Chuy’s Holdings (CHUY), a small (and thinly traded) cookie-cutter story whose stock has been amazingly resilient this month.

Stock Name	Price	Buy Range	Loss Limit
Ryanair DAC (RYAAY)	0.00	81-84	75-76
MACOM Technology Solutions (MTSI)	0.00	34-36	31.5-32
Intuitive Surgical, Inc. (ISRG)	0.00	535-555	500-505
Alphabet, Inc. (GOOGL)	0.00	695-720	640-645
Flir Systems (FLIR)	0.00	30-31	27.5-28
Five Below (FIVE)	134.58	32-34	29-29.5
DreamWorks (DWA)	0.00	24-25.5	22-23
CubeSmart (CUBE)	0.00	29.5-31	27.5-28
Chuy’s Holdings (CHUY)	0.00	32.5-35	29.5-30
Abiomed (ABMD)	0.00	83-87	77-78

Current Market Outlook


The first week of the year was historically bad, with all the major indexes breaking lower and most individual stocks going along for the ride. With such dramatic action, we’re sure you’ll hear and read a variety of predictions, but we urge you to ignore the noise and focus on the facts—and the facts today are that the trends are down, so you should remain in a defensive posture, meaning lots of cash, little if any new buying, with the focus on building a watch list of future winners. Obviously, short-term, a bounce is overdue, and when it comes, it could be a great one. But the fact that the market has had trouble rallying even in the face of “oversold” conditions isn’t a good sign. It’s best to stay defensive until we see some sustained buying emerge.

This week’s list contains special situations, income securities, precious metals and even a couple of resilient growth stocks. Our Top Pick is Rovi Corp. (ROVI), a cheap technology stock that just exploded higher following two major license renewals. Nibbling on dips could work out.

Stock Name	Price	Buy Range	Loss Limit
58.com (WUBA)	0.00	58-61	54-55
Ulta Beauty (ULTA)	331.95	176-182	163-165
Rovi Corp. (ROVI)	0.00	16-17.5	14-15
Children’s Place (PLCE)	0.00	59-62	53-54
National Storage (NSA)	0.00	16-17.5	15-15.5
FLSR (FLSR)	0.00	62-65	56-58
Equinix, Inc. (EQIX)	547.73	300-308	278-282
Athenahealth (ATHN)	0.00	150-155	140-142
Abercrombie & Fitch (ANF)	15.37	24-25.5	22-23
Agnico Eagle Mines (AEM)	79.05	28-29.5	25.5-26

WHAT TO DO NOW: Big picture, the market and most leaders look great, and our market timing indicators are in fine shape. Near-term, though, there’s little doubt things have gotten a bit giddy, with many names and indexes extended to the upside. Tonight, we’re placing Cava (CAVA) on Hold as that stock has been caught up in some group weakness; we’ll hold our 45% cash position for now, but stay tuned, as we’d like to add some new names (or add to existing names) in the near future.

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.

Both Carnival (CCL) in the Smart Investing Growth & Income Portfolio, and Royal Caribbean Cruises (RCL) in the Growth Portfolio, were up over 5% yesterday, after Carnival reported a blowout first quarter.

GameStop (GME) reported fourth-quarter 2016 results on Friday (January year end), encouraging both bulls and bears.

Shares of international package delivery company FedEx Corp. (FDX) rose $17 (11.8%) yesterday, after the company reported a third quarter earnings beat, and raised its full-year 2016 profit estimate.

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.