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

Current Market Outlook


The market began 2016 on a bearish note, with the major indexes plunging and even the market’s most resilient stocks getting hit very hard. The “reason” for the decline was supposedly a meltdown in China’s stock market overnight, but there’s no question the U.S. market’s underpinnings had been weak for a while (hence our cautious approach in recent weeks). From here, anything is possible—January is a notoriously volatile month full of crosscurrents, so yet another snapback is possible. But we’re moving our Market Monitor down a notch into bearish territory given the evidence; now’s the time to think more about capital preservation and work mostly on building a watch list, keeping new buys to very small positions.

This week’s list has many great ideas, stocks that should do well if the market does find strong support. Our Top Pick is SolarEdge (SEDG), which is aiming to be the Intel of the solar sector; the company and the sector as a whole are turning around after a big decline last year.

Stock Name	Price	Buy Range	Loss Limit
SolarEdge Technologies Inc. (SEDG)	124.37	25.5-27	22-22.5
Royal Caribbean Cruises (RCL)	0.00	96-99	91.5-92
Pacira Biosiences (PCRX)	54.85	72-75	66-67
Ophthotech (OPHT)	0.00	70-74	64-65
Universal Display (OLED)	187.54	51.5-54	47.5-48
Nevro Corp. (NVRO)	0.00	64-67	57-58
Neurocrine Biosciences (NBIX)	123.40	50-53	45-46
Dollar Tree (DLTR)	0.00	74.5-78	71.5-72
China Biologic Products (CBPO)	0.00	135-140	123-125
Acorda Therapeutics (ACOR)	0.00	39.5-41	37-38

Current Market Outlook


Last week had some promising moments, but by week’s end, the sellers had pushed the major indexes back down on the week. At this point, the bears are running wild, as most of the major indexes remain in wide trading ranges. At the very least, the intermediate-term trend is sideways-to-down, and the broad market is in poor health, with hundreds of stocks hitting new lows on a daily basis. It’s OK to hold some resilient performers, but we urge a cautious stance, with plenty of cash on the sideline and limiting new buying to just small positions of resilient stocks.

This week’s list has some solid ideas, though there are no broad trends apparent—mainly company-specific situations that have attracted some buyers. Our Top Pick is Alkermes (ALKS), a speculative biotech that could swim against the tide thanks to the FDA’s recent approval for one of its high-potential drugs.

Stock Name	Price	Buy Range	Loss Limit
Red Hat (RHT)	0.00	79-81	74-75
Pure Storage (PSTG)	25.64	15-16.5	13.5-14
NetEase, Inc. (NTES)	0.00	170-176	160-162
Ligand Pharmaceuticals (LGND)	267.14	103-107	96-97
Intra-Cellular Therapies (ITCI)	0.00	50-55	44-46
FLSR (FLSR)	0.00	62-65	56-58
Extra Space Storage (EXR)	0.00	84-87	80-81
Amazon.com (AMZN)	2.00	650-667	618-622
Alkermes (ALKS)	0.00	75-78	68-69
Adobe Inc. (ADBE)	315.23	89-92	85-86

Current Market Outlook


The broad market’s weakness has finally caught up with the major indexes. Last week we saw an end to the post-September market rally, with all major indexes (and most stocks) breaking down. We never got too bullish in recent weeks because of all the warts on the rally, and now it’s time to be cautious, selling your losers and laggards and holding plenty of cash. From here, we’re open to any scenario, ranging from yet another quick snapback to a prolonged downtrend after months of topping action. Just following the evidence, we’re moving our Market Monitor down to the lower end of neutral.

This week’s list reveals that despite the broad market implosion, there are still many resilient stocks; you could nibble on one or two or just add them to your watch list. Our Top Pick is TAL Education (XRS), a stock that looks to be in a bull market of its own.

Stock Name	Price	Buy Range	Loss Limit
TAL Education (XRS)	0.00	43-45	40-41
Wayfair (W)	167.03	43.5-45.5	40-40.5
Take-Two Interactive (TTWO)	123.32	34-35	32-32.5
NVIDIA Corporation (NVDA)	242.42	31-32.5	29-29.5
ServiceNow (NOW)	341.86	81.5-84	77.5-78
Integrated Device Technology (IDTI)	0.00	26-28	24.5-25
Five Prime Therapeutics (FPRX)	0.00	37-40	31-32
Eagle Pharmaceuticals Inc. (EGRX)	0.00	88-93	80-82
Acuity Brands (AYI)	0.00	224-230	208-210
Abercrombie & Fitch (ANF)	15.37	25-26	22.5-23

Current Market Outlook


Last week didn’t see much net change in the major indexes, but volatility has surged, with big swings up and down based on the news of the day. Overall, not much has changed—some stocks and sectors are acting well, but many others are chopping around and some (like MLPs) are literally crashing. By our measures, the market’s trends are still pointed up, but it’s close. All in all, we’re sticking with a relatively neutral stance, meaning we’re holding our top performers, but also holding some cash and being very selective on the buy side. And if something breaks down or trips its stop, it should be jettisoned quickly.

This week’s list continues with the bigger-cap, growth-oriented theme that’s been present for the past few weeks. Our Top Pick is Ulta Beauty (ULTA), which just gapped up to new highs after three months of rest following a great earnings report. Try to buy on dips.

Stock Name	Price	Buy Range	Loss Limit
Weibo (WB)	98.16	18-19	16-17
Western Alliance (WAL)	0.00	36.5-38	34.5-35
Ulta Beauty (ULTA)	331.95	180-184	169-170
Palo Alto Networks (PANW)	236.92	188-193	172-174
Nevro Corp. (NVRO)	0.00	58-62	52-54
Netflix, Inc. (NFLX)	423.92	123-127	113-115
Southwest Airlines (LUV)	0.00	48-50	44-45
Jabil Inc. (JBL)	41.50	24.5-26	23-23.5
Alibaba (BABA)	254.81	82-85	76-77
Broadcom Limited (AVGO)	266.26	142-146	132-134

Current Market Outlook


Since our last issue, the market has rebounded nicely from its sharp one-week pullback in early November, which is obviously good to see. However, not that much has changed from a big picture point of view—the major indexes are in decent shape (the trends remain up), but the advance remains narrow, with a few dozen stocks doing well but many stocks and sectors simply chopping around or trending down. Bottom line, we’ll keep our Market Monitor where it is and stick to our game plan: you should hold your best performers (though taking some partial profits on the way up makes sense), but also hold some cash and be very selective on the buy side.

What’s encouraging is that our screens are finding more and more good growth stories, which is what we see this week. Our Top Pick is a big-cap stock that’s gathering strength as it transitions to the cloud—Autodesk (ADSK) leads its field, but the stock has come alive as big investors anticipate huge recurring revenue ahead.

Stock Name	Price	Buy Range	Loss Limit
Stamps.com (STMP)	0.00	98-103	88-89
PBF Energy (PBF)	38.93	38.5-40.5	36-36.5
Universal Display (OLED)	187.54	49-52	45-46
Monster Beverage Corporation (MNST)	0.00	150-155	139-140
Heartland Payment (HPY)	0.00	76-79	71-72
Home Depot (HD)	0.00	130-133	123-124
Hawaiian Holdings Inc. (HA)	0.00	35-37	31.5-32
General Motors Company (GM)	0.00	35-36.5	32-33
Ctrip.com International Ltd. (CTRP)	34.94	98-104	89-90
Autodesk (ADSK)	229.00	60-63	55.5-56.5

Current Market Outlook


Given the strong October run-up, we weren’t surprised to see the market retreat last week. However, the severity of the dip in both indexes and individual stocks was a yellow flag—many indexes dipped below their 50-day lines, lots of lagging stocks were crushed and even the leaders came under pressure on Friday and today. The action isn’t necessarily a death knell for the rally, but it does put it back on the fence; we’re switching our Market Monitor back into the neutral zone. It’s vital to get rid of losers, honor your stops and remember to book some partial profits in your winners. And as for new buying, it’s prudent to keep new positions small until we see the rally perk up again.

This week’s list has a broad mix of stocks and sectors—no unifying theme but a bunch of good charts and stories. Our Top Pick is Fleetmatics (FLTX), a unique software company with steady growth and a huge opportunity. Try to buy on dips.

Stock Name	Price	Buy Range	Loss Limit
Tyler Technologies (TYL)	0.00	164-170	148-150
Charles Schwab (SCHW)	0.00	31.5-33	29-29.5
NetEase, Inc. (NTES)	0.00	141-147	128-130
Kite Pharma (KITE)	0.00	75-78	66-68
Global Payments Inc. (GPN)	0.00	67-69	61-62
Alphabet, Inc. (GOOGL)	0.00	730-750	680-690
Fleetmatics Group PLC (FLTX)	0.00	55.5-58.5	51.5-52
New Oriental Education (EDU)	113.97	26-27.5	23-23.5
A.O. SMITH (AOS)	0.00	74-76	70-70.5
Alkermes (ALKS)	0.00	69.5-72	64-65

Current Market Outlook


Today finally saw a meaningful pullback in the major indexes and most stocks; the realization that the Fed is likely to hike rates next month has created some jitters, and given that the S&P 500 and Nasdaq bumped up against their old highs last week (and that the advance has been narrow), further weakness wouldn’t be unusual. But until we see abnormal action, we’re going with the major trends, which continue to point up. Thus, we believe this dip, while probably having further to run, is buyable. That said, stock selection remains key, as we’re still seeing many stocks fall apart even as others remain in favor.

This week’s list has a well-sponsored feel to it, which isn’t surprising given the market’s preference for bigger-cap stocks of late. Our Top Pick is Nvidia (NVDA), which looks like a liquid leader following its recent run higher. Try to buy on dips of a point or two.

Stock Name	Price	Buy Range	Loss Limit
Sinclair Broadcasting (SBGI)	54.14	32-33.5	27.5-28
Phillips 66 (PSX)	0.00	88-92	80-81
Bank of the Ozarks (OZRK)	0.00	49.5-52	46-46.5
NVIDIA Corporation (NVDA)	242.42	29-30.5	26-26.5
ServiceNow (NOW)	341.86	82-84.5	75-76
MSCI Inc. (MSCI)	0.00	65-67	60-61
Lear Corp. (LEA)	0.00	119-123	112-113
Imperva Inc. (IMPV)	0.00	69-73	62-63
Activision Blizzard, Inc. (ATVI)	0.00	33-35	30.5-31
Align Technology (ALGN)	316.20	65-67	61-62

Current Market Outlook


Last week brought another small improvement in the market, both for the major indexes (the S&P 500 and Nasdaq notched their fifth straight up week and are holding above some key longer-term moving averages) and for some leading stocks—more growth stocks with top-notch fundamentals have reacted well to earnings, offering some much-needed leadership for this rally. Of course, the flip side is also true, as a bunch of stocks have been crushed on earnings, and the broad market’s action is just decent. Overall, we’re a bit more constructive than we have been, so we’ll bump the Market Monitor up a notch, but it remains vital to be selective—buy what’s working, keep losses small and avoid or sell anything that breaks down.


This week’s list has an encouraging batch of growth stocks with good stories and numbers (not as many defensive-type stocks this week). Our Top Pick is LinkedIn (LNKD), a dynamic big-cap growth stock that’s come back to life after its quarterly report blew away expectations.

Stock Name	Price	Buy Range	Loss Limit
Ultimate Software (ULTI)	0.00	200-205	185-186
Lending Tree (TREE)	411.51	108-116	95-97
Royal Caribbean Cruises (RCL)	0.00	96-99	87-88
Proofpoint (PFPT)	113.79	67-70	60-61
The Priceline Group Inc. (PCLN)	0.00	1380-1440	1300-1310
LinkedIn Corporation (LNKD)	0.00	234-242	214-216
IntercontinentalExchange, Inc. (ICE)	0.00	245-255	230-235
Expedia Group (EXPE)	0.00	130-133	119-120
Ctrip.com International Ltd. (CTRP)	34.94	91-95	83-85
Boyd Gaming Corporation (BYD)	0.00	19-20	17-17.5

Current Market Outlook


The big-cap indexes are looking better and better, with the S&P 500 and Nasdaq rocketing above their 200-day lines last week on the back of some bullish earnings reports. That said, not all is hunky dory—mid- and small-cap indexes continue to languish, the number of stocks hitting new 52-week lows is actually picking up and many stocks near their highs are still just biding their time. All in all, we’re still cautiously optimistic but we’re also sticking with our relatively neutral stance—it’s fine to take a shot at a few good set-ups, but honor your stops and keep some cash on the sideline until we see more leadership emerge, possibly on earnings during the next couple of weeks.

This week’s list has a wide array of stocks and sectors, including a few recent earnings winners. For our Top Pick, we’re going to go where the strength is—Delta Air (DAL) isn’t changing the world, but earnings are huge and the sector is acting very well.

Stock Name	Price	Buy Range	Loss Limit
Netgear Inc (NTGR)	0.00	38.5-41	35-36
Lennox International (LII)	270.56	124-128	113-114
General Motors Company (GM)	0.00	33.5-35	31.5-32
Facebook, Inc. (FB)	0.00	98-103	91-92
Euronet Worldwide (EEFT)	142.83	77-80	73-74
Delta Air Lines (DAL)	54.28	48-51	44.5-45
Cavium (CAVM)	0.00	69.5-72	63-64
Acuity Brands (AYI)	0.00	200-209	188-190
Athenahealth (ATHN)	0.00	145-153	135-137
Agnico Eagle Mines (AEM)	79.05	27-28.5	25-26

Current Market Outlook


The market put together another constructive week, with the major indexes recovering following some early weakness and more stocks setting up in constructive launching pads. That said, the rubber will likely meet the road during the next three weeks as earnings season revs up—a bunch of powerful breakouts would dramatically raise the odds that the market is beginning a sustained rally, but if the sellers feast on stocks following their reports, it’ll be best to take things slowly. For now, we remain neutral—buying a stock here or there is fine, but booking some partial profits on the way up and holding a chunk of cash on the sideline also makes sense.

This week’s list contains a mix of stocks already out to new highs, many that are setting up, and a few that are recovering well from huge declines. Our Top Pick is Restoration Hardware (RH), which is near the top of its launching pad and doesn’t report earnings until December.

Stock Name	Price	Buy Range	Loss Limit
TripAdvisor (TRIP)	55.14	80-84	72-73
Synaptics (SYNA)	0.00	84-86	76-77
RH Inc. (RH)	252.93	99-103	91-92
PDC Energy (PDCE)	0.00	56-59	52-52.5
ServiceNow (NOW)	341.86	74-76	67-68
Newfield Exploration (NFX)	0.00	38-40	35-36
The Goodyear Tire & Rubber Company (GT)	0.00	30.5-32	27.5-28
Franco-Nevada (FNV)	125.51	49-52	46-47
Fiat Chrysler (FCAU)	0.00	15.5-16.5	13.5-14
Amazon.com (AMZN)	2.00	555-575	495-500

Current Market Outlook


The market rally continued last week, with the major indexes pushing back toward (and in some cases, above) their multi-week highs. That was enough to turn the intermediate-term trend back up, causing us to flip our Market Monitor back into neutral territory, so you can begin to loosen the purse strings a bit, buying some new positions and looking to add more should you develop profits in the days ahead. That said, there are still a few flies in the ointment; the longer-term trend remains down and most of the big movers have been the worst performers of the past few months. That’s not bearish, but we would like to see real leadership emerge to new highs before we get more bullish.

This week’s list has some newer names, including a few off-the-bottom stocks from beaten-down sectors. For our Top Pick, we’ll take a stab at one of those—Matador Resources (MTDR) resisted the energy plunge well in recent months and is already back toward new high ground. If the energy run continues, it should do very well.

Stock Name	Price	Buy Range	Loss Limit
Zillow Group (ZG)	0.00	32-34	29-30
Cimarex Energy (XEC)	0.00	118-122	107-108
Paycom Software (PAYC)	0.00	39-41	36-37
NVIDIA Corporation (NVDA)	242.42	25-26	22-23
Netflix, Inc. (NFLX)	423.92	108-115	97-98
Matador Resources Company (MTDR)	27.89	25-27	22-23
JinkoSolar Holding (JKS)	0.00	24-26	22-23
Hawaiian Holdings Inc. (HA)	0.00	26-28	23-24.5
Global Payments Inc. (GPN)	0.00	130-133	115-117
EPAM Systems (EPAM)	188.24	79-81	70-72

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.

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.