Current Market Outlook


For the third straight Monday, Greece caused the market to gap sharply at the open, this time on the upside as a deal in Europe is coming into view. The snapback from last week’s panic has been excellent, and we’re especially pleased to see many resilient, growth-oriented stocks spike to (or close to) new highs. That said, even after the past two days, the major indexes are still hovering near their 50-day moving averages, and it’s obvious that news is driving the market on a day-to-day basis. Throw in the fact that earnings season is about to rev up, and we’re sticking with a relatively neutral stance—focusing on the strongest stocks makes sense, but so does holding some cash and ditching any broken stocks.

This week’s list has a group of names that should do well if the market’s recent strength develops into a sustained uptrend. Our Top Pick is old friend Illumina (ILMN), which is emerging from a very long sideways phase. Start small, and look to add shares if the stock reacts well to earnings next week.

Stock Name	Price	Buy Range	Loss Limit
WhiteWave Foods (WWAV)	0.00	48-50	46-47
Ulta Beauty (ULTA)	331.95	161-164	153-154
Tyler Technologies (TYL)	0.00	135-140	125-127
Tesoro (TSO)	0.00	95-99	89-90
RH Inc. (RH)	252.93	96-100	92-93
Nordic American Tankers (NAT)	0.00	14-15	13-13.5
Neurocrine Biosciences (NBIX)	123.40	47-50	42-43
Meritage Homes (MTH)	102.20	48-49.5	44-45
LifePoint Hospitals (LPNT)	0.00	85-87	77-78
Illumina Inc. (ILMN)	289.74	215-220	205-209

Current Market Outlook


Greece continues to dominate the headlines, and this weekend’s “No” vote hit the market and most stocks, though nothing as dramatic as what we saw last week. That said, you shouldn’t overreact to today’s action, just as it wasn’t smart to overreact to last Monday’s drubbing. Overall, we’re still neutral, as the main trend remains sideways, and we expect further volatility based on the news of the day. Our biggest piece of advice is to take things on a stock-by-stock basis—many stocks are acting well, and you should hold onto those, but don’t hesitate to dump shares of stocks if they break key support.

Encouragingly, this week’s list contains a lot of resilient, growth-oriented stocks … just the kind of potential leadership we like to see setting up. Our Top Pick is Horizon Pharmaceuticals (HZNP), which is acting like it wants to get going should the market hold together.

Stock Name	Price	Buy Range	Loss Limit
Wayfair (W)	167.03	35-37	32-33
Valero Energy (VLO)	97.40	63-65	58-59
Receptos (RCPT)	0.00	186-195	165-170
Ligand Pharmaceuticals (LGND)	267.14	94-97	87-88
Horizon Therapeutics (HZNP)	49.89	33.5-35	30-31
HealthEquity, Inc. (HQY)	70.70	30-32	27.5-28
The Hain Celestial Group, Inc. (HAIN)	0.00	64-67	61-62
Celanese (CE)	0.00	70-73	66-67
BioMarin Pharmaceutical (BMRN)	0.00	137-139	122-124
Acuity Brands (AYI)	0.00	183-188	175-176

Current Market Outlook


With Greece on the brink of defaulting on some loans and/or exiting the eurozone, the uncertainly of what’s to come caused sellers to drive the indexes and most stocks down sharply today. The straight-down action of the past few days, which came on the heels of some encouraging gains, is a yellow flag, as are the downmoves of many stocks. As we’ve been writing, you should honor your stops (many stocks tripped their stops today) and be holding at least some cash on the sideline. That said, while we’re knocking our Market Monitor down a notch today, the bigger picture hasn’t changed—the major indexes are still within their multi-month ranges, and the best stocks are pulling back normally, so we don’t advise selling wholesale.


This week’s list has many strong stocks that have held up well during the recent selloff. Our Top Pick is Community Health Systems (CYH), which just exploded out of a base following a big court ruling last week. Try to buy on dips.

Stock Name	Price	Buy Range	Loss Limit
SVB Financial Group (SIVB)	0.00	141-145	135-137
Sealed Air (SEE)	0.00	51-52.5	47.5-48
Lennar (LEN)	61.85	50-52	47-47.5
IACI (IACI)	0.00	77-79	73-74
Facebook, Inc. (FB)	0.00	84.5-87	81.5-82
Community Health Systems (CYH)	0.00	61-63	57-58
Carnival Corporation (CCL)	0.00	48-49.5	46.5-47
Avery Dennison Corp. (AVY)	0.00	60-61.5	57-58
Arista Networks (ANET)	0.00	79-82	74-75
Adobe Inc. (ADBE)	315.23	80-82	76-77

Current Market Outlook


The market remains very volatile, reacting to the news of the day (Greece, in particular, seems to be pushing and pulling the market on a daily basis), and most indexes are still trapped within trading ranges. However, stepping away from the headlines reveals increasing bullish evidence—growth stocks have been acting well for a few weeks and the Nasdaq has punched out to multi-year highs, yet investor sentiment remains apathetic. It’s not time to jump in with both feet (selectivity on the buy side and taking partial profits on the way up still makes sense), but we’re nudging our Market Monitor up another notch in reaction to the market’s action.

This weeks’ list has a good mix of names from a variety of industries. Our Top Pick is Ciena (CIEN), which has a history of big pops and drops, and started a fresh uptrend during the past few weeks.

Stock Name	Price	Buy Range	Loss Limit
Youku Tudou (YOKU)	0.00	26.5-28	24-25.5
Intrexon (XON)	0.00	48-50	43.5-44
Bank of the Ozarks (OZRK)	0.00	46-47.5	41.5-42.5
Outerwall Inc, (OUTR)	0.00	80-82	73-74
Lions Gate Entertainment Corp. (LGF)	0.00	35.5-37	32.5-33
Insys Therapeutics (INSY)	0.00	37.5-39.5	33-34
HD Supply Holdings, Inc. (HDS)	0.00	34-35.5	32-32.5
Salesforce.com (CRM)	0.00	74-77	69-70
Cheetah Mobile (CMCM)	0.00	32-34	29-30
Ciena (CIEN)	44.25	24.5-26	22.5-23

Current Market Outlook


The breakdown of the Greek debt negotiations hit the markets this morning before some support appeared (partially on news that Greek talks were back on). Our main advice right now: Keep your eyes on the action of the market, not on the headlines. So far, the major indexes remain in a sideways range, while a few stocks are still in choppy uptrends. Thus, despite the news, not much has changed, and so we’re keeping our Market Monitor in neutral territory and sticking with the game plan of holding some cash and being choosy on the buy side, while honoring stops and booking partial profits on the way up.

This week’s list has some names that haven’t appeared in months (if ever) as some new leadership attempts to firm up. Our Top Pick, though, is a familiar name—Gilead Sciences (GILD) is cheap, flush with cash and just emerging after a long rest.

Stock Name	Price	Buy Range	Loss Limit
Charles Schwab (SCHW)	0.00	32-33	30-30.5
Signature Bank (SBNY)	0.00	140-145	133-135
Netflix, Inc. (NFLX)	423.92	635-660	570-580
Men’s Wearhouse (MW)	0.00	60-62	56-57
Mobileye N.V. (MBLY)	0.00	47.5-50.5	44.5-45
JD.com (JD)	39.58	35.5-37.5	33.5-34
The IMAX Corporation (IMAX)	0.00	41-43	37-38
Illumina Inc. (ILMN)	289.74	209-216	198-199
Gilead Sciences (GILD)	75.10	115-119	106-107
FireEye (FEYE)	0.00	50-52.5	45-46

Current Market Outlook


The major indexes are getting sloppier, with the S&P 500 and NYSE Composite now a couple of percent below their 50-day lines, and many individual stocks and sectors are getting hit. It’s not pretty, but this remains a split tape—the Nasdaq is holding up relatively well, for instance, and we’ve seen many growth stocks do OK in recent days, even as the market as a whole has dropped. Overall, we’re sticking with a neutral stance, which means holding some cash and being very selective on the buy side. It’s OK to pull the trigger if you see a good set-up or two, but honor your stops and don’t be afraid to book partial profits on the way up.

This week’s list is skewed toward the growth side of the equation, but has a mix of stocks that are in established uptrends and others that are just getting going. Our Top Pick is GoPro (GPRO), which has shown enough strength to tell us the March low was the bottom. Buy on dips and use a loose stop.

Stock Name	Price	Buy Range	Loss Limit
Zoës Kitchen (ZOES)	0.00	35.5-37.5	33.5-34
Zebra Technologies (ZBRA)	154.94	109-112	100-101
Skechers (SKX)	0.00	102-105	91-93
Shake Shack (SHAK)	92.08	73-76	66-68
Hologic (HOLX)	0.00	34.5-36	33-33.5
GoPro, Inc. (GPRO)	0.00	56-59	51-52
Global Payments Inc. (GPN)	0.00	104-105	98-99
Dexcom (DXCM)	421.36	70-72	65-66
Axalta Coating (AXTA)	0.00	34-35	31-32
AMAG Pharm. (AMAG)	0.00	68-70	62-63

Current Market Outlook


Once again, the major indexes tested new high ground last week, and once again, the sellers appeared and drove the indexes and many stocks lower. Day-to-day fluctuations aside, the story remains the same—the intermediate-term trend remains sideways, though below the surface, there are many stocks and sectors making good-sized multi-week moves. So the goal, of course, is to stick with what’s working (though taking partial profits on the way up makes sense) while jettisoning any stocks that break support. Keeping some cash on the sideline is also wise, at least until the market begins a sustained uptrend.

This week’s list has it all—some speculative stocks, some stocks that have pushed ahead on big news and some turnaround situations. Our Top Pick is Ligand Pharmaceuticals (LGND), partly because of the big story, and partly because of the lower-risk set-up in its chart.

Stock Name	Price	Buy Range	Loss Limit
T-Mobile US (TMUS)	0.00	36-38	33.5-34.5
NetEase, Inc. (NTES)	0.00	138-143	127-128
MercadoLibre, Inc. (MELI)	980.83	140-145	130-133
Louisiana-Pacific (LPX)	0.00	17.5-18.5	16-16.5
Ligand Pharmaceuticals (LGND)	267.14	83.5-87	79-80
Integrated Device Technology (IDTI)	0.00	23-24	21-22
Dunkin’ Brands Group, Inc. (DNKN)	0.00	52-53	49-50
Clovis Oncology (CLVS)	0.00	84.5-87.5	77-78
Ciena (CIEN)	44.25	23-24	20.5-21
Broadcom Limited (AVGO)	266.26	143-148	128-130

Current Market Outlook


The major indexes’ latest foray into new high ground has again been beaten back, as stocks slid today back into their multi-month trading ranges. It’s clear that the major trend of the market remains sideways, which is a good reason to remain somewhat cautious. But it’s also clear that many stocks are still working well—nobody is printing money, but we’re seeing plenty of stocks and sectors persist higher and, so far, take any selling waves in stride. You should still hold onto some cash and be selective when doing new buying, but if you see a good set-up, go ahead and take it.

This week’s Top Ten is a bit less heavy on growth stocks, though there are still a few hot stocks to read about. Our Top Pick is Cal-Maine Foods (CALM), which is anything but a growth stock, but looks like an interesting special situation. Earnings should explode in the next few quarters.

Stock Name	Price	Buy Range	Loss Limit
Summit Materials (SUM)	0.00	26.5-28	24-24.5
Universal Display (OLED)	187.54	52-54	46-47
Jumei Holdings (JMEI)	0.00	20.5-22	18.5-19
The Goodyear Tire & Rubber Company (GT)	0.00	30-32	27.5-28
Cheetah Mobile (CMCM)	0.00	30-32	26-27
CF Industries (CF)	45.23	311-318	288-290
Cal-Maine Foods, Inc. (CALM)	0.00	51-54.5	46-48
A.O. SMITH (AOS)	0.00	69-70.5	63-64
Ambarella (AMBA)	52.79	82-85	74-75
Autoliv (ALV)	0.00	127-130	119-120

Current Market Outlook


Some of the major indexes are probing the top of their multi-month trading ranges, which is nice to see. But the fact is that, until proven otherwise, the intermediate-term trend remains sideways, so the game plan remains the same—hold some cash and be selective with your new buying. For the stocks you own, you should continue to stick with what’s working—despite the incessant ups and downs, there are plenty of stocks that are working, so focus on the best and leave the rest.
This week’s list has another batch of strong stocks with good stories; we haven’t seen a rash of defensive stocks show up yet, which often occurs when the market is starting to get into trouble. Our Top Pick is Opko Health (OPK), which is speculative but has some major potential catalysts later this year.

Stock Name	Price	Buy Range	Loss Limit
Zebra Technologies (ZBRA)	154.94	106-109	94-95
Tesla, Inc. (TSLA)	818.87	237-244	213-216
SolarEdge Technologies Inc. (SEDG)	124.37	33-35.5	28-28.5
SolarCity (SCTY)	0.00	59.5-62	55-56
OPKO Health Inc (OPK)	0.00	16-17	14-14.5
Newmont Mining (NEM)	57.31	26.5-27.5	23-23.5
Horizon Therapeutics (HZNP)	49.89	27-30	25-26
Cirrus Logic Inc. (CRUS)	0.00	35-36.5	32-33
Cabot Oil & Gas (COG)	0.00	33.5-35	31.5-32
Activision Blizzard, Inc. (ATVI)	0.00	24-25.5	22.5-23

Current Market Outlook


We could recap all of the market’s ups and downs of the past few days, or couple of weeks … or past few months, for that matter. But the bottom line is that, right now, the main trend of the major indexes is sideways until proven otherwise. As for individual stocks and sectors, it’s all about being selective—there are pockets of strength, but stock selection and timing your buys is important in this choppy environment. We’re knocking our Market Monitor down one more notch, not because we’re feeling terribly bearish but more to reflect the overall market’s neutral position.


The good news is that Top Ten automatically hones in on the market’s strongest stocks, and despite the usual batch of earnings potholes, most are still in good shape. Our Top Pick this week is SunEdison (SUNE), which is leading the new recovery in solar stocks thanks to its huge pipeline and yieldco strategy.

Stock Name	Price	Buy Range	Loss Limit
XPO Logistics (XPO)	0.00	47-50	43-44
SunEdison (SUNE)	0.00	27-28.5	24.5-25
Qunar (QUNR)	0.00	48-50	44-46
Norwegian Cruise Lines (NCLH)	0.00	53-55	50-51
Martin Marietta Materials (MLM)	261.52	150-153	141-142
Global Payments Inc. (GPN)	0.00	100-102	94-95
Tableau Software (DATA)	126.42	107-110	97-98
Carter’s (CRI)	0.00	97.5-100.5	94-95
Celanese (CE)	0.00	65.5-67.5	62-63
AMAG Pharm. (AMAG)	0.00	58-61	53-54

Current Market Outlook


A week ago, it looked like the market had finally left behind its up-and-down pattern, but earnings season had other ideas—the major indexes took on some water, and many individual stocks were hit hard after so-so quarterly reports. That said, it’s not the end of the world; most indexes are holding their 50-day lines and there are a bunch of stocks either holding their own, or still within multi-month launching pads. We are respecting last week’s selling by knocking our Market Monitor back down a notch, and we do think it’s best to be very selective when doing new buying. The real key will be the next few days and whether the market can hold important support levels.

In the meantime, we’re impressed that we’re still finding solid growth ideas from a variety of fields. Our Top Pick is Equinix (EQIX), a steadily-growing data center operation whose REIT status offers tax advantages and the prospect of big dividends.

Stock Name	Price	Buy Range	Loss Limit
Valeant Pharmaceuticals (VRX)	0.00	215-220	200-203
Oshkosh (OSK)	95.04	52.5-54.5	47.5-48.5
NetEase, Inc. (NTES)	0.00	124-128	114-116
JetBlue Airways Corporation (JBLU)	0.00	20.5-21.5	18.5-19
Incyte Corporation (INCY)	76.98	97.5-102.5	93-94
Equinix, Inc. (EQIX)	547.73	252-257	233-236
CyberArk (CYBR)	111.74	66-68	57-58
Ctrip.com International Ltd. (CTRP)	34.94	62-65	57-58
Bluebird Bio (BLUE)	0.00	134-140	118-120
Ambarella (AMBA)	52.79	73-75	67-68

If you have the feeling that this year’s boom in the tech sector—and the corresponding record highs in the major averages—isn’t being felt on a market-wide basis, you’re not imagining it.

As it turns out, the record lift in the Nasdaq and S&P is being driven by a troublingly small number of stocks. The result of this narrowing market is that value-focused investors like us have been forced to exercise patience while waiting for the boom to visit our corner of the market (more on that in a minute).

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.

Updates on WellCare Health Plans (WCG) and Whirlpool (WHR).

Boise Cascade (BCC) reported forth-quarter results yesterday, and Axiall (Axiall) rescheduled its earnings report.

Shares of online travel company The Priceline Group (PCLN, 1,240.12) are up $129.44 or 11.65% as of midday today after reporting stronger-than-expected full-year 2015 results.

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.