Current Market Outlook


After weeks of banging on resistance, the major indexes lurched above some key levels last week, and many individual stocks did the same. To be fair, “breakouts” in indexes are notoriously unreliable, which is why we put more emphasis on the overall trend (choppy, but still positive) and the action of leading stocks (improving, though earnings season continues to have its say). Thus, while last week wasn’t a major buy signal, the weight of the evidence tells us to push our Market Monitor up a notch into bullish territory and continue to look for new leadership to emerge in the weeks ahead.

This week’s list has a wide variety of stocks, but for our Top Pick, we’re going with the mega-cap stock that just gapped up on earnings—Amazon’s (AMZN) surge last week pushed it out of a 15-month base as investors see huge potential for the firm’s cloud computing division.

Stock Name	Price	Buy Range	Loss Limit
Taser (TASR)	0.00	28-30	25-26
Men’s Wearhouse (MW)	0.00	55-57	50-51
Ligand Pharmaceuticals (LGND)	267.14	82-86	76-78
HD Supply Holdings, Inc. (HDS)	0.00	32-34	30-30.5
Hasbro (HAS)	0.00	69-72	65-66
GW Pharmaceuticals (GWPH)	174.52	115-120	103-105
Fortinet Inc. (FTNT)	137.53	37-39	34.5-35
Axalta Coating (AXTA)	0.00	29.5-31	27-28.5
Amazon.com (AMZN)	2.00	430-450	410-415
Akamai Technologies (AKAM)	0.00	73.5-76.5	68-69

Current Market Outlook


Last Friday saw a big, broad selloff in the market, not unlike what we’ve seen a few times so far this year. But, interestingly, while those other selloffs lasted a few days, this one might not—the market snapped back vigorously today. All of this is short-term stuff, of course; the overall trend is still generally sideways and few stocks are running away on the upside, so we’re not suggesting it’s time to become fully invested. But we’re seeing evidence that selling pressures are fading, which, if earnings season goes well, could launch a sustained advance.

This week’s list has a nice mix of charts; some are super-strong, some are tight after prior advances. Our Top Pick is MobilEye (MBLY), a company with as big a growth story as you’ll find and a chart that’s showing strength after a long decline. Stick with a small position and expect volatility.

Stock Name	Price	Buy Range	Loss Limit
WABCO Holdings (WBC)	0.00	124-126.5	116-117
Qunar (QUNR)	0.00	43-44.5	39-40
Universal Display (OLED)	187.54	45.5-47.5	41-42
Newfield Exploration (NFX)	0.00	36-37.5	33.5-34
Netflix, Inc. (NFLX)	423.92	540-560	490-500
Mobileye N.V. (MBLY)	0.00	43-46	38-39
First Solar (FSLR)	83.74	60-63.5	54-55
Esperion Therapeutics (ESPR)	0.00	98-100	89-90
Depomed (DEPO)	0.00	25-27	22-22.5
Builders FirstSource (BLDR)	44.12	12.5-13.5	11-11.5

Current Market Outlook


The Nasdaq poked above the 5,000 level for the third time in six weeks today, and most other indexes aren’t far behind. To us, what’s distinctive about the recent upmove is a complete lack of selling—very few stocks are hitting new lows, and even bad news has failed to attract the bears. Now, to be fair, buyers aren’t exactly flexing their muscle, either; not many stocks are hitting new highs and volume’s been generally light. Overall, we’re going to keep our Market Monitor where it is because the sideways trend of the market is still intact, but we do think there’s a good chance the third time could be the charm as the Nasdaq tests new high ground.

This week’s list has a bunch of good prospects, including some from unexpected areas (energy and yieldcos!). But our Top Pick is Valeant Pharmaceuticals (VRX), a steady grower in the drug field that should see earnings accelerate thanks to its recent acquisition of Salix.

Stock Name	Price	Buy Range	Loss Limit
Valeant Pharmaceuticals (VRX)	0.00	200-210	188-190
Terraform Power (TERP)	0.00	38-40	35-35.5
Sabre Corp. (SABR)	0.00	24.5-25.5	22-22.5
PDC Energy (PDCE)	0.00	53-55	49-50
Orbital ATK (OA)	0.00	74-76	67-69
JD.com (JD)	39.58	33-34.5	30-31
Intercept Pharmaceuticals (ICPT)	0.00	270-285	245-250
Harman International Industries, Inc. (HAR)	0.00	134-139	124-126
Canadian Solar (CSIQ)	0.00	34-36	30.5-31
Autohome (ATHM)	98.65	46.5-49.5	42-43

Current Market Outlook


The market found some buying support after this morning’s gap lower, as some investors believe the Fed might stay on hold for longer considering job growth has slowed. That was good to see, but, daily wiggles aside, the intermediate-term trend remains sideways, which means staying selective, holding some cash and honoring your stops is paramount. There are still plenty of stocks working and a few set-up nicely, and that’s where your focus should be.

This week’s Top Ten presents a bunch of current winners; all have held up well during the market’s recent selloff. Our Top Pick is Carmax (KMX), which popped out of a nice, flat base on earnings last week.

Stock Name	Price	Buy Range	Loss Limit
58.com (WUBA)	0.00	49-51	45-46
United Therapeutics (UTHR)	0.00	170-175	160-162
Medivation (MDVN)	0.00	125-130	116-117
CarMax (KMX)	0.00	72-75	67-68
Horizon Therapeutics (HZNP)	49.89	24.5-26	21-22
Humana Inc. (HUM)	0.00	175-179	158-162
Diamondback Energy (FANG)	0.00	75-78	67-69
E*Trade Financial (ETFC)	0.00	26.5-28	24-25
D. R. Horton (DHI)	66.55	27.5-28.5	25.5-26
Cirrus Logic Inc. (CRUS)	0.00	31.5-33.5	29.5-30

Current Market Outlook


Despite today’s rally, the major indexes have basically been in a sideways trend during the past few months—they’ve tried to get going on the upside twice during the past few weeks, but both times hit a wall and fell back. Now, a sideways trend isn’t a death knell for the market, but it does make it more difficult—it’s vital to pick your spots when buying, to book partial profits on the way up and to honor your stops should a stock break down. We’re going to knock down our Market Monitor a bit—we’re still more bullish than bearish, but given the environment, we want to lighten up on the gas pedal a bit.

This week’s list has a few dependable growers, not surprising given the market’s wobbles. Still, for our Top Pick, we’re going with a faster mover—Ctrip.com (CTRP) recently gapped up on earnings after 18 months out of the spotlight, thanks to a bullish forecast. We think you can start a position around here.

Stock Name	Price	Buy Range	Loss Limit
VeriSign (VRSN)	190.71	63-65	59-60
Twitter (TWTR)	40.37	47.5-50.5	44-45
Signet Jewelers (SIG)	0.00	132.5-136.5	126-127
ServiceMaster (SERV)	0.00	32-34	29.5-30.5
Red Hat (RHT)	0.00	75-77	68-70
Novo Nordisk (NVO)	0.00	52-54.5	47-48
Molina Healthcare (MOH)	0.00	63-65	59-60
Huntington Ingalls (HII)	0.00	135-140	127-129
Ctrip.com International Ltd. (CTRP)	34.94	56-58	51-53
Abiomed (ABMD)	0.00	70-73	64-66

Current Market Outlook


The market has had plenty of gyrations this year, even since it pushed out to new highs in February. But at no time since then has the intermediate-term trend turned down, and at no time have a bunch of Top Ten stocks showed abnormal action. Thus, we remained bullish, and that patience began paying off last week as the market’s uptrend resumed. There will surely be pullbacks and potholes among various sectors and indexes from time to time, but with the odds favoring higher prices in the weeks ahead, you should be holding your top performers and looking to add new leaders at good buy points.

This week’s list has a diverse mix of stocks, including a few new names. Our Top Pick is Ulta Beauty (ULTA), which is one of the market’s top retail stocks and cookie-cutter stories. A buy on dips is your best bet.

Stock Name	Price	Buy Range	Loss Limit
Western Refining (WNR)	0.00	47-49.5	43-44
Vipshop Holdings (VIPS)	14.25	26-28	23-24.5
Ulta Beauty (ULTA)	331.95	145-152	137-139
Ryland (RYL)	0.00	45-47.5	41.5-42.5
Regeneron Pharmaceuticals (REGN)	512.96	460-475	430-440
Universal Display (OLED)	187.54	42-45	38-39
Juno Therapeutics (JUNO)	0.00	55-60	51-52
JD.com (JD)	39.58	27-28.5	25-26
JetBlue Airways Corporation (JBLU)	0.00	18-19	16.5-17
Fortinet Inc. (FTNT)	137.53	33.5-35	31.5-32

Current Market Outlook


The market has been shaking and baking during the past three weeks on lots of headline (mainly currency-related) news, but while there has been some damage, the major indexes are holding key support and relatively few stocks have fallen apart. Of course the evidence can change at any time, and if the market really breaks down, we’ll turn cautious. But, despite the whippy day-to-day action, we’re sticking to our bullish stance, and believe holding your best performers, and even doing a little buying at opportune times, will prove fruitful.

This week’s list is once again heavy on the medical and retail sectors, though there are a few other tempting ideas out there, too. Our Top Pick is Urban Outfitters (URBN), which has come back to life after a long period out of the limelight.

Stock Name	Price	Buy Range	Loss Limit
WisdomTree (WETF)	0.00	20-21	18-19
Vulcan Materials Company (VMC)	137.10	80-83	75.5-76
United Therapeutics (UTHR)	0.00	164-168	158-160
Urban Outfitters (URBN)	0.00	43.5-45	38-39
SunEdison (SUNE)	0.00	22.5-24	20.5-21
IPG Photonics (IPGP)	0.00	96-99	87-89
Horizon Therapeutics (HZNP)	49.89	21-23	19-19.5
GrubHub (GRUB)	140.03	42-44	39-39.5
Foot Locker (FL)	0.00	59-62	56.5-57
American Eagle (AEO)	0.00	16.5-17.5	15-15.5

Current Market Outlook


After a straight-up move in February, the market has hit some rough waters, with the major indexes and lots of growth stocks taking hits. There’s always the chance that the market is beginning a major correction after a strong but relatively brief (in this case, four weeks) advance, but we like to go with the evidence. So far, all of the indexes are holding above their 50-day lines, and very few stocks have shown any abnormal selling. Thus, while we’re not fully invested, we are sticking with a bullish outlook and believe holding your best performers, and even buying a little on this dip, makes sense.

This week’s list is again heavy on the chip and medical (mainly biotech) sectors, with a smattering of retail. Our Top Pick is Biogen (BIIB), a blue-chip leader of the biotech group. The stock lifted out of a 10-month base in January and has acted well since, and it’s now approaching a solid entry point after pulling back.

Stock Name	Price	Buy Range	Loss Limit
WhiteWave Foods (WWAV)	0.00	39.5-41	37-38
Tesoro (TSO)	0.00	86-89	80-81
Skyworks Solutions (SWKS)	0.00	90-92	80-82
NXP Semiconductors (NXPI)	0.00	95-100	87-89
Mallinckrodt (MNK)	0.00	117-121	108-110
Jack in the Box (JACK)	0.00	92-95	87-88
HDFC Bank Limited (HDB)	0.00	59-61	56-57
Centene (CNC)	0.00	61-62.5	57-58
Burlington Stores (BURL)	193.95	54-56	50-51
Biogen (BIIB)	0.00	405-415	370-380

Current Market Outlook


With the broad market zooming, finding strong stocks is easy these days. But while buying any strong stock might work, your best odds will come from buying strong stocks that have set up well. That means they have a base, where supply and demand have stabilized for a while, or they have a breakout, which can kick off a new advance, or other supportive patterns. What you don’t want to do in a market this strong is buy (or own) laggards. Make hay while the sun shines! (And take advantage of what are traditionally the two last months in the market’s favorable November-April season.)

Our Top Pick this week is WABCO Holdings (WBC), a global supplier of technology systems for commercial trucks, buses and trailers. Business is booming and the stock has great and growing sponsorship.

Stock Name	Price	Buy Range	Loss Limit
WABCO Holdings (WBC)	0.00	116-118	103-105
Norwegian Cruise Lines (NCLH)	0.00	47.5-49.5	43-43.5
IntercontinentalExchange, Inc. (ICE)	0.00	230-236	220-222
Hilton Worldwide Holdings (HLT)	0.00	28-29	26-26.5
Salesforce.com (CRM)	0.00	68-70	60-62
Cracker Barrel Old Country Store (CBRL)	0.00	149-152	133-136
Cavium (CAVM)	0.00	68-70	62-64
Acuity Brands (AYI)	0.00	155-160	144-146
Akorn (AKRX)	0.00	51-53	46-48
Agrium (AGU)	0.00	110-114	104-106

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.

Yesterday, Vulcan Materials (VMC) reported fourth-quarter 2015 results of $0.31 per share, when the market was expecting $0.26. As a result, the stock is climbing.

For the second time since we launched Smart Investing in Turbulent Times in October 2015, we have a takeover stock in the Buy Low Opportunities Portfolio.

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.