Issues
Current Market OutlookThe market was due for a pullback after three straight good weeks, and that’s what we’re seeing now as investors ponder 50-50 polls on Britain’s upcoming E.U. vote (a yes vote is generally considered bearish), the Fed’s meeting this week and Sunday’s horrible terrorist attack. The bottom line is that many indexes are approaching their 50-day lines, though few leading stocks have broken down. As always, you should play it by the book: By our measures, the market’s trends are still sideways-to-up, so we’re sticking with our overall bullish stance; dips following strong advances still look buyable. That said, you should also honor your stops and loss limits, jettisoning any stocks that break support. Further market weakness would have us turning cautious, but today we’ll keep our Market Monitor where it’s been.
Encouragingly, we had no problem finding some great-looking stocks. Our Top Pick is Dave & Buster’s (PLAY), which has a newer retail concept that’s working well, and the firm is on a solid expansion pace.
| Stock Name | Price | ||
|---|---|---|---|
| Dave & Buster’s (PLAY) | 57.01 | ||
| Penumbra Inc. (PEN) | 173.25 | ||
| Match (MTCH) | 0.00 | ||
| LLL (LLL) | 0.00 | ||
| Halliburton (HAL) | 0.00 | ||
| Cornerstone OnDemand (CSOD) | 51.01 | ||
| CDK (CDK) | 0.00 | ||
| Burlington Stores (BURL) | 193.95 | ||
| AMN Healthcare (AHS) | 0.00 | ||
| Agnico Eagle Mines (AEM) | 79.05 |
Current Market OutlookThe S&P 500 and Nasdaq came into last week perched just under major resistance levels. But despite the prior run-up, weak opens on every day of the week and the poor jobs report on Friday, the market couldn’t pull back! Of course, the indexes still aren’t free and clear, and there are many uncertainties out there including the Fed’s next move and the upcoming EU vote in Britain, so we can’t rule out another retreat. But the market’s resilience thus far and the improved action from many leading stocks bodes well. We’re keeping our Market Monitor in bullish territory—a breakout on the upside (with many more stocks hitting new highs) would prompt us to lean toward a fully invested posture, while a dip of a few percent would have us paring back again.
This week’s list has many enticing selections, but we’ve selected an energy stock for our Top Pick. Continental Resources (CLR) has the acreage to crank out huge profits if oil prices creep higher, and the stock has tightened up nicely after a big run. Start with a small position and add to it as it rises.
| Stock Name | Price | ||
|---|---|---|---|
| Zendesk (ZEN) | 82.19 | ||
| Zillow (Z) | 76.64 | ||
| UnitedHealth Group Inc. (UNH) | 0.00 | ||
| Ulta Beauty (ULTA) | 331.95 | ||
| Tata Motors Limited (TTM) | 0.00 | ||
| Steel Dynamics (STLD) | 0.00 | ||
| Sanmina (SANM) | 0.00 | ||
| Continental Resources (CLR) | 66.19 | ||
| Big Lots (BIG) | 43.12 | ||
| Broadcom Limited (AVGO) | 266.26 |
Current Market OutlookWe think last week’s action could prove to be a turning point for the market, not just in the short-term (recovering from a four-plus week retreat) but longer-term, too (as some indexes attack key resistance levels). There are still flies in the ointment (we’d like to see more stocks hitting new highs), so we’re not fully bullish, but the combination of a healthy broad market, the intermediate- and longer-term trends of the market pointing sideways-to-up, and pervasive negative sentiment (nobody believes the market will rise significantly going forward), all bode well going forward. After a trip into neutral territory, we’re bullish again, though we’re still holding some cash in reserve as we wait for more individual stocks to kick into gear.
This week’s list has many great looking charts combined with solid growth stories. Our Top Pick is more aggressive than we’ve had in recent weeks—Veeva Systems (VEEV) has a great growth story and it catapulted higher on earnings, marking what could be a coming out party for the stock. Keep new positions small to start.
| Stock Name | Price | ||
|---|---|---|---|
| Veeva Systems (VEEV) | 180.23 | ||
| ONEOK (OKS) | 0.00 | ||
| Universal Display (OLED) | 187.54 | ||
| Masimo (MASI) | 159.56 | ||
| Jack in the Box (JACK) | 0.00 | ||
| Dycom Industries (DY) | 0.00 | ||
| Dollar Tree (DLTR) | 0.00 | ||
| Copart (CPRT) | 74.80 | ||
| Boston Scientific (BSX) | 0.00 | ||
| Abiomed (ABMD) | 0.00 |
Current Market OutlookThe market has turned mostly neutral, with the intermediate-term trend slightly negative, the longer-term trend slightly positive, and individual stocks a mixed bag. In the big picture, the pullback in the major indexes during the past month is reasonable given the February-April gains, and we’re encouraged by both the broad market’s resilience (few stocks or sectors are in disarray) and the dearth of bullish sentiment. Even so, it’s best to go with the market’s action first and foremost, and right now, it’s a mixed bag. Thus, we’re knocking our Market Monitor down another notch and will keep an open mind—a big-volume selloff from here would raise the odds of a deeper correction, but a surge back above the 50-day lines for the major indexes would likely signal the resumption of the post-February advance. Stay tuned.
This week’s list again has a solid growth feel to it, including a few stocks that recently reacted well to earnings. Our Top Pick is Fidelity Information Services (FIS), a steady fundamental performer that gapped up on earnings three weeks ago and has held firm since.
| Stock Name | Price | ||
|---|---|---|---|
| Weibo (WB) | 98.16 | ||
| Ultimate Software (ULTI) | 0.00 | ||
| TransUnion (TRU) | 83.09 | ||
| Tallgrass Energy Partners (TEP) | 0.00 | ||
| NetEase, Inc. (NTES) | 0.00 | ||
| Fidelity National Information Services (FIS) | 0.00 | ||
| Emergent BioSolutions, Inc. (EBS) | 0.00 | ||
| Salesforce.com (CRM) | 0.00 | ||
| Becton Dickinson (BDX) | 0.00 | ||
| Applied Materials (AMAT) | 0.00 |
Current Market OutlookIt’s been a frustrating past month in the market, with the major indexes chopping lower, the Nasdaq breaking its 50-day line, many stocks blowing up on earnings and most investors throwing up their hands in disgust. Yet, through it all, the evidence hasn’t deteriorated to a major degree—the intermediate-term uptrend hasn’t broken, and most strong, liquid stocks that weren’t maimed during earnings have held key support. Today was certainly encouraging, though it’s too soon to assume the pullback is over so we’ll keep our Market Monitor where it is today. However, the next few days should be telling—a decisive break lower from here will have us trimming our sails, but another good day or two would be a great sign that the post-February advance is resuming.
This week’s list is encouraging in that we see more true growth stories—or at least stocks with some major catalysts. Our Top Pick is Martin Marietta Materials (MLM), which is one of the big raw material suppliers for the construction industry. Buy on dips.
| Stock Name | Price | ||
|---|---|---|---|
| TransDigm (TDG) | 599.41 | ||
| NVIDIA Corporation (NVDA) | 242.42 | ||
| Newmont Mining (NEM) | 57.31 | ||
| Martin Marietta Materials (MLM) | 261.52 | ||
| Jacobs Engineering Group (JEC) | 89.83 | ||
| Electronic Arts (EA) | 0.00 | ||
| EBIX Inc. (EBIX) | 0.00 | ||
| Blue Buffalo Pet Products (BUFF) | 0.00 | ||
| B&G Foods (BGS) | 0.00 | ||
| Berry Global (BERY) | 64.22 |
Current Market OutlookThe market has now been pulling back for nearly three weeks following a strong two-month rebound; currently, most indexes are hovering just above their 50-day lines (though the Nasdaq is living below its 50-day). Among individual stocks, the action has been mixed, with many stocks and sectors breaking down but a fair number holding up well (and some even emerging on positive earnings reports). All in all, we’re nudging our Market Monitor down a notch, but the rubber should meet the road in the coming days—a decisive break of support would have us advising holding more cash, while a strong resumption of the uptrend should present some excellent buying opportunities. For now, we continue to lean bullish, but we’re taking things on a stock-by-stock basis and watching the action closely.
This week’s list is another broad collection of stocks and sectors, though we’re seeing more good growth stories pop up. Our Top Pick this week is one of them: Align Technologies (ALGN) isn’t a barn-burner, but growth is accelerating, earnings estimates are excellent and the stock is hitting new highs.
| Stock Name | Price | ||
|---|---|---|---|
| Zillow (Z) | 76.64 | ||
| Pioneer Natural Resources (PXD) | 0.00 | ||
| Huntsman (HUN) | 0.00 | ||
| Home Depot (HD) | 0.00 | ||
| Facebook, Inc. (FB) | 0.00 | ||
| Cynosure (CYNO) | 0.00 | ||
| Continental Resources (CLR) | 66.19 | ||
| Activision Blizzard, Inc. (ATVI) | 0.00 | ||
| Align Technology (ALGN) | 316.20 | ||
| AMN Healthcare (AHS) | 0.00 |
Current Market OutlookA batch of disappointing earnings reports combined with the 2015 overhead resistance areas (around 2,080 to 2,140 on the S&P 500 and 5,000 to 5,200 on the Nasdaq) to bring out the sellers last week, especially in some big, old tech stocks, which drove the Nasdaq below its 50-day line. However, the other indexes are in good shape, and while a few stocks have cracked on earnings, most are holding up just fine. The bottom line is that, to this point, not much has changed—the market still doesn’t have the leadership we’d like to see, but the trend is up and the broad market is in good shape. Thus, you should be holding your top performers (though booking some partial profits here and there is always smart) and using normal retreats in strong stocks as buying opportunities.
This week’s list is a hodgepodge of stocks from all over the map, including some growth, commodities and turnarounds. Our Top Pick is Teck Resources (TCK), a giant turnaround play in the commodity space—the firm remained profitable throughout the bust, and after a great quarterly report, earnings are expected to boom in the quarters ahead.
| Stock Name | Price | ||
|---|---|---|---|
| United States Steel Corporation (X) | 0.00 | ||
| VCA Inc. (WOOF) | 0.00 | ||
| Teck Resources Limited (TCK) | 0.00 | ||
| Square, Inc. (SQ) | 91.04 | ||
| Monster Beverage Corporation (MNST) | 0.00 | ||
| Core Laboratories (CLB) | 0.00 | ||
| Boardwalk Pipeline Partners (BWP) | 0.00 | ||
| Boston Scientific (BSX) | 0.00 | ||
| Banc of California (BANC) | 0.00 | ||
| Amazon.com (AMZN) | 2.00 |
Current Market OutlookThe market has met with some selling in recent days, spurred on by some poorly received earnings reports and the fact that the major indexes were butting up against resistance areas formed during much of 2015. In the short term, further consolidation is possible for the indexes, and would be logical after a relatively smooth two-plus month run. And some potholes among individual stocks are sure to pop up during earnings season. But the overall bullish story remains intact—the major trends of the indexes remain up, selling pressures on the broad market are light and Top Ten stocks are generally acting well. You should continue to lean bullish, holding your top performers and buying strong stocks on dips, all while holding some cash (possibly 25% to 30%) on the sideline.
This week’s list has a wide mix of stocks and industries, including a bunch of names that haven’t appeared in many months (if ever). Our Top Pick is Nvidia (NVDA), a chipmaker with huge opportunities in new markets and a stock that is consolidating calmly. Keep new positions small ahead of earnings.
| Stock Name | Price | ||
|---|---|---|---|
| Silver Wheaton (SLW) | 0.00 | ||
| Parsley Energy (PE) | 0.00 | ||
| NVIDIA Corporation (NVDA) | 242.42 | ||
| Medivation (MDVN) | 0.00 | ||
| HD Supply Holdings, Inc. (HDS) | 0.00 | ||
| New Oriental Education (EDU) | 113.97 | ||
| DCP Midstream (DPM) | 0.00 | ||
| 3D Systems (DDD) | 0.00 | ||
| Crescent Point Energy (CPG) | 0.00 | ||
| Broadcom Limited (AVGO) | 266.26 |
Current Market OutlookLast night, the headlines blared that there was no deal among Middle Eastern countries to curtail oil production, which led to a big overnight move down in oil prices and threatened to take a chunk out of major stock markets. Today, though, the reaction was fine—stocks actually rose on the day while oil prices declined only modestly. It’s not just a good lesson (pay attention—not to the news—but the market’s reaction to the news!), but also a good sign that the general market can shrug off “bad news” and continue along its way. More important will be earnings season, which will pick up steam in the days ahead. Right now, we continue to lean bullish and will be watching earnings reactions closely—how stocks react to their reports will be very revealing.
This week’s list has a mix of old world stocks (housing, construction, precious metals) and growth-oriented stocks (retail, technology). Our Top Pick is Adobe Systems (ADBE), a big-cap growth stock that has a great story and looks poised to break out.
| Stock Name | Price | ||
|---|---|---|---|
| TAL Education (XRS) | 0.00 | ||
| Whirlpool (WHR) | 0.00 | ||
| Weibo (WB) | 98.16 | ||
| U.S. Concrete (USCR) | 0.00 | ||
| Steel Dynamics (STLD) | 0.00 | ||
| Universal Display (OLED) | 187.54 | ||
| KB Home (KBH) | 36.05 | ||
| Kate Spade & Company (KATE) | 0.00 | ||
| Agnico Eagle Mines (AEM) | 79.05 | ||
| Adobe Inc. (ADBE) | 315.23 |
Current Market OutlookThe market hit some resistance during the past two weeks, with 2,070 or so on the S&P and 4,900 on the Nasdaq repelling recent advances, and with many individual stocks hitting potholes. While there are still some things missing from the rally (namely, new highs outside of the “yield” stocks and sectors), to this point, the selling is normal given the huge February-March advance and the fact that earnings season is approaching. Some further retrenchment, which could go along with a scary headline or two, would probably be good for the market in the long run. So far, though, we remain more bullish than not, and we’re pleased to see some early earnings winners emerge.
This week’s list has a handful of those winners, though for our Top Pick, we’re delving into the precious metals sector—AngloGold (AU) is under extreme accumulation, bursting to new highs as the gold stocks resume their advance. Try to buy on dips.
| Stock Name | Price | ||
|---|---|---|---|
| Tesla, Inc. (TSLA) | 818.87 | ||
| Silicon Motion (SIMO) | 0.00 | ||
| Ollie’s Bargain Outlet (OLLI) | 103.94 | ||
| Newmont Mining (NEM) | 57.31 | ||
| Ligand Pharmaceuticals (LGND) | 267.14 | ||
| Global Payments Inc. (GPN) | 0.00 | ||
| Five Prime Therapeutics (FPRX) | 0.00 | ||
| Edwards Lifesciences (EW) | 228.06 | ||
| Acuity Brands (AYI) | 0.00 | ||
| AngloGold Ashanti (AU) | 20.45 |
Current Market OutlookThe market has enjoyed something of a “lockout” rally since it bottomed in early February, rarely pulling back for more than a couple of days before finding buyers. Combined with some rare momentum indicators that have flashed, the action is characteristic of a kick-off to a sustained advance. That said, there remain flies in the ointment—most of the strength has been in dividend-related stocks (growth stocks are just doing so-so), and the off-the-bottom sectors (industrials, commodities, etc.) are starting to hit resistance. As earnings season approaches, some pullbacks would not be unusual among individual stocks and sectors. Altogether, you should continue to lean bullish, but we need to see growth stocks get going and the longer-term trend turn up before getting fully bullish.
This week’s list is a good mix of stocks and sectors; we’re seeing more growth-oriented stocks begin to appear. Our Top Pick is Five Below (FIVE), a great cookie-cutter story whose stock recently reacted well to earnings. Try to buy on dips.
| Stock Name | Price | ||
|---|---|---|---|
| United States Steel Corporation (X) | 0.00 | ||
| Square, Inc. (SQ) | 91.04 | ||
| Sonic Corp. (SONC) | 35.22 | ||
| RSP Permian (RSPP) | 0.00 | ||
| MasTec, Inc. (MTZ) | 66.65 | ||
| Lululemon Athletica (LULU) | 304.69 | ||
| Michael Kors Holdings Limited (KORS) | 73.22 | ||
| Hewlett Packard Enterprise (HPE) | 0.00 | ||
| Five Below (FIVE) | 134.58 | ||
| Amedisys (AMED) | 174.06 |
Current Market OutlookAfter five straight weeks on the upside, the major indexes have retreated mildly in recent days, keeping the intermediate-term uptrend firmly intact. Going forward, the key will be how the market handles itself during any further weakness—if dips are modest and lead to renewed upside (especially with growth stocks beginning to hit new highs), then a legitimate bull phase will likely be in place. If the selling pressures intensify and the major indexes sink, that would obviously tell you the opposite. Right now, given the evidence, we remain optimistic, but not fully bullish, until the longer-term trend and growth stocks kick into gear. We’ll be watching for it.
This week’s list is again heavier on commodity and turnaround ideas than true growth stories. Our Top Pick is Wynn Resorts (WYNN), which has bottomed out and begun a new advance, bolstered in part by a new resort opening in Macau later this year.
| Stock Name | Price | ||
|---|---|---|---|
| Wynn Resorts (WYNN) | 121.08 | ||
| Proto Labs (PRLB) | 0.00 | ||
| Parsley Energy (PE) | 0.00 | ||
| Nucor Corporation (NUE) | 66.20 | ||
| NCR Inc. (NCR) | 0.00 | ||
| Mellanox Technologies (MLNX) | 92.00 | ||
| Inphi (IPHI) | 120.16 | ||
| Barrick Gold (GOLD) | 27.20 | ||
| Finisar (FNSR) | 0.00 | ||
| FedEx (FDX) | 0.00 |
Updates
It’s not often that we discuss currencies in the Cabot Turnaround Letter, but given the persistent relative strength of the U.S. dollar right now, I think it’s imperative that we address it—mainly because of how it will likely impact our portfolio holdings going forward.
The top haven asset for the first half of 2026 wasn’t gold, U.S. Treasury bonds or the Japanese yen.
The top haven asset for the first half of 2026 wasn’t gold, U.S. Treasury bonds or the Japanese yen.
After spending much of the year leading the market higher, small caps have finally run into a little turbulence. Through midday today, the S&P 600 Index is down 1.8% from last Thursday’s close, roughly in line with the S&P 500’s 1.9% decline.
That said, it’s important to keep the recent pullback in perspective. Small caps remain the market’s clear leader in 2026, with the S&P 600 up 20.2% year to date versus an 8.1% gain for the S&P 500.
That said, it’s important to keep the recent pullback in perspective. Small caps remain the market’s clear leader in 2026, with the S&P 600 up 20.2% year to date versus an 8.1% gain for the S&P 500.
While flashier, more star-studded teams like Lionel Messi’s Argentina, Kylian Mbappe’s France and Erling Haaland’s Norway garnered most of the headlines at the just-completed World Cup, Spain was the best team. There was nothing flashy about Spain: no mega-stars, not a ton of goals, no relentless attack. Instead, they dominated the tournament with precision passing, immaculate ball control and near-impenetrable (just one goal allowed all tournament!) defense.
High-flying AI-related stocks are facing a high bar of performance. Even what normally would be considered staggering growth is met with a yawn. The backdrop of the Middle East conflict and almost $100 oil is not helpful.
The Philadelphia Semiconductor Index (SOX) has outperformed the S&P 500 by 57% this year, even after a sharp correction. This is basically a macro trade, and there are few industries as cyclical, or as capital-intensive, as semiconductor manufacturing.
The Philadelphia Semiconductor Index (SOX) has outperformed the S&P 500 by 57% this year, even after a sharp correction. This is basically a macro trade, and there are few industries as cyclical, or as capital-intensive, as semiconductor manufacturing.
The market rolls sideways amidst a slew of conflicting forces.
The S&P 500 has bounced around and is at the same level it was in the middle of May. The primary culprit is technology. That sector has been in a funk. The S&P 500 is hard-pressed to generate any lasting traction while this massive sector, accounting for over 40% of the index, flounders.
The S&P 500 has bounced around and is at the same level it was in the middle of May. The primary culprit is technology. That sector has been in a funk. The S&P 500 is hard-pressed to generate any lasting traction while this massive sector, accounting for over 40% of the index, flounders.
The market has gone sideways since May. It seems to be deciding what to do.
It’s encouraging that the resumption of hostilities with Iran has not sent the market lower. It’s also positive that oil prices aren’t rising back to the $100 level earlier in the war, although prices have risen. It’s also another earnings season and analysts expect a big one.
It’s encouraging that the resumption of hostilities with Iran has not sent the market lower. It’s also positive that oil prices aren’t rising back to the $100 level earlier in the war, although prices have risen. It’s also another earnings season and analysts expect a big one.
With war being one of the most dominant themes of the last four years, it stands to reason that investors should position their portfolios to account for this conspicuous (and unwelcome) trend.
And lest one be tempted to think that the warfare theme will diminish anytime soon, last week’s article by NPR deflates that illusion: It revealed that global military conflicts are at their highest level since WWII.
And lest one be tempted to think that the warfare theme will diminish anytime soon, last week’s article by NPR deflates that illusion: It revealed that global military conflicts are at their highest level since WWII.
Price targets are standard practice on Wall Street. But sometimes, they can act as an artificial ceiling.
For example, say Truist sets a price target on an up-and-coming growth stock that’s 25% higher than its current share price. For a growth stock, a 25% return isn’t much. But then again, the stock could be a total flop, which is the natural boom-or-bust tradeoff growth investors must endure in trading off increased risk for massive upside. So, a price target on a growth stock seems almost like an unnecessary cap on a stock that has the potential to go through the roof.
For example, say Truist sets a price target on an up-and-coming growth stock that’s 25% higher than its current share price. For a growth stock, a 25% return isn’t much. But then again, the stock could be a total flop, which is the natural boom-or-bust tradeoff growth investors must endure in trading off increased risk for massive upside. So, a price target on a growth stock seems almost like an unnecessary cap on a stock that has the potential to go through the roof.
WHAT TO DO NOW: Continue to trim your sails. In the Model Portfolio, we’ve been getting closer and closer to shore as growth funds and indexes are under pressure and AI stocks cascade lower. Tonight we’re going to further trim Marvell (MRVL) given its ugly action, selling a third of what we have left. That will leave the portfolio with a big 58% cash position. We could put some of that to work if growth names find support, but we want to see key growth measures firm up before buying.
After a brief pause last week, small caps are once again leading the pack.
Through Wednesday’s close, the S&P 600 Small Cap Index is up roughly 21% year to date, compared to gains of about 15% for the S&P 400 MidCap Index, 17% for the Nasdaq and 11% for the S&P 500.
Through Wednesday’s close, the S&P 600 Small Cap Index is up roughly 21% year to date, compared to gains of about 15% for the S&P 400 MidCap Index, 17% for the Nasdaq and 11% for the S&P 500.
Its earnings season again! That’s a good thing. Earnings just might save the day in an otherwise confusing and uncertain market.
The market is causing whiplash. The Iran peace deal changed things. Stocks held back by high oil prices, and the resulting higher inflation and interest rates, reignited as oil prices came back down after the peace deal. But hostilities with Iran have resumed.
The market is causing whiplash. The Iran peace deal changed things. Stocks held back by high oil prices, and the resulting higher inflation and interest rates, reignited as oil prices came back down after the peace deal. But hostilities with Iran have resumed.
The peace deal may be on hold again. But stocks are hanging in there so far.
The ceasefire with Iran is over and hostilities have resumed. That sounds like a bigger bummer than it’s been in the market so far. Falling oil prices enabled previously beleaguered stocks to soar higher again as the prognosis for inflation and interest rates simultaneously improved. But that rally is over if oil prices spike higher again.
The ceasefire with Iran is over and hostilities have resumed. That sounds like a bigger bummer than it’s been in the market so far. Falling oil prices enabled previously beleaguered stocks to soar higher again as the prognosis for inflation and interest rates simultaneously improved. But that rally is over if oil prices spike higher again.
Alerts
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.
Portfolios
Strategy
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 Momentum 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 Momentum Trader features.