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

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.

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.

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 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 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.

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.

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.

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.

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 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.

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.

I recommend that you sell Boeing and move your capital into WellCare Health Plans (WCG) or Cardinal Health (CAH).

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.