Trouble comes from where investors least expect it, so it’s not surprising to us that the Russia-Ukraine situation is making investors nervous. Is there a chance this is the event that capsizes the market? Of course there is—and that’s why you should watch your stops and risk. But after such a powerful rally for much of February among the major indexes and many stocks, the odds favor the first dip being buyable, at least among leading stocks. That doesn’t mean the pullback can’t last a few days (news-driven ups and downs are likely in the short-term), but with the overall uptrend intact, we remain optimistic.

This week’s list isn’t as growth-oriented as the past few weeks, but there are still more than a few good stories here. Our Top Pick is Avis Budget (CAR), a well-known firm with surprisingly solid earnings growth prospects as global travel increases.

Stock Name	Price	Buy Range	Loss Limit
58.com (WUBA)	0.00	46-48	41-42
Trimble Navigation (TRMB)	0.00	36-38	34-35
Signet Jewelers (SIG)	0.00	93-95	85-87
Spirit Airlines (SAVE)	57.03	54-57	49.5-50.5
Regeneron Pharmaceuticals (REGN)	512.96	320-330	275-280
Penn Virginia (PVA)	0.00	14-14.5	12-12.5
Michael Kors Holdings Limited (KORS)	73.22	95-100	85-90
Keurig Green Mountain (GMCR)	0.00	105-112	91-92
Avis Budget Group (CAR)	0.00	45-47	41-42
Basic Energy Services (BAS)	0.00	21.5-23	19-20

We wrote last week about how the unusually persistent rebound in the market bodes well going forward. And the good vibes have continued since then, with gaggles of growth stocks rising nearly every day and a vacuum of selling pressure. Also impressive is how stocks have reacted to their quarterly reports—earnings season is nearly over, but we can’t remember a time when so many stocks have gapped up on their results. Of course, the market isn’t a one-way street, and forgotten are many of the worries of a month ago; some shakeouts are sure to occur. But such power on the upside usually doesn’t just disappear. We remain optimistic.

This week’s list reveals a broad swath of strong stocks from many industries. Our Top Pick is AerCap Holdings (AER), a firm that buys and leases airplanes. Business is strong, earnings estimates are huge and a recent acquisition is a game changer.

Stock Name	Price	Buy Range	Loss Limit
Domtar (UFS)	0.00	104-110	96-97
Trinity Industries (TRN)	0.00	65-67	59-60
RetailMeNot (SALE)	0.00	41-43	36.5-37.5
O’Reilly Automotive (ORLY)	0.00	150-155	142-143
Nabors Industries (NBR)	0.00	21-22.5	19-19.5
Harman International Industries, Inc. (HAR)	0.00	102-105	93-95
Freescale Semiconductor (FSL)	0.00	21-22	18-19
FireEye (FEYE)	0.00	73-75	63-65
HomeAway, Inc. (AWAY)	0.00	45-48	41-41.5
AerCap (AER)	0.00	41-43	35-36

When evaluating the market, you want to pay attention to unusual activity (good or bad), and the non-stop recovery by the market during the past two weeks strikes us as unusually bullish—eight times out of 10 the market will stall out during the rally, but so far, there’s been a vacuum of selling pressures. That doesn’t mean everything is rosy (many divergences have popped up, and the number of stocks hitting new highs is much smaller than it was in January), but the persistent snapback is enough to put our Market Monitor back into a lean-bullish stance. And that means you should do some buying in some newly-powerful stocks.
This week’s list has a bunch of newer names that are mostly on the growth side of the fence. Our Top Pick is Demandware (DWRE), a small company with a big story. It’s thinly traded, so be sure to keep your position smaller than normal.

Stock Name	Price	Buy Range	Loss Limit
YY Inc. (YY)	0.00	63-66	56-58
Tesla, Inc. (TSLA)	818.87	190-195	165-170
SolarCity (SCTY)	0.00	70-75	63-64
Proofpoint (PFPT)	113.79	37.5-40.5	34-34.5
Monster Beverage Corporation (MNST)	0.00	70-71.5	62-64
Jones Lang LaSalle (JLL)	0.00	114-119	104-106
Intercept Pharmaceuticals (ICPT)	0.00	300-340	250-260
E*Trade Financial (ETFC)	0.00	21-22	19-19.5
Demandware (DWRE)	0.00	68-70	59-60
Athenahealth (ATHN)	0.00	180-187	160-162

The fact that the major indexes and, especially, a ton of growth stocks bounced sharply late last week is a bullish sign; it at least tells you buyers are still interested, especially when it comes to some fast-growing names that recently reported outstanding results. That said, we can’t conclude the market is off to the races again—all the major indexes (save the Nasdaq) are still below their 50-day lines, the number of stocks hitting new highs is still tiny, and much of the broad market has taken on lots of water. Some new buying is fine, as is holding your top performers, but be sure to hold some cash until the market confirms a new uptrend.

This week’s list has a bunch of stocks that are acting bullishly, including a few that recently gapped up on earnings. Our Top Pick is Michael Kors (KORS), a well-sponsored name that reported a blowout quarter last week. Try to buy on dips.

Stock Name	Price	Buy Range	Loss Limit
Yelp (YELP)	41.30	86-92	75-76
Valeant Pharmaceuticals (VRX)	0.00	133-138	124-125
USG Corp. (USG)	0.00	31-33	29.5-30
Salix Pharmaceuticals (SLXP)	0.00	95-99	89-90
ServiceNow (NOW)	341.86	63-65	57-58
Michael Kors Holdings Limited (KORS)	73.22	91-96	83-84
Incyte Corporation (INCY)	76.98	62.5-65	54-55
Keurig Green Mountain (GMCR)	0.00	102-107	89-90
Tableau Software (DATA)	126.42	84-88	78-80
Canadian Solar (CSIQ)	0.00	36.5-38.5	32-33

Last week’s market action provided an awesome opportunity to discover leading stocks; they were the ones that quickly bounced back from the broad market selling and broke out to new highs! It’s not often you get such a clear opportunity to separate the wheat from the chaff, but when you do, it’s worth taking advantage of. Today, all those stocks that broke out are on our favored list, while those that bounced weakly are suspect. And those that did worse? They should be sold—note that our Hold list on page 12 has shrunk a bit. Also arguing for selling is the fact that our Market Monitor remains in neutral territory, mainly because the market’s intermediate-term trend is down. In short, holding some cash and keeping new buys small is advised. Our favorite stock in today’s crop is WebMD (WBMD), which has solid growth prospects and a great technical set-up.

Stock Name	Price	Buy Range	Loss Limit
WebMD Health Corp. (WBMD)	0.00	44-46	39-40
Twitter (TWTR)	40.37	60-65	54-55
Sangamo BioSciences (SGMO)	0.00	16.5-18.5	14-15
Royal Caribbean Cruises (RCL)	0.00	47-50	45-46
Qihoo 360 (QIHU)	0.00	95-98	84-85
Pandora Media Inc. (P)	0.00	33-36	30-31
NPS Pharmaceuticals (NPSP)	0.00	32-35	29-30
Keryx Biopharmaceuticals (KERX)	0.00	14-15.5	12.5-13.5
Facebook, Inc. (FB)	0.00	60-62.5	55-56
Concur Technologies (CNQR)	0.00	113-115	100-102

The big news today is that last week’s market weakness turned our intermediate-term market-timing indicator negative. But no one indicator is perfect, and at Cabot, we use another indicator to measure the market’s long-term trend—and that indicator is still positive. Thus it’s a standoff, which means our Market Monitor is positioned at dead neutral. Short-term, we tend to think the market is ripe for more of a pullback, simply because it’s had such a great, long advance. But long-term, we remain optimistic that once the correction is complete, the main uptrend can continue, and this thinking, in part, is because there are so few investment alternatives! In any event, our goal is to continue presenting you with stock that are most prone to short-term strength, and this issue brings a nice mix of old and new. Read them all, choose your favorite story, and work to find a good entry point. Our favorite this week is Twitter (TWTR), which has a huge fundamental story and a decent technical setup.

Stock Name	Price	Buy Range	Loss Limit
Valeant Pharmaceuticals (VRX)	0.00	125-131	123-124
VeriSign (VRSN)	190.71	58.5-60.5	56-57
Vipshop Holdings (VIPS)	14.25	91-95	80-82
Twitter (TWTR)	40.37	56-62	52-53
Insulet (PODD)	175.69	41-43	39-40
Pandora Media Inc. (P)	0.00	31-33	29-29.5
Medivation (MDVN)	0.00	70-75	69-70
The Hain Celestial Group, Inc. (HAIN)	0.00	91-93	83-85
Gilead Sciences (GILD)	75.10	76-79	73-74
CalAmp (CAMP)	0.00	27-29	24-25

The evidence has generally improved during the past two weeks, with the major indexes remaining in solid uptrends and, most encouragingly, more growth-oriented stocks showing power and emerging from basing structures. All of that is to the good, but earnings season is ramping up, and we know that can change any stock’s or sector’s outlook in a hurry. Put it together, and we’re still sticking with our lean bullish stance—now’s probably not the time to buy five or six stocks at once, but there are many attractive names out there, and getting in at opportune times should pay off.

This week’s list is heavy on growth stocks, though there are a couple of cyclical and special situation ideas, too. Our favorite of the week is HomeAway (AWAY), a firm we remain keen on, and a stock that’s testing support for the first time since a powerful November breakout.

Stock Name	Price	Buy Range	Loss Limit
T-Mobile US (TMUS)	0.00	30-32	27-28
SolarCity (SCTY)	0.00	70-74	63-64
Altisource Residential (RESI)	0.00	31.5-33	29-29.5
Pacira Biosiences (PCRX)	54.85	63-65	53-55
Palo Alto Networks (PANW)	236.92	60-62.5	55-56
The Manitowoc Company (MTW)	0.00	23.5-25	21.5-22
Harman International Industries, Inc. (HAR)	0.00	87-90	80-81
Forest Labs (FRX)	0.00	65-70	59-60
HomeAway, Inc. (AWAY)	0.00	40-42	37-37.5
AOL, Inc. (AOL)	0.00	48-50	44-45

We’ve seen mixed action since the year began, which isn’t totally surprising given January’s normal wiggles. The major indexes are churning a bit up near their highs, something that can lead to short-term selling; at the very least, it’s telling you that buying pressures have eased as the calendar has flipped. On the other hand, we’re encouraged to see some growth stocks that had been sitting out the dance since early October begin to reassert themselves—so far this year, we’ve seen a handful of breakouts from legitimate bases, the first collection of breakouts since November, and most held well even in today’s selloff. All told, we continue to lean bullish, though we’re watching things closely.

This week’s list has a bunch of promising names, including a few with terrific growth stories. Our favorite of the week is Arris Group (ARRS), which, thanks to a huge acquisition last year, is a leading provider of next-generation set-top boxes. Try to buy on weakness.

Stock Name	Price	Buy Range	Loss Limit
Yelp (YELP)	41.30	74-78	69-70
United Therapeutics (UTHR)	0.00	105-110	95-97
United Continental Holdings (UAL)	96.76	43-45	39-40
Splunk (SPLK)	207.67	72-74	64-65
Pandora Media Inc. (P)	0.00	31.5-33.5	29-29.5
Medivation (MDVN)	0.00	68-70	63-64
JinkoSolar Holding (JKS)	0.00	31-34	28-29
FireEye (FEYE)	0.00	53-57	47-48
Broadcom Limited (AVGO)	266.26	50-52	47-48
Arris Group (ARRS)	0.00	23-24.5	20-21

The evidence has gotten a bit worse during the past week, with more misses than hits among leading growth stocks, and with the major indexes sagging a few days in a row. That said, early January is often tricky, with lots of crosscurrents, profit taking, repositioning and so on, so we’re hesitant to change our stance for the moment unless we see a decisive show of strength or weakness. The good news is that we are seeing more proper set-ups from many names that rested during the past six to 10 weeks; if a bunch of them emerge, it would give us some newer, fresher leadership to sink our teeth into.

This week’s list includes a bunch of smaller and less-well-known ideas, which we view as a good thing; most of the “obvious” stocks are either chopping around or suffering through some selling. Our Top Pick this week is YY Inc. (YY), which has had a huge run, but isn’t overly pricey and just surged out of a multi-week tight area. It’s very volatile but the potential is big.

Stock Name	Price	Buy Range	Loss Limit
YY Inc. (YY)	0.00	54-58	49-50
WisdomTree (WETF)	0.00	16-17	14.5-15
Western Digital Corporation (WDC)	0.00	80-83	75-76
Workday (WDAY)	194.88	81.5-85.5	77-78
Spirit AeroSystems (SPR)	92.54	32.5-34	30.5-31
NPS Pharmaceuticals (NPSP)	0.00	30.5-32	26-27
Jazz Pharmaceuticals (JAZZ)	0.00	120-127	112-113
Himax Technologies (HIMX)	0.00	12.5-14	11.5-12
E-House Holdings (EJ)	0.00	13.5-14.5	11-12
Canadian Solar (CSIQ)	0.00	33-35	28-29

It’s been a fun and fruitful 2013, and we hope you were able to snag a few winners this year. That said, while we enjoy reviewing this past year as much as anyone, our focus is on the present and the future—so far, the overall market is in fine shape, though intriguingly, despite what is supposed to be a quiet time of year, we’ve seen a few sharp selloffs among growth stocks during the past couple of days. Of course, there are always lots of crosscurrents at year-end, but it’s imperative to keep your eyes open, pick your spots on the buy side and have some stops in place should the selling spread. Right now, though, we’re sticking with our lean bullish stance and will see how things shake out when the calendar turns.
This week’s list is very diversified, with many different industries represented. Our favorite of the week is Salix Pharmaceuticals (SLXP), a solid growth firm whose recent buyout of Santarus could be a gamechanger.

Stock Name	Price	Buy Range	Loss Limit
United States Steel Corporation (X)	0.00	28-30	26-26.5
Valero Energy (VLO)	97.40	46-47	42-43
United Therapeutics (UTHR)	0.00	105-112	97-100
Seagate Technology (STX)	0.00	53-55	49-50
Salix Pharmaceuticals (SLXP)	0.00	86-90	81-82
Royal Caribbean Cruises (RCL)	0.00	45-47	39-40
NXP Semiconductors (NXPI)	0.00	43-45	40-41
Legg Mason Inc. (LM)	37.44	40-42	38-39
Facebook, Inc. (FB)	0.00	52.5-55.5	48-49
Conn’s Inc. (CONN)	0.00	74-78	68.5-69.5

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.

I’m adding E*Trade Financial (ETFC) to the Growth Portfolio today.

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.