The major indexes continue to act very well; today’s pop higher is par for the course. That said, the hot growth stocks of the past few weeks are starting to take a breather; there hasn’t been much abnormal selling, but new buying is being focused on some other groups. Moreover, investor sentiment has, by our measures, become elevated, which raises risk. Altogether, we’re leaving our Market Monitor where it has been. Continue to keep your feet on the ground and try to do your buying on weakness, or in stocks that are recently emerging from multi-week pauses.

This week’s list has a bunch of newer names to Top Ten, or at least stocks that haven’t appeared in a couple of months or longer. Our favorite is Five Below (FIVE), a small but exciting growth company whose stock just popped out of a long consolidation.

Stock Name	Price	Buy Range	Loss Limit
Swift Transportation (SWFT)	0.00	19-20	18-18.5
Qihoo 360 (QIHU)	0.00	79-84	68-69
Ocwen Financial (OCN)	0.00	54-56	49-50
Melco Crown (MPEL)	0.00	29-30.5	25-26
Cheniere Energy (LNG)	63.82	30-32	25-27
Gulfport Energy (GPOR)	0.00	60-63	53-55
Five Below (FIVE)	134.58	45-48	41-42
Dril-Quip (DRQ)	0.00	107-111	101-103
Concur Technologies (CNQR)	0.00	105-110	88-90
ACADIA Pharmaceuticals (ACAD)	47.84	22-23	19-20

If you’re invested in leading growth stocks, you’re probably doing very well; many of them have been shooting ahead, and on big volume to boot! That said, the broad market still isn’t acting right, and the longer that goes on, the greater the chance of some potholes in the days or weeks ahead. We’re not anticipating anything drastic, and we think holding your strong, profitable stocks is your best move. But we’ll continue to keep our Market Monitor just shy of bullish territory—holding some cash and picking your spots is important, especially with so many stocks extended to the upside.

This week’s list has many newer names (to us), which could reflect the start of a rotation into some previously stagnant groups. Our favorite of the week is Energen (EGN), one many good-looking energy stocks out there; we think it’s a solid buy here or on any weakness.

Stock Name	Price	Buy Range	Loss Limit
YY Inc. (YY)	0.00	44-46	38-39
Pinnacle Entertainment (PNK)	0.00	22-24	19-20
Nu Skin Enterprises Inc. (NUS)	46.07	86-90	76-78
Micron Technology, Inc. (MU)	43.31	14.5-15.5	13-13.5
Lear Corp. (LEA)	0.00	69-71	66-67
Halliburton (HAL)	0.00	48.5-51	45.5-46
Evercore Partners (EVR)	0.00	47.5-49	44.5-45
Energen (EGN)	77.04	67-70	62-63
Infoblox Inc. (BLOX)	0.00	39-41	33-35
Aegerion Pharmaceuticals (AEGR)	0.00	90-94	84-85

The market has shifted into a news-driven environment; today the indexes popped higher as it appears any strike on Syria will be delayed, or possibly abandoned. But with many economic reports coming up that could affect interest rates (including the jobs report on Friday) and with Congress debating Syria, expect more gyrations ahead. Overall, our outlook is the same as the past two weeks—with many growth stocks acting well, you should hold your top performers and look to do a little buying on weakness. But with the indexes chopping around, you should also hold some cash and wait for a real green light before getting too aggressive.

This week’s list includes a few secondary-type names; there aren’t as many liquid leaders as has been the case in past weeks. But there are plenty with big potential. Our favorite is Hain Celestial (HAIN), a direct play on the organic food movement, whose stock just emerged from a year-long rest.

Stock Name	Price	Buy Range	Loss Limit
Zillow (Z)	76.64	92-97	78-80
Web.com (WWWW)	0.00	27-28.5	25-25.5
Sina Corp. (SINA)	0.00	76-80	68-69
Nationstar Mortgage (NSM)	0.00	48-51	45-46
Laredo Petroleum (LPI)	0.00	24-25.5	22.5-23
Jazz Pharmaceuticals (JAZZ)	0.00	85-87	79-80
Incyte Corporation (INCY)	76.98	33-34.5	29-30
HD Supply Holdings, Inc. (HDS)	0.00	22-23.5	20.5-21
The Hain Celestial Group, Inc. (HAIN)	0.00	78-80.5	73-74
Chesapeake Energy Corporation (CHK)	0.00	25-26	23.5-24

The broad market has bounced in recent days, which is good to see; we’re even seeing a much-overdue relief rally in the interest rate-sensitive sectors. But the real action remains among growth stocks; the vast majority of our recent recommendations are acting well, including a bunch that have pushed to new highs! We still don’t think the market is 100% in the clear; we’ll leave the Market Monitor where it is (just shy of bullish), so holding some cash and keeping your feet on the ground makes sense. But the action among leaders is encouraging.

This week’s list has a nice variety of names to choose from, but for our favorite, we’re going with an institutional growth stock leader—Netflix (NFLX) has come out of the public’s eye of late, but shares have surged to new highs as the firm’s business continues to rebound. Try to buy on weakness.

Stock Name	Price	Buy Range	Loss Limit
Yandex (YNDX)	0.00	33-34.5	30-30.5
Yelp (YELP)	41.30	48-52	42-43
Stratasys (SSYS)	0.00	103-108	92-94
Polaris Industries (PII)	0.00	110-115	104-105
Oshkosh (OSK)	95.04	45-47	41-42
Netflix, Inc. (NFLX)	423.92	275-285	245-250
Melco Crown (MPEL)	0.00	26-27	24-24.5
Magna International Inc. (MGA)	0.00	78-81	73-74
Keurig Green Mountain (GMCR)	0.00	83-88	78-79
Cabot Oil & Gas (COG)	0.00	37.5-39	36-36.5

In the month since the broad market began to weaken, the losers have been interest-rate sensitive securities; investors clearly fear that rates will rise further. But who are the winners? Interestingly, there is no one strong sector resisting the decline. Rather, numerous strong stocks in a variety of industries are being supported by investors. But more and more, these stocks are failing to hit new highs, so the big picture is one of growing weakness overall, and this is reflected in the less bullish status of our Market Monitor. You can still make money in this market, but more than ever, skillful stock-picking, combined with proper entry timing, is critical. So we urge you to study numerous individual stocks carefully. Try to buy on normal pullbacks. And above all, keep losses small if a stock doesn’t do what you hired it to do.

Our Editor’s Choice today, Lions Gate Entertainment, is a lower-risk selection with a good long-term growth story, and a timely entry could work out very well.

Stock Name	Price	Buy Range	Loss Limit
Trulia (TRLA)	0.00	42-45	37-38
Sealed Air (SEE)	0.00	29-30	25-26
Questcor Pharmaceuticals (QCOR)	0.00	60-63	56-57
Pandora Media Inc. (P)	0.00	18-20	15-16
LightInTheBox Holding Co., Ltd. (LITB)	0.00	18-20	15-16
Lions Gate Entertainment Corp. (LGF)	0.00	32-33.5	28-29
Ctrip.com International Ltd. (CTRP)	34.94	43-45	39-40
Cornerstone OnDemand (CSOD)	51.01	49-51	45-46
Celldex Therapeutics (CLDX)	0.00	19-20	16-17
Baidu (BIDU)	0.00	130-135	118-120

We started to see the market shake and bake a bit last week, which isn’t unusual considering the heady run the indexes and dozens of growth stocks have had since the late-June low. Exactly what happens next is anyone’s guess; our feeling is simply that the next month will probably be more difficult than the last month, so you should expect a few potholes or sudden selloffs. But with the main trend still pointed up, we think higher prices are likely in the weeks and months ahead. Thus, while plunging into a bunch of stocks right now probably isn’t the best idea, we do think you should work to remain (or work toward becoming) heavily invested.

This week’s list has some old friends and a couple of new faces. There’s lots of strength to choose from, but our favorite is Michael Kors (KORS) a fashion house with ambitious growth plans.

Stock Name	Price	Buy Range	Loss Limit
Under Armour (UA)	0.00	69.5-71.5	64-65
Ocwen Financial (OCN)	0.00	49.5-52	45.5-46.5
LKQ Corp. (LKQ)	0.00	28.5-30.5	25-27
Michael Kors Holdings Limited (KORS)	73.22	69-72	63.5-64.5
Jazz Pharmaceuticals (JAZZ)	0.00	77-80	74-75
Harman International Industries, Inc. (HAR)	0.00	66-69	59-60
Facebook, Inc. (FB)	0.00	37.5-39.5	32-33
Cubist Pharmaceuticals (CBST)	0.00	59-62	52-54
Baidu (BIDU)	0.00	130-136	118-120
Activision Blizzard, Inc. (ATVI)	0.00	17-18	15.5-16

We haven’t seen this many growth stocks acting well at one time since at least late 2010, and probably more like 2007, which is very encouraging. That said, we are seeing some froth begin to appear—many investors are giddy with their recent gains, and a few smaller-cap, speculative names have gone vertical. Thus, be sure to keep your feet on the ground, and don’t be afraid to book some partial profits here or there. But, in general, the buyers are clearly in control, and the main trends of the market are up, so you should work to get (or remain) heavily invested.
This week’s list has a few of the aforementioned zoomers, but most of the stocks have very solid fundamentals and aren’t far from solid entry points. There are many we like, but our favorite is Concur Technologies (CNQR), one of the many younger Cloud-based software firms that are thriving.

Stock Name	Price	Buy Range	Loss Limit
Pioneer Natural Resources (PXD)	0.00	172-177	159-162
LinkedIn Corporation (LNKD)	0.00	228-236	205-208
Chart Industries (GTLS)	72.05	110-115	101-103
Gilead Sciences (GILD)	75.10	59-61	54-55.5
Canadian Solar (CSIQ)	0.00	14-15	11-12
Concur Technologies (CNQR)	0.00	97-100	88-90
Con-way (CNW)	0.00	43-45	41-42
Ciena (CIEN)	44.25	22-23	20-20.5
Athenahealth (ATHN)	0.00	107-112	93-95
Aegerion Pharmaceuticals (AEGR)	0.00	89-91	78-80

In most cases, the market acts in a way that surprises the majority, but during the past couple of weeks, stocks have actually behaved as we expected—the major indexes have calmed down to digest their huge post-June 24 run, while volatility among individual stocks has increased as earnings season produces all sorts of big moves up and down. Overall, the bulls remain in control, and while you have to watch your step during earnings season, we’re seeing some new leadership emerge, which is a good sign.

This week’s list includes a few recent earnings winners; powerful gaps up on a firm’s quarterly report usually lead to higher prices. Our favorite of the week is Facebook (FB), which had a coming out party last week after blowing away expectations. It’s extended, but we think you can start small here and look to build a position should the stock advance.

Stock Name	Price	Buy Range	Loss Limit
Yandex (YNDX)	0.00	30-31.5	27-28
TripAdvisor (TRIP)	55.14	70-73	62-64
Pharmacyclics (PCYC)	0.00	100-104	92-93
ManpowerGroup (MAN)	90.84	64.5-66	60-61
Illumina Inc. (ILMN)	289.74	79-82	72-73
Finisar (FNSR)	0.00	18-18.5	15.5-16.5
Facebook, Inc. (FB)	0.00	33.5-35.5	30-31
E*Trade Financial (ETFC)	0.00	13.5-14.5	12.5-13
Dana Holding (DAN)	0.00	20.5-21.5	18.5-19.5
Celgene (CELG)	0.00	139-143	127-129

The market and most stocks remain in a solid uptrend, though earnings are beginning to have the anticipated push-pull effect on the market, with lots of gaps up and down to start the day. We think increased volatility is nearly a sure bet going forward, especially after such a great rebound. In the short-term, then, make sure you have a plan of how you want to deal with earnings season (we include any upcoming earnings dates of our recommendations in today’s issue), and be prepared for lots of action in both directions. Long-term, though, the path of least resistance remains up, so we favor using normal retreats as buying opportunities.

This week’s list is one of the more growth-oriented that we’ve seen this year; just about every stock has a real, sustainable growth story with solid numbers. Our favorite of the week is Proto Labs (PRLB), which has set up a nice risk-reward entry here after tightening up for a few weeks.

Stock Name	Price	Buy Range	Loss Limit
Zillow (Z)	76.64	67-69	59-60
Vipshop Holdings (VIPS)	14.25	34-36	30-31
Trulia (TRLA)	0.00	35.5-37	31-32
Santarus (SNTS)	0.00	23.5-24.5	20-21
Spirit Airlines (SAVE)	57.03	33-35	30-31
Proto Labs (PRLB)	0.00	63-65	56-58
Nu Skin Enterprises Inc. (NUS)	46.07	78-80	70-71
Nationstar Mortgage (NSM)	0.00	44-46	40.5-41.5
Generac Holdings (GNRC)	86.60	39.5-41	36-37
Ambarella (AMBA)	52.79	17.5-19	16-16.5

What a difference a few weeks make! In late June the market was on its knees as fears of Fed tapering took hold. Today, though, those fears have given way to optimism, with all major indexes and hundreds of stocks surging to new highs. Yes, earnings season is getting underway, which always adds risk to the equation; we’re sure we’ll see a few potholes in the weeks ahead as some firms miss estimates. But the evidence has turned clearly bullish, and the path of least resistance is up. Thus, you should be working to get heavily invested in some of the strongest stocks in the market.

This week’s list has many familiar faces, as well as a broad representation among sectors. Our favorite of the week is Santarus (SNTS), which has enjoyed a huge run in recent months, but sales and earnings growth are huge, and the stock has exploded higher on big volume. Pullbacks are possible, but higher prices are likely over time.

Stock Name	Price	Buy Range	Loss Limit
YY Inc. (YY)	0.00	33-35	28-29
Yelp (YELP)	41.30	36-38	32-33
The ExOne Company (XONE)	0.00	60-62	53-54
Tesla, Inc. (TSLA)	818.87	120-130	100-108
Santarus (SNTS)	0.00	24-25	20-21
Nexstar Media Group (NXST)	105.68	37-39	30-31
Krispy Kreme Doughnuts (KKD)	0.00	19-20	16-17
Delphi Automotive (DLPH)	0.00	52-54	50-51
Conn’s Inc. (CONN)	0.00	55-57.5	49-50
Bloomin’ Brands (BLMN)	0.00	24.5-25.5	22.5-23

Last week’s action was encouraging, from both the major indexes (most of which have pushed back above their 50-day lines) and growth stocks, which are definitely leading the way higher. With rising interest rates still a worry and earnings season coming up, it’s likely that volatility will remain elevated; you shouldn’t throw money at the market willy-nilly. But we’re very encouraged by the straight-up, smoke-up-a-chimney type of action by the market and many stocks since the panic low in late-June. Our Market Monitor remains in the bullish camp.

This week’s list is a bit more diverse than we’ve seen of late, with many quality prospects to consider. Our favorite of the week is Pandora (P), which is a very jumpy stock we were knocked out of a few weeks ago, but its recent, powerful action is intriguing. Try to buy on weakness.

Stock Name	Price	Buy Range	Loss Limit
Thor Industries (THO)	104.76	48-50	41-42
Qihoo 360 (QIHU)	0.00	47-49	41-42
Pandora Media Inc. (P)	0.00	19-20	16-16.5
InvenSense (INVN)	0.00	14.5-15.5	13-14
Guidewire (GWRE)	90.60	42-44	37-38
Chart Industries (GTLS)	72.05	96-98	90-91
Ford Motor Co. (F)	0.00	15.5-16.5	13-14
Electronic Arts (EA)	0.00	22.5-24	21-21.5
DreamWorks (DWA)	0.00	24-25.5	21-22.5
Cree, Inc. (CREE)	67.96	65-68	60-61

The market has followed through on last week’s rebound rally and we’re seeing an increasing number of strong growth stocks with good setups. The big news is that the rally has lifted many of the indexes we follow above their 25- and 50-day moving averages, giving us a green light for new buying. We don’t advise jumping in with both feet—new buy signals do not guarantee a continued advance—but you should be taking a serious inventory of your watch list (and the stocks in this week’s issue) to select a few favorites for buying.
This week’s list includes several bigger names and a few recent IPOs, which indicates good breadth for the rally. Our favorite is SunPower (SPWR), which is making the turnaround in the solar industry look like a sound growth proposition.

Stock Name	Price	Buy Range	Loss Limit
SunPower (SPWR)	12.26	19.5-22	17-18
Splunk (SPLK)	207.67	45-47	41-42
Proto Labs (PRLB)	0.00	63-65	55-56
The Priceline Group Inc. (PCLN)	0.00	810-840	779-780
Illumina Inc. (ILMN)	289.74	72-74	67-68
Ciena (CIEN)	44.25	19-20	17.5-18
Bloomin’ Brands (BLMN)	0.00	24-25	22.5-23
Boeing (BA)	432.22	99-102	94-95
American Axle (AXL)	0.00	17.5-18.5	16-16.5
Actavis (ACT)	0.00	123-127	108-110

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.

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.