Glad to be back! A lot has happened in the two weeks since I last wrote, with the market reaching new record highs despite the tariff deadline coming and going without a ton of clarity. And now second-quarter earnings season has arrived, which could provide further wind in the market’s sails, though estimates are more tempered (5% growth, vs. 14% growth among large-cap companies in Q1) this time around.

Meanwhile, our portfolio is humming, with TWO of our stocks reaching their price targets today! We’ll “retire” them to make room for today’s new recommendation, from an industry I wrote extensively about in our last update: movie theaters. The hope is that this movie theater stock will follow in the footsteps of United Airlines (UAL) and Carnival Corp. (CCL) and quickly reach our price target as shares play catch-up to their fundamentals due to some post-Covid lag.

Details inside. Enjoy!

We don’t yet know what the inflation rate for June will be (report is due July 15), but in the latest Federal Reserve meeting—reading between the lines—it seems economists expect the Fed to lower rates a couple of times during the remainder of the year.

And, just in the last few days, it’s been reported that Goldman Sachs now expects the Fed to cut rates three times.

We’ll see.

Tariffs are back.

Of course, stocks could continue to move higher. The optimists have been right so far. But the indexes are near all-time highs, while uncertainty abounds. It might not be the best strategy to pay a premium for a stock in a precarious market.

Fortunately, while the overall market is near the high, there are stocks that are still cheap. The amazing market recovery from the April low has been led by technology, which accounts for about one-third of the S&P index. That sector has soared over 40% in the last three months. But many great stocks are still priced far from their 52-week highs.

In this issue, I highlight a financial industry powerhouse with a long track record of outperforming the market. The stock is well below the 52-week high and selling near its cheapest valuations in years. While the market could go either way in the weeks ahead, this stock is well-positioned to boom when the environment normalizes. Meanwhile the current uncertainty is keeping it cheap.

It may seem like stock prices have run away in the impressive recovery from the April low. But there is a stock where it’s still April.

The recent bull run continued last week, this time led by Small Caps (IWM), which gained 3.5%, followed by a gain of 2.3% for the Dow, and 1.7% for both the S&P 500 and Nasdaq.

Nothing’s changed with the market from a top-down point of view: It’s bullish, with the intermediate-term trend pointed up, and now we’re seeing new highs expanding as more stocks join the parade. Individual stocks remain trickier, as we saw some rotation out of growth and into some other areas last week—if leaders decisively crack, that could be bearish, but to this point, the action has mostly served to broaden the advance, which is a good thing. We wouldn’t go wild on the buy side right here, but we continue to advise following the positive evidence—we’ll leave our Market Monitor at a level 8.

This week’s list is definitely broader than it has been in recent weeks. Our Top Pick is helping to lead what looks like a fresh group move.

The recent bull run continued last week, this time led by Small Caps (IWM) which gained 3.5%, followed by a gain of 2.3% for the Dow, and 1.7% for both the S&P 500 and Nasdaq.

The recent bull run continued last week, this time led by Small Caps (IWM) which gained 3.5%, followed by a gain of 2.3% for the Dow, and 1.7% for both the S&P 500 and Nasdaq.

The S&P 500 and Nasdaq reached new records on Wednesday, reversing Tuesday’s declines. President Trump’s tax-and-spending bill squeaked through the Senate and is now at the heart of a battle in the House. This is hopefully settled today, and a setback would have an impact on the stock market.

Luckin Coffee’s (LKNCY) revenue in China has already surpassed Starbucks in China. This week, it brought the battle to America as its first two U.S. locations opened in New York. This may be just a public relations gambit.

Today’s addition is a small-cap networking company on the cusp of a potential multi-year growth cycle.

The big-picture growth catalyst? Emerging AI and cloud computing technologies that place new strategic importance on network infrastructure and security for data centers, hyperscalers and global enterprises.

All the details are inside this month’s Issue.

Enjoy!

After a weekend that many feared would sink the market as the Middle East situation was flaring up, to the surprise of many, the market didn’t sell off and, in fact, by week’s end the S&P 500 had gained 3.4%, the Dow had rallied 3.8% and the Nasdaq added 4.2%.

Even as worries fade over the recent Middle East flare-up, new tariff-related headlines have lately crept back into the news. However, stocks have taken it in stride by ignoring what would normally be “bad” news. In view of this, we’re pleased with the market’s resilience—and it’s also welcome that it hasn’t become overheated with too much enthusiasm yet. We’re still seeing a few flies here and there, with some stocks having trouble breaking above resistance, but a growing number of stocks are joining the parade, with a nice mixture of growthy and cyclical names getting into sync with the general march forward. All told, we like what we’re seeing, and in view of the continued strength, we’re raising our Market Monitor to a level 8.

This week’s list features names across multiple industries, which we view as a sign that categorical strength is building. Our Top Pick is a sporting goods giant that has multiple growth tailwinds and is tightening up as the 25-day line has caught up. We’re fine entering here or (preferably) on a dip.

Chaos was the overriding theme of the first half of 2025. But for all the pearl-clutching over tariffs, Middle East conflict, slowing economic growth and still-high interest rates, the S&P 500 was up 5% and has risen to new all-time highs. Stocks have truly climbed the proverbial “Wall of Worry.” Will they continue to? I wouldn’t bet against it. So today, we add a once-great large-cap tech stock name that may finally be ready to dig out of a years-long funk. Clif Droke identified it as a prime turnaround candidate in his Cabot Turnaround Letter. Now, we add it to the Stock of the Week portfolio.

Details inside.

Markets were closed yesterday in honor of the late President Jimmy Carter.

No matter your politics, the service was well done and inspirational.

It was a solid opening this first week of 2025: new recommendation American Superconductor (AMSC) shares were up 10%, Centrus Energy (LEU) shares were up about 8%, Cloudflare (NET) shares were up 7.5%, and Dutch Bros (BROS) shares were up 7.3%.

Here are my top eight predictions for the cannabis sector for 2025.

1. Cannabis rescheduling goes through

Promises made, promises kept. Trump loves a “deep state” challenge. Put these two together, and it seems probable that rescheduling could happen in 2025.

The market sobered up in December after a big post-election rally in November. The S&P fell 2.5% in the last month of the year. But January has started out with stocks up 2.2% already.

Technology is driving the market higher. The sector is taking off after Nvidia (NVDA) issued bullish statements about demand for its artificial intelligence chips. AI is a huge growth catalyst for the market’s largest sector and has proven it can drive the indexes higher all by itself. In fact, technology has been the primary catalyst for the S&P over most of this bull market. But things might be changing.

In today’s note, we discuss pertinent developments and institutional ratings changes for some of the stocks in the portfolio, including Alcoa (AA), Duluth Holdings (DLTH), SLB Ltd. (SLB) and the SPDR S&P Retail ETF (XRT).

The fabled “Santa Claus Rally” failed to appear this season, prompting concern for the early part of 2025 among many investors. We discuss what it entails for our investment approach.

WHAT TO DO NOW: Happy New Year! December’s weak action has created some decent setups and taken a chunk out of sentiment, both of which are good to see—but the underlying evidence hasn’t changed, with our Cabot Tides negative and few names heading higher. We came into the year with around half the portfolio in cash, and we’re remaining cautious today—our only change is placing Flutter (FLUT) on Hold.

The year 2024 was another great year for stocks. The S&P was up over 23% for the year. It’s a nice addition to the 26% return last year. It is the first back-to-back 20%-plus return years for the index since 1998.

But the year ended on a sour note. Usually, good years in the market finish strong. But not this time. True, the S&P 500 was down less than 2% in December. But that’s only because the big tech companies are still doing okay. The rest of the market had a terrible month.

It was a rare rough December for stocks.

Sure, the S&P 500 and the Nasdaq were down just over 2%, propped up as usual by enduring strength in the Magnificent Seven. But the losses were far greater in almost every other corner of the market, with 10 of the 11 major sectors declining, small caps tumbling nearly 8%, value stocks off by more than 6%, and energy and materials stocks retreating by double digits.

And we were having such a good time. Stocks were killing it in November after the election. But December turned out to be a real stinker.

Sure, the S&P 500 is only down about 1% over the past month. But that’s only because the big tech companies are still doing okay. The rest of the market is getting slapped around. Eight of the eleven S&P sectors are down in December. And many individual stocks are having a terrible month.

In today’s note, we discuss developments and institutional ratings upgrades for some of the stocks in the portfolio, including Fidelity National Information (FIS), Paramount Global (PARA) and Starbucks (SBUX).


The famed “Santa Claus Rally” is underway and, assuming a successful conclusion, portends a bullish early part of the coming New Year.

It was a better year for value stocks, as the Vanguard Value Index Fund (VTV) is up 14.6% year to date with just a few days still to go in 2024. Barring a complete implosion this week, it will be the best year for the VTV since 2021 and the third best in the last decade. That’s good … but the last decade is quite the grim comparison.

It’s a busy and short Christmas week and like many of you, I was doing last-minute shopping and preparing to visit family.

Therefore, this is a brief update and instead of the usual stock-by-stock update, I can summarize as follows.

In today’s note, we discuss developments and institutional ratings upgrades for some of the stocks in the portfolio, including Agnico-Eagle Mines (AEM), Atlassian (TEAM), GE Aerospace (GE), SPDR S&P Retail ETF (XRT) and Starbucks (SBUX).

Intuitive Surgical (ISRG) has a great story (next-gen Da Vinci 5 platform) but shares have been irresponsive to the potential and failed to make any sustained progress after the March 18 earnings report.

Soleno (SLNO) gave a business update/reported Q1 results after the close yesterday. Not much new to talk about given the recent (April 29) announcement (covered in a Special Bulletin that day) that the FDA granted the company’s lead drug candidate (DCCR) Breakthrough Therapy Designation for the treatment of adults and children ages 4 years and older with Prader-Willi syndrome (PWS).

Shares of Docebo (DCBO) opened lower this morning after the company delivered a Q1 beat after the close yesterday but lowered full-year guidance.

When it comes to small appliances, SharkNinja (SN) is one of the more innovative players out there, and the company’s mass-market appeal and expansion into new categories continue to deliver impressive results.

Rivian (RIVN) has been our dog in the portfolio but I’ve held on because I think the potential for shares to come back and ultimately work well is still there. Yesterday’s first-quarter results don’t suggest that will happen right away, but there are certainly some bright spots.

Shares of Intapp (INTA) should open higher today after the company beat Q3 fiscal 2024 expectations after the close yesterday. Revenue grew 20.2% to $110.6 million, beating by $2.4 million (2.3%), while EPS of $0.14 was up from a penny in the year-ago quarter and beat by $0.07.

New kid on the block Zeta (ZETA) is starting the week off with a bang after the Q1 report yesterday sailed past expectations.

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.