The war in the Middle East continued to tighten its grip on financial markets last week as U.S. and Israeli airstrikes on Iran showed no signs of letting up, keeping oil prices at an uncomfortable level for the market. Against that backdrop, by week’s end—the third straight week of losses for U.S. equities—the S&P 500 had shed 1.6%, the Dow had dropped 2%, the Nasdaq had declined by 1.3%, and the Russell 2000 had fallen a mere 0.4%.

The market has had a good amount thrown at it of late, though so far, the big-cap indexes have mostly hung in there and more than a few growth stocks have done the same, which are certainly rays of light. At this point, though, that doesn’t outweigh all the other evidence that tells us to be cautious—the intermediate-term trend remains sideways-to-down and most stocks and sectors are firmly in correction territory. All told, we continue with our cautious-but-flexible stance: Right now, we favor only small positions and plenty of cash, though we’re willing to quickly change our tune. We’ll leave our Market Monitor at a level 5.

This week’s list is mostly energy and AI related, though as has been the case lately, there’s something for everyone. For our Top Pick we’re going with a little-known networking play that’s showing excellent strength and looks well suited for the emerging agentic AI boom.

The war in the Middle East continued to tighten its grip on financial markets last week as U.S. and Israeli airstrikes on Iran showed no signs of letting up, keeping oil prices at an uncomfortable level for the market. Against that backdrop, by week’s end — the third straight week of losses for U.S. equities — the S&P 500 had shed 1.6%, the Dow had dropped 2%, the Nasdaq had declined by 1.3%, and the Russell 2000 had fallen a mere 0.4%.

The market slump continues against the backdrop of the Iran war and sky-high oil prices, but there are signs of optimism if you look closely enough: a bitcoin bounce-back, slowing growth stock selling, and declining volatility. Do investors know something? Or is it mere speculation that it’s in everyone’s self-interests for the fighting in the Middle East to be short-lived? We’ll see. Meanwhile, it’s a good time to invest in a country that’s not directly involved in the Iran war: China. For that, we go to Cabot Explorer Chief Analyst Carl Delfeld, who recommends one of the fastest-growing companies in China.

Details inside.

The war in the Middle East continued to tighten its grip on financial markets last week as U.S. and Israeli airstrikes on Iran showed no signs of letting up, keeping oil prices at an uncomfortable level for the market. Against that backdrop, by week’s end — the third straight week of losses for U.S. equities — the S&P 500 had shed 1.6%, the Dow had dropped 2%, the Nasdaq had declined by 1.3%, and the Russell 2000 had fallen a mere 0.4%.

The war in the Middle East continued to tighten its grip on financial markets last week as U.S. and Israeli airstrikes on Iran showed no signs of letting up, keeping oil prices at an uncomfortable level for the market. Against that backdrop, by week’s end — the third straight week of losses for U.S. equities — the S&P 500 had shed 1.6%, the Dow had dropped 2%, the Nasdaq had declined by 1.3%, and the Russell 2000 had fallen a mere 0.4%.

This was a challenging week for investors with little movement either way in Explorer stocks.

The Iranian conflict has expanded into a Mideast pressure cooker with wider repercussions for energy markets. Opening the Strait of Hormuz is crucial as higher energy and oil prices impact not just Americans but our allies and partners that depend on imports for almost all their energy. The challenge is that the situation is volatile and overall security and economic goals collide with day-to-day actions.

It’s been a wild ride this past month, hasn’t it? The war in Iran has created tremendous volatility in the markets, with the Dow Jones Industrial Average hitting all-time highs—above 50,000—only to fall back to the 47,000+ level.

Investors have retreated to value stocks, pushing small caps up 5.59% year to date, midcaps, 5.32%, and large caps, 3.98%. Growth stocks are mostly negative right now.

Sector-wise, as expected with a war in a major oil-producing region and worries about the possible closure of the Strait of Hormuz, it’s no surprise that energy company stocks are flying high, up 25.97% so far in 2026.

Artificial intelligence is transforming the world, just not yet.

Ultimately, AI will create new industries that deliver noticeable changes in daily life. And it will happen much faster than with past technologies. But there are companies, outside the actual technology generators themselves, that benefit after the initial launch of a new technology and before new industries develop.

The next phase of AI is likely in companies that enable and service the technology. This new phase is already evident in the stronger performance of previously lackluster utilities as they accommodate the huge electricity demand increase from AI data centers. AI profits are spreading toward companies that service the equipment and massive data management needs of AI.

In this issue, I highlight a REIT that is experiencing massive demand growth servicing the equipment and records generated by the burgeoning technology. It is making an already reliable income-generating security a growth investment as well.

The AI trade isn’t dead. It’s shifting. And this security is in the new sweet spot.

Last week was Wall Street’s worst in months as the military conflict in the Middle East sent oil prices soaring higher, and Friday morning the February jobs report revealed the economy shed 92,000 non-farm payroll jobs, well below estimates that called for gains. By week’s end, the S&P 500 had dropped 2%, the Dow had fallen 3%, the Nasdaq had tumbled 1.2%, and the Russell 2000 had declined by 2.6%.

The market initially took the Iran attacks in stride early last week, but as oil prices elevated, the sellers took the upper hand, pushing the overall intermediate-term trend to negative and, of course, doing a lot of damage to many stocks. Now, given that the reason for the selling is fairly obvious at this point (oil prices, Iran, etc.), could things reverse with some good news? Yes, and we obviously saw some of that today, with hopes the attacks may be near an end helping the market recover nicely by day’s end. Thus, we do remain flexible should the buyers flex their muscle—but we also always go with the evidence, and while today’s bounce was nice, most indexes and stocks are still sitting below key levels. We have our Market Monitor at a level 5, though we could change that (up or down) depending on what comes.

This week’s list is well-rounded, with some growth, precious metals, oil and even some AI infrastructure, which we do find encouraging given what’s going on in the market. Our Top Pick is has rested for two years but recently gapped up on earnings as its AI servers see huge growth. A follow-through on the earnings move would be enticing.

The nascent war (conflict?) in the Middle East is taking a toll on U.S. markets, with the S&P 500 down 2% this week and the Dow off more than 3%. Under the market’s hood, there’s even more selling, prompting us to sell five positions in this week’s issue. However, we also add a potential turnaround story in the healthcare space that has huge upside, according to Cabot Turnaround Letter Chief Analyst Clif Droke.

Details inside on a busy week for the Stock of the Week portfolio.

Uncertainty in the market has soared. The situation in Iran significantly increases the near-term risk to stock prices.

The earnings catalyst has passed. Market indexes are near the high. In this environment, a very unpredictable situation in the Middle East could tip the balance. Of course, it’s impossible to know what will ultimately happen in Iran.

There is a huge increase in uncertainty with the market near the high. Although stocks were mostly higher by midday on Monday, the situation in Iran adds another degree of risk.

The current situation makes this an even better time to sell covered calls on stocks near the recent high. After a huge YTD rally in several previously underperforming sectors, a few stocks are generating very high-priced call premiums. An unpredictable market with stocks near the high after the strongest rally in years is the ideal time to turn the recent market successes into high income.

It has been called by many pundits the biggest speculative event since the late ‘90s Internet stock mania. I’m referring, of course, to the widely referenced “AI bubble” that has been in play for the better part of the last three years.

But is it truly a “bubble” in the historical sense of the term? The answer to this question is salient for us not only as investors, generally speaking, but also as it concerns at least a couple of the stocks in our portfolio—namely Intel (INTC) and Centuri Holdings (CTRI).

WHAT TO DO NOW: It’s not 2008 out there, but the market environment remains very challenging, especially for growth, where most indexes, funds and stocks are struggling. That said, we have started to see some growth names emerge on the upside, and our watch list is growing—if we can see more than a day or two of strength, we’d like to put some money to work. But until then, we’re content to stay close to shore and patiently wait for growth stocks to get moving. In the Model Portfolio, we’re placing Axsome Therapeutics (AXSM) on Hold tonight; our cash position is still just above 50%.

It’s been an interesting week here in Rhode Island, where most people are finally dug out from the roughly three feet of snow that fell across the state Sunday night and into Monday.

Growing up in Vermont, major snowstorms were certainly disruptive. But more often than not, it was all about how we would get to the ski resort without going off the road.

Hello from sunny Florida!

I am on vacation with my family this week, taking a much-needed break from the harsh, snowy Vermont winter (and narrowly making it down here ahead of the latest blizzard to dump another foot or two of snow on the Northeast). But with so much going on in the market – tariffs rejected! GDP growth slowing! AI panic! – I wanted to provide an update on everything that’s going on with our stocks.

It’s the same basic market story as it has been for the last four months. Technology is floundering while other sectors are killing it. But a couple of events occurring this week could potentially change the dynamic.

For value-focused investors, this year’s prologue has been a welcome change from the turmoil experienced in early 2025.

In just the past few weeks, some of last year’s most ignored or underappreciated laggards have posted outsized gains, with rallies that have made even momentum-driven tech stock traders envious. Even more remarkable is the fact that much of that strength has been concentrated in ultra-defensive areas of the market like consumer staples, utilities and healthcare.

The market rotation continues to be the main story out there this week, though rumblings of a potential strike on Iran, an update from the January FOMC meeting, and a slew of earnings reports and economic data releases have been giving investors plenty to think about.

In terms of the rotation, the equal‑weight S&P 500 ETF (RSP) is up 5.5% so far this year, illustrating that leadership is broadening beyond the narrow group of mega‑cap stocks that drove much of last year’s performance.

Year to date, the S&P 600 SmallCap Index is up 8.3% and the S&P 400 Mid‑Cap Index is up 7.9%. Both are comfortably outperforming the S&P 500, which is up just 0.1%, and the Nasdaq, which is down 2.1%.

Happy Chinese New Year! The year of the horse is upon us.

China is expecting an incredible 9.5 billion trips to be made during the 40-day Lunar New Year travel period. Chinese automakers are also on the move as the country’s numerous brands sold nearly 200,000 vehicles in Britain last year, doubling their market share to almost 10%.

As U.S. investors have shifted from risk-on to risk-off mode in recent months, a clear disparity between the “haves” and the “have-nots” has materialized.

Let’s start with the “have-nots.” Financials have fared the worst so far this year (-4.7%), followed by technology (-3.1%), communication services and consumer discretionary (-2.8% each). The downturn in the two tech-related sectors in particular is a stark departure from recent years, when technology led the charge of the current bull market.

Cyclical stocks are soaring and technology is floundering in the transformed market.

The bull market is turned upside down. For most of the first three years, technology, and particularly AI stocks, soared while most other stocks did very little. Now, previously meandering stocks are killing it while technology sinks.

We’re going to kick off 2026 by locking in profits with Argan (AGX), an engineering, procurement and construction company that specializes in gas-fired power plants, biomass projects and solar facilities.

WHAT TO DO NOW: We usually hesitate to do much of anything on the first day or two of the New Year given the volatility—but CrowdStrike (CRWD) fell back to support earlier this week and is getting hit again today, falling to new recent lows. We’ll follow our plan and cut our loss here, aiming to redeploy the money in a stronger name should growth stocks kick into gear. Our cash position will now be in the mid-50% range.

Our entire selling philosophy, especially when it comes to growth stocks, revolves around a concept we call “Tight to Loose.” We’re also big fans of a few key chart-based sell signals that tell you a stock is coming under distribution by deep-pocketed investors.

I’ve heard from a few subscribers recently who want to know if it’s time to sell their big winners, like Wynn Reports (WYNN), which is up 48% since I recommended it in April of last year.

Some stocks in the Model Portfolio and others we’ve recommended have had great runs during 2017 but have come under pressure recently. And that’s naturally led to a lot of questions about how exactly to handle big winners, so that’s what we’ll dive into today.

Here are some of the sources that I have found most useful, reliable and unique. One of them may be able to give you a new perspective on some of the stocks you own.

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.

This report explains my buy, hold and sell opinions for the Standard & Poor’s 11 sectors. In summary, seven sectors should fare quite well during the remainder of 2017, but other sectors will likely perform poorly in the months ahead.

Writing covered calls is a great way to boost your yield on stocks you already own, and involves a lot less risk than most investors think.

Dividend reinvestment is one of the most powerful weapons in the income investor’s toolbox.

The Cabot Emerging Markets Timer measures the intermediate-term trend of emerging markets-related stocks.

If you like the idea of buying low and calmly hanging on...this is the right advisory for you.

Here’s a list of the attributes I seek for any stock I consider for inclusion in Cabot Dividend Investor.

SNaC is the method chief analyst Paul Goodwin uses to choose stocks for the Cabot Emerging Markets Investor