I turned cautious on stocks here back on July 8, citing: Weak insider buying, signs of too much bullishness, which is a negative in the contrarian sense, signs of economic weakness, and the looming seasonally weak time period of August through the middle of October.

Since then, the Invesco QQQ exchange-traded fund (QQQ) has fallen 4.7%, and the State Street SPDR S&P 500 exchange-traded fund (SPY) has traded down slightly, or 0.5%.

So, caution has been a good call so far. Yet, despite the market weakness, our insider portfolio has outperformed. It is up 3.8% as of the July 27 close compared to 1% for the SPY since the portfolio inception on June 10 (more details below).

As someone who grew up in the ’70s and ‘80s, personal fragrances always seemed to be something of a ubiquitous staple for adults of that era. For me, it was nearly impossible to go out anywhere in public in those days without catching the scent of a lady’s perfume or a man’s cologne—overly strong though it often was in both cases.

Then there were the visits to the local shopping malls with the scent of fragrances permeating the air, as perfumes were heavily sold across the counters of many stores in those venues.

Amidst the highly uncertain prognosis for the market, one industry is on its own schedule – energy.

Beyond the immediate price gyrations, the Iran war has changed things.

Before the war, the outlook for energy prices over the rest of this year and beyond was bearish. But that’s changed. Most forecasts are now calling for significantly higher average oil and gas prices going forward than were predicted before the war. And that was before hostilities resumed.

The forecast is higher prices than previously thought, with a significant risk of still higher prices ahead. Meanwhile, the prices of most energy stocks have fallen significantly over the past couple of months.

The current energy situation isn’t even the best reason to buy the best energy stocks. The current situation creates a good entry point for stocks that should have solid longer-term returns. In this issue, one of the very best exploration and production companies is highlighted.

After eight weeks of correction and consolidation, the market is still in the throes of no man’s land. Big picture, the odds continue to favor the next major move being up, and it’s possible earnings season launches some winners given that many stocks have been resting for a couple of months at this point. But overall, little money is being made as money sloshes back and forth based on the news of the day. Some select buying is fine, but we’re not flooring the accelerator until the bulls flex their muscle. We’ll leave our Market Monitor at a level 6.

This week’s list is a bit eclectic, with everything from energy to medicals to fintech and more. For our Top Pick, we’re going with an old school name where the underlying business looks great, as does last week’s earnings-related breakout. We’re OK entering here or (preferably) on dips.

To close out a tough July for stocks comes a potentially game-changing week, with the Fed revealing its latest intentions under newly minted chairman Kevin Warsh, the second-quarter GDP results due out, and more than half of the Mag. 7 reporting earnings. Will all of those newsy events help right the ship, particularly for tech stocks, which are going on two months of steady decline? We’ll see. But I’m quite confident the bull market is not over – not with earnings growth north of 30% so far this quarter. So today, we keep our foot on the growth pedal by adding a potentially revolutionary biotech company that’s caught the fancy of Cabot Growth Investor Chief Analyst Mike Cintolo for quite some time.

Details inside.

The AI and Semiconductor potential reckoning that has gripped Wall Street all month came to a head last week as the biggest names in the group finally stepped up to report earnings, and the market’s response was brutal as many of these strong earnings reports were aggressively sold into. Throw in worries in the Middle East and the Bond Market and it turned out to be a bad setup for stocks. For the week, the Nasdaq bore the brunt with a drop of roughly 2.1%, while the S&P 500 slipped 0.6%, the Dow eased 0.4%, and the Russell 2000 fell 1.1%.

The AI and Semiconductor potential reckoning that has gripped Wall Street all month came to a head last week as the biggest names in the group finally stepped up to report earnings, and the market’s response was brutal as many of these strong earnings reports were aggressively sold into. Throw in worries in the Middle East and the Bond Market and it turned out to be a bad setup for stocks. For the week, the Nasdaq bore the brunt with a drop of roughly 2.1%, while the S&P 500 slipped 0.6%, the Dow eased 0.4%, and the Russell 2000 fell 1.1%.

The AI and Semiconductor potential reckoning that has gripped Wall Street all month came to a head last week as the biggest names in the group finally stepped up to report earnings, and the market’s response was brutal as many of these strong earnings reports were aggressively sold into. Throw in worries in the Middle East and the Bond Market and it turned out to be a bad setup for stocks. For the week, the Nasdaq bore the brunt with a drop of roughly 2.1%, while the S&P 500 slipped 0.6%, the Dow eased 0.4%, and the Russell 2000 fell 1.1%.

As growth investors, we continue to advise a cautious but flexible stance, as our neutral-to-negative growth-focused indicators and the weak action among many leading stocks has us holding lots of cash. That said, we’re really not that negative--most big-picture evidence is still positive, and our watch list is still full of stocks holding in normally while the market finds its way. We have no changes tonight, but are ready to pounce when our indicators give the go-ahead.

Before we dive into this week’s covered call idea we need to clean up a couple positions from the July expiration cycle. First off, FROG, BROS and SN expired for their full profits. However, SEDG and FLEX did not, leaving us with our stock positions which we will exit today.

To execute these trades, you need to:

Sell SEDG Stock

Sell FLEX Stock

Moving on …

The split tape condition we alluded to last week continues to hold sway, with a divergence of strength and weakness among the major sectors. While there are some encouraging signs among key groups—including financials, healthcare and cybersecurity—the primary evidence is still mixed, with cross-currents holding sway and some growth-y names looking for support. Accordingly, we’ll keep our Market Monitor at level 6.

This week’s list has a fair number of stocks that should be able to shake off—or even benefit from—the latest headwinds. Our Top Pick is showing solid momentum and has excellent potential with a promising healthcare franchise.

Midsummer market malaise drags on, but perhaps that will change in the coming weeks now that second-quarter earnings season is in full swing. And while air has certainly come out of the balloon of the AI trade of late, money has mostly rotated into sectors and names that either didn’t participate in or sharply trailed the massive market run-up in April and May. That includes today’s new addition to the Cabot Stock of the Week portfolio. It’s an undervalued healthcare name that I recommended to my Cabot Value Investor readers last month. So far, it’s looking like a smart buy-low choice, as the stock is starting to build momentum. And yet, shares remain undervalued – making it perfect for the current risk-off climate.

Details inside.

Stocks are cheap right now.

That sounds like an inaccurate statement, given the AI bloat and relentless run-up in semiconductor stocks through much of the first half of the year. But on a forward price-to-earnings ratio, the S&P 500 has dipped below 20 for the first time since early April. April, of course, marked the beginning of a historic two-month rally that has carried the indexes in what has otherwise been a muted year for stocks. Prior to this spring’s massive rally, the biggest rally since the start of 2025 came last spring … after the S&P 500 had again dipped below 20 on a forward P/E basis.

It’s wild and woolly out there with earnings, Iran, the Fed, and big tech. Any one of these factors could potentially move the market either way.

After falling near pre-war levels, oil prices spiked above $90 per barrel last week as Middle East hostilities intensified. Prices are down sharply so far this week as the bombings have halted for now. But it’s anybody’s guess how things will play out and affect the price of oil.

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.

Today’s Daily Alert recommendation comes from Cabot Market Letter, edited by Michael Cintolo.

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Today’s recommendation comes from the latest issue of Nate Pile’s Nate’s Notes, in which Pile decided the market had finally firmed up enough to add some new semiconductor stocks to his portfolio. Here’s his recommendation of one of the new selections.

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Today’s Daily Alert features a value pick from the Cabot Benjamin Graham Value Letter, edited by J. Royden Ward. Ward recently published a special feature on undervalued companies with accelerating earnings, a screen that has proven profitable for him before. One of his high-potential, moderate-risk selections is below.

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Today’s Daily Alert features a medical device company that makes a wide variety of medical devices, tools and materials. Its products include surgical instruments, implantable devices and many other products used in neurosurgery, orthopedic surgery, plastic surgery and other medical procedures. Here’s the recommendation, from Argus analyst David Toung.

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Given the volatile ups and downs of today’s market, I thought it was a good time to feature a value pick. Accordingly, today’s recommendation comes from the Cabot Benjamin Graham Value Letter, edited by J. Royden Ward.

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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.

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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.

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