The bulls had another strong week as the Magnificent Seven reported mostly strong earnings, the Fed held steady (as expected), Q1 GDP came in at a solid 2.0%, and Apple capped the week with a top- and bottom-line earnings beat that sent shares up more than 3% on Friday. The one fly in the ointment? Inflation — the PCE price index surged at a 3.5% annualized rate in Q1, a sharp acceleration driven by elevated energy costs tied to the Iran conflict.

The past month has gone about as well as any bull could have hoped, with the market stampeding off the late March low -- and with nearly all of the top-down evidence looking positive today. Individual stocks have been a bit trickier, with leadership concentrated in AI names and with earnings season causing some gyrations; we’re standing pat and holding our still-large cash position tonight because of that. But don’t get us wrong -- we’re optimistic, and looking to extend our line as more leaders (preferably outside of AI) emerge during earnings season.

Back on April 23 at the market close, I suggested buying cannabis stocks in the sharp pullback that day right after the federal government announced cannabis rescheduling.

From opening prices the next day, cannabis stocks were recently up 18%. Not only that, but for the moment, cannabis stocks seem to have found a stable footing.

For investors in UnitedHealth Group (UNH), the last 18 months have probably felt like an eternity. After hitting a lifetime high north of 600 a share in late 2024, a rapid succession of shocks—ranging from leadership turmoil to compressed margins to Medicare policy changes—combined to crush the company’s stock over the next year-and-a-half, cutting its value by more than half.

But after the seemingly endless turbulence of that period, the stock has begun to stabilize while UnitedHealth’s turnaround is gaining significant traction, with the firm’s recent financial results showing better-than-expected recovery signs. For this and other reasons I’ll describe here, the stock appears worthy of our consideration.

This has been an amazing turnaround!

The market has made up for all the March losses and then some, before the war has even ended. Investors are clearly looking toward the post-war market. And the market usually gets these things right.

The inevitable post-war bounce has come early. Soon, we will see what lies beyond the war. It will likely be more uncertainty. The problem is that the war has further clouded what was an already uncertain economy over the remainder of the year. The economy was likely headed for a high level of growth. But the war probably put that off for a while.

The current situation creates another great income opportunity. The market is at all-time highs after a post-war bounce, before the war is over, and ahead of a very uncertain economic environment over the rest of the year. It’s a great time to take advantage of the recent rally and lock in high-priced calls on stocks near the highs while the market still has upward momentum.

In this month’s issue, I highlight covered calls on two more stocks. These will be the first calls sold in both positions as the market is providing a perfect vehicle to widen the high-income participation of more of the portfolio.

Tech took the wheel last week as a surge in semiconductors — led by Intel’s (INTC) stunning earnings beat that sent shares surging more than 20% to a record high — helped the Nasdaq extend its winning streak while the broader market ground out modest gains. The Iran ceasefire extension from President Trump mid-week kept risk appetite alive, though the Dow lagged as oil prices remained stubbornly elevated. For the week, the S&P 500 gained 0.6%, the Nasdaq added 1.5%, the Russell 2000 ticked up 0.4%, while the Dow Jones slipped 0.4%.

The market has basically acted as well as any bull could have hoped during the past month, showing some very rare strength that, historically, should portend nice gains in the months ahead. Of course, the worries of the world haven’t disappeared, so near-term, some digestion or rotation is certainly possible, especially if the relative quiet in the Middle East blows up. Still, while we remain flexible, we always go with the odds, which favor upside for the market and leaders down the road. We’ll stick with a level 7 on the Market Monitor for now, though we’d like to bump that up if we see some calmness going forward.

This week’s list has a broad range of ideas, both fundamentally and chart-wise. For our Top Pick, we’re going with a name that staged a long-term breakout in the fall and, after a tough correction, has re-emerged nicely as business accelerates.

The market hit the pause button this week, settling into a holding pattern after going nowhere but up through the first three weeks of April. This week could go a long way toward determining where it goes from here, what with nearly half of all large-cap companies reporting earnings and Jerome Powell giving his last formal address as Fed chief. To account for possible volatility, today we add an undervalued blue-chip stock whose name everyone knows. It’s been a mainstay of Clif Droke’s Cabot Turnaround Letter for a while. And today, we add it to Cabot Stock of the Week.

Details inside.

Tech took the wheel last week as a surge in semiconductors — led by Intel’s (INTC) stunning earnings beat that sent shares surging more than 20% to a record high — helped the Nasdaq extend its winning streak while the broader market ground out modest gains. The Iran ceasefire extension from President Trump mid-week kept risk appetite alive, though the Dow lagged as oil prices remained stubbornly elevated. For the week, the S&P 500 gained 0.6%, the Nasdaq added 1.5%, the Russell 2000 ticked up 0.4%, while the Dow Jones slipped 0.4%.

Tech took the wheel last week as a surge in semiconductors — led by Intel’s (INTC) stunning earnings beat that sent shares surging more than 20% to a record high — helped the Nasdaq extend its winning streak while the broader market ground out modest gains. The Iran ceasefire extension from President Trump mid-week kept risk appetite alive, though the Dow lagged as oil prices remained stubbornly elevated. For the week, the S&P 500 gained 0.6%, the Nasdaq added 1.5%, the Russell 2000 ticked up 0.4%, while the Dow Jones slipped 0.4%.

Tech took the wheel last week as a surge in semiconductors — led by Intel’s (INTC) stunning earnings beat that sent shares surging more than 20% to a record high — helped the Nasdaq extend its winning streak while the broader market ground out modest gains. The Iran ceasefire extension from President Trump mid-week kept risk appetite alive, though the Dow lagged as oil prices remained stubbornly elevated. For the week, the S&P 500 gained 0.6%, the Nasdaq added 1.5%, the Russell 2000 ticked up 0.4%, while the Dow Jones slipped 0.4%.

The comeback of big tech dominated markets this week, with Explorer Dominator stocks posting gains while Explorer Disruptive stocks struggled a bit. The S&P 500 and Nasdaq both finished at record highs.

The April rally has been very encouraging. It’s important to remain optimistic but not to get too carried away, given current valuations. And that brings me to this week’s new recommendation.

Oil prices, geopolitics, and shifting inflation expectations continued to drive noisy headlines over the last week, and the stock market has been responding with intermittent bouts of risk-off behavior.

Year to date, the divergence between large caps and small caps remains one of the market’s defining features and is – for obvious reasons – especially notable for us.

This Iran-driven market is getting a bit of a reprieve this week, so far.

The indexes started the week sharply higher on rumors of talks to end the conflict. If the conflict does end, there should be a strong relief rally in the market. But it’s also quite possible that nothing comes of the talks and the market selling continues. We’re certainly not out of the woods yet.

While the S&P 500 fell just below its 200-day line yesterday, the S&P 600 SmallCap Index has held up better. The small-cap index found support at 1,495 yesterday, the same level at which it previously found support last Monday.

It may be that investors recognize the more domestic focus of small-cap companies. Or their still discounted valuation. On the flip side, we’ll need to keep an eye on potential impacts on growth and the U.S. economy from the war in Iran, as well as rates.

Weak market environments are no fun, but they do serve a useful purpose. For one thing, they serve to flush out “weak hands” in individual stocks that are overcrowded with too many buyers. A weak market can also serve to build up a large amount of short interest that can serve as a fuel for a major rally once the air has been cleared, so to speak.

But an even more useful function served by market declines is their usefulness in identifying the leaders of the next major advance. Specifically, they show us that the stocks and industry groups that buck the trend during the market’s weak phase tend to be outperformers when broad strength finally returns.

Some signs of life are emerging in the market.

For starters, the major indexes have stopped falling and were actually up two days in a row (this Monday and Tuesday) for the first time all month. Also, Bitcoin – whose main utility is as a leveraged investment tool in a bull market – is up more than 10% this month, at a time when stocks have been going the other way, thanks to the Iran war and sky-high oil prices.

“I’d rather be an optimist and wrong than a pessimist and right.” -Howard Marks

Stocks struggled again this week as the Federal Reserve held interest rates steady yesterday. Higher inflationary energy prices were weighed against anemic job growth. The Fed preserved a path to cut rates later this year as the economy evolves. Some consider our economy to be at a fragile equilibrium with pockets of growth.

It’s still an Iran-dominated market. The Iran war is by far the main event. But the market is starting off the week on a positive note because of optimism that the Strait of Hormuz will reopen and relieve oil price pressure.

So far, the market seems to be taking things in stride. The S&P 500 is only down about 1.5% for the month.

The Iran saga continues. But the market is starting off the week on a positive note because of optimism that the Strait of Hormuz will reopen and relieve oil price pressure.

The Iran situation is by far the main event in the market right now. The war could end quickly or drag on for a while. So far, the market is taking things in stride. The S&P closed last week down 3% for the month of March. That’s nothing like the tariff sell-off last April. But there is still downside risk.

Just when it looked like inflation was abating, with nationwide retail gasoline prices falling from an average of $3.20 to $2.73 a gallon between August and January, the specter of rising prices has appeared once again in the wake of the latest Middle East conflict.

As of this writing, the national gas price average is $3.63 a gallon (and rising by the day), which is 33% higher from the January low.

WHAT TO DO NOW: Remain cautious. Our Cabot Tides have joined our Two-Second Indicator and Growth Tides on the negative side of the fence. We have seen a couple rays of light from our Aggression Index and via some peppy growth names (mostly in the AI space)—but until the market can turn up, we advise staying close to shore. In the Model Portfolio, we sold Axsome (AXSM) this morning via special bulletin, leaving us with around 69% in cash; tonight, we’ll place our ProShares S&P 500 Fund (SSO) position on Hold given the market’s weakness and Tides red light.

After a fast start to the year, value stocks have been knocked backward of late.

Since the Iran war began at the end of February, value stocks – as measured by the Vanguard Value Index ETF (VTV) – have fallen nearly 3.5%, more than the Dow (-2.6%) and more than twice as much as the S&P 500 (-1.5%) this month. Overall, however, value stocks are in good shape, up 4.7% year to date and 8.8% in the last six months – both more than doubling the performance of the S&P and the Dow during those time periods. So, the sharper selling in value stocks this month may simply be a case of the bears (or, “the weak hands,” as my colleague Mike Cintolo more accurately calls them) coming for stocks that had more meat on the bone.

There’s never a dull moment in the stock market. Like everybody, I’m watching the situation in Iran closely.

For the market, it’s really all about the Strait of Hormuz and energy prices. If activities in the Strait remain severely disrupted for several more weeks, oil and natural gas prices are likely to stay elevated or move higher, despite the IEA’s recent decision to release 400 million barrels of oil (roughly 20 days of supply). The longer this persists, the greater the potential damage to the global economy and the stock market.

WHAT TO DO NOW: While there’s been some modest improvement here and there, growth stocks continue to be unable to get going in any real way, with the Nasdaq stuck in the mud and our Aggression Index approaching multi-month lows. We already have a lot of cash, but today we’re pulling the plug on JFrog (FROG), which continues to have great fundamentals, but the stock (and the software sector overall) continues to sag. We’ll sell here and make sure a disappointing situation doesn’t get much worse.

Following yesterday’s after-hours preliminary Q4 earnings results, we are selling Beta Bionics (BBNX) today.

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 market timing indicators are discussed in every issue of Cabot Growth Investor. Here are detailed explanations of what they are and how we use them.

Changing interest rates affect all income investors, but since they can have a wide variety of effects, figuring out whether changes in rates are going to help you or hurt you can be a complex problem.

These rules are the foundation of the Cabot Market Letter investment philosophy.

My stock-picking strategy has been refined over the course of 28 years, and has been quite stable for the last six years. My investment goals are (1) minimize stock market risk, (2) achieve capital gains, with dividends as a welcome addition to total return and (3) outperform the U.S. stock markets.

These are the six fundamental characteristics that correlated most highly with profits in a 10-year study of stocks bought for the Model Portfolio of the Cabot Growth Investor.

Our instincts warn us that stocks reaching all-time highs are invariably overdue to fall. Sometimes yes, sometimes no. We examine two common scenarios involving stocks that are about to rise—or fall—from new high prices.

Here are two points to bear in mind when you’re setting a target price for your small-cap stock stop-loss.

Here’s exactly what I look for in dividend-paying stocks, whether they’re joining the High Yield, Dividend Growth or Safe Income tiers of our portfolio.

If professional investment companies are not making their decisions based on the price of the stock, neither should you.

Here are some common-sense, down-to-earth ways to control your risk, so that the market’s inevitable potholes never cause fatal damage to your portfolio.

More than six years after the Fed lowered the Federal Funds rate to 0%-0.25% in December 2008, the economy has strengthened to the point that the Fed is considering raising rates to prevent inflation.

I created Cabot Dividend Investor’s three-tiered portfolio to address the needs of the widest possible variety of investors with some combination of these goals. But this variety means that you need to figure out how to mix and match my recommendations to best fit your goals.