As I write this, the Nasdaq and S&P 500 both just notched record closes. This morning, however, investors seem to be responding by cashing in a bit, and the futures are down. But who can blame them for taking some profits?

All in all, the economy—despite high gas prices, inflation, and rising interest rates—seems to be doing okay.

Unemployment did increase to 4.2% in September, but we also added 90,000 new private-sector jobs, higher than the 68,000 that had been predicted.

“There are no bad bonds, only bad prices.” -Wall Street adage

The stock market has been resilient mainly due to strong earnings and enduring enthusiasm for AI tech stocks as the top 10 stocks in the S&P 500 now account for about 40% of the entire weight of the index. Meanwhile, less than half of the stocks in the S&P 500 closed above their 200-day moving average yesterday. Gold and small-cap stocks continue to be soft.

The bond market had stocks on the back foot for most of last week, as the 10-year Treasury yield climbed to its highest level in 24 years and the Dow closed out September with a loss of more than 4%. Then Friday’s September Jobs Report flipped the script (a bit) as employers added just 29,000 jobs against expectations of roughly 90,000, and in a “bad news is good news” twist, stocks rallied as traders scaled back bets on an October Fed rate hike, lifting the Nasdaq to a record high. For the week, the S&P 500 slipped 0.3%, the Dow fell 1.3%, the Nasdaq gained 0.5%, and the Russell 2000 dipped 0.2%.

The overall setup in June and July wasn’t a good one, but that started to change in August, and growth stocks and indexes definitely outperformed last month. Obviously, that doesn’t erase all the other evidence that we’ve been writing about, so we’re not taking a huge step into the market’s waters, but the recent improved vibes combined with a still-bullish longer-term view have us nudging up our Market Monitor to a level 7 tonight, while keeping a close eye on progress from here.

This week’s list is again heavy on growth-y names, which is encouraging. Our Top Pick is a familiar name that’s been showing great relative strength for weeks and has set up nicely just shy of all-time highs.

Is another April-and-May-type rally nearing? This week could give us the answer. Stocks are finally starting to show signs of life, though under the surface, trouble remains. Today’s new addition to the Stock of the Week portfolio should fare well regardless of which way the market goes from here. It’s a little-known discount Mexican grocery store chain that’s one of the very few non-mega-cap tech stocks that’s held up well of late, meaning it could thrive in any market environment. It’s a new recommendation from Tyler Laundon in his Cabot Early Opportunities newsletter.

Details inside.

The bond market had stocks on the back foot for most of last week, as the 10-year Treasury yield climbed to its highest level in 24 years and the Dow closed out September with a loss of more than 4%. Then Friday’s September Jobs Report flipped the script (a bit) as employers added just 29,000 jobs against expectations of roughly 90,000, and in a “bad news is good news” twist, stocks rallied as traders scaled back bets on an October Fed rate hike, lifting the Nasdaq to a record high. For the week, the S&P 500 slipped 0.3%, the Dow fell 1.3%, the Nasdaq gained 0.5%, and the Russell 2000 dipped 0.2%.

The bond market had stocks on the back foot for most of last week, as the 10-year Treasury yield climbed to its highest level in 24 years and the Dow closed out September with a loss of more than 4%. Then Friday’s September Jobs Report flipped the script (a bit) as employers added just 29,000 jobs against expectations of roughly 90,000, and in a “bad news is good news” twist, stocks rallied as traders scaled back bets on an October Fed rate hike, lifting the Nasdaq to a record high. For the week, the S&P 500 slipped 0.3%, the Dow fell 1.3%, the Nasdaq gained 0.5%, and the Russell 2000 dipped 0.2%.

The bond market had stocks on the back foot for most of last week, as the 10-year Treasury yield climbed to its highest level in 24 years and the Dow closed out September with a loss of more than 4%. Then Friday’s September Jobs Report flipped the script (a bit) as employers added just 29,000 jobs against expectations of roughly 90,000, and in a “bad news is good news” twist, stocks rallied as traders scaled back bets on an October Fed rate hike, lifting the Nasdaq to a record high. For the week, the S&P 500 slipped 0.3%, the Dow fell 1.3%, the Nasdaq gained 0.5%, and the Russell 2000 dipped 0.2%.

The intermediate-term evidence is about as mixed as you’ll ever see, with nearly 80% of the broad market below their 50-day lines and our Cabot Tides negative--all while most growth stocks hold up well and our Aggression Index has turned positive! We’re pleased that our current crop of stocks is acting well, and we remain optimistic that next big move is up ... but advise staying cautious until the market shows its hand.

Chinese stocks have been out of favor for most of the 2020s, since their Covid apex. And while the Chinese economy is not growing as fast as it did during its halcyon days a decade ago, it’s still on track to double U.S. GDP growth this year. In fact, many of China’s largest companies continue to grow – some of them thanks to artificial intelligence. One of the country’s biggest names, in fact, has been reborn as an AI behemoth, leading to accelerating revenues and global ambitions. And yet, the stock trades at barely more than a third of its Covid-era highs. It’s a classic growth and value opportunity, and one that looks ready to fly now that Chinese stocks are slowly starting to gain traction again.

It’s the October addition to our Cabot Value Investor portfolio. I think it has better than 60% upside.

Details inside.

This month’s company has spent decades building a successful small-ship adventure travel business that takes guests to some of the world’s most extraordinary destinations. Today, record occupancy, strong advance bookings and new air-and-land offerings suggest the next phase of growth could be even more profitable.

All the details are inside the October issue of Cabot Small-Cap Confidential.

Since early July I have been cautioning about market weakness, and it has definitely arrived.

True, you don’t see it in the broad indices. The S&P 500 and Nasdaq are up 2.3% and 3.4%, respectively, in the past three months.

While these indices are up moderately, anyone who is constructing broad portfolios of individual names is probably doing far worse. That’s because most of the market is in a correction. More than 70% of S&P 500 stocks are at least 10% below their recent highs, notes Jason Goepfert, a technical analyst at NextGen News.

The term “strategic transformation” is thrown around a lot these days, and with good reason: An explosive number of companies are undergoing such realignments in 2026—particularly as it pertains to digitization and AI. On a related note, the cryptocurrency industry is increasingly becoming intertwined with the AI buildout, with a growing number of crypto miners joining the strategic transformation trend by repurposing their infrastructure for AI and making their energy assets available to AI data centers.

WHAT TO DO NOW: The evidence remains mixed, with lots of rotation, crosscurrents and news-driven action out there. If the recent growth dip over the past three days finds support, we could probe a couple of small new buys given our bullish Aggression Index, but tonight we’re still playing things halfway, holding our relatively strong crop of stocks but also a good amount of cash given the on-again, off-again environment. We have no changes tonight but will be on the horn if that changes in the days ahead.

Investors should never buy and sell stocks based purely on the calendar. That being said, three of the last four Octobers have kickstarted a productive rally.

The 2022 bear market mercifully found a bottom in the middle of October, with the S&P 500 dipping below 3,600 after a worse than 20% decline over the previous 10 months. By the start of December, the benchmark index was trading above 4,000, and the new bull market that is now four years old and counting had formed.

The most important number in the market right now continues to be the 10-year Treasury yield.

That yield has surged from roughly 4.6% in mid-August to more than 5.3% this week, weighing on stocks across the market-cap curve, but especially small-cap stocks. The rate move has been driven by a combination of inflation concerns, elevated oil prices, ongoing tensions in the Middle East and growing scrutiny of government debt levels both in the U.S. and abroad. This isn’t just an American interest-rate story – France has recently emerged as a focal point for global bond investors.

It’s a new high! What high interest rates? What Fed hiking rates again?

The S&P 500 hit a brand new all-time high this week. It’s an impressive display of resiliency amidst the highest benchmark 10-year Treasury rate since 2002 and oil prices still in the $90 per barrel range.

This market continues to hold up despite issues most would have expected to drive prices down. It looks like a market that really wants to go higher.

Oil prices crossed the $100-per-barrel level in September, although prices have pulled back to around $90. The benchmark ten-year Treasury has reached the highest level since 2002 at 5.33%. The Fed raised the fed funds rate in September for the first time in three years. And Wall Street expects at least one more hike before the end of the year. But the S&P 500 still trades within just a fraction of a percent of the all-time high.

The current environment is one of those rare times when the S&P 500 Index (SPX) doesn’t tell the story for what’s really happening in the broad market. In fact, it’s downright misleading.

While the SPX is currently just 2% below its all-time high, more than 40% of S&P 500 stocks were at least 20% below their 52-week highs as of September 30. Even more tellingly, the average individual stock listed on the NYSE has entered bear market territory, trading roughly 21% below its 2026 peak, even though the headline indexes mask much of this damage.

Interest rates around the world kept edging up as Explorer disrupter stocks had a difficult week while dominating stocks mostly posted gains. Gold prices continue to be soft.

Foreign investors bought a record $426 billion in stocks and investment fund shares in the second quarter, according to data from the Bureau of Economic Analysis out this week.

Despite the resilience of the market indexes, many stocks are starting to buckle.

Yeah, the S&P is still within 2% of the high despite high oil prices and interest rates. But that is mainly due to the solid performance of the technology sector, which accounts for 40% of the index weighting. Almost all the other stock sectors are in negative territory over the last month.

The market continues to hover right near the high while oil prices and bonds hit troubling levels.

The market is holding these high levels because of technology, which is up 8.75% over the last month and accounts for about 40% of the index. The rest of the market sectors, with the exception of Communications Services, have been in negative territory over the past month, with interest rate-sensitive stocks performing the worst.

It has long been my contention that the AI buildout—which is unquestionably the dominant force underlying the current stock market environment—will ensure abundant liquidity for equities for as long as it persists.

It can further be argued that the AI investment theme is today’s analog to the computer tech buildout of the 1980s or the Internet stock boom of the ‘90s and, as such, is doing much of the heavy lifting for the major indexes. Indeed, the fact that one of the most important leaders for the Nasdaq, the semiconductors, continues to boom in spite of soaring interest rates and other global macro headwinds is a case in point illustrating that AI-driven liquidity is powerful enough to allow investors to ignore these threats.

WHAT TO DO NOW: The market (especially the broad market) is still facing meaningful headwinds from oil prices and Treasury rates, which has turned our Cabot Tides negative—though, interestingly, our Aggression Index has turned technically positive, while many growth stocks perk up. We debated adding a new name (or averaging up in an existing one), but given the huge crosscurrents, we’ll again stand pat tonight. That said, the next few sessions will be interesting—if the resilience in many names morphs into some breakouts, we’ll likely put some money to work, but tonight, let’s watch things a bit more to see if the buyers can really show up. Our cash position remains around 50%.

Nike (NKE) released fiscal Q1 2027 (ended in August) earnings that missed Wall Street’s expectations on the top line, but were in line with the company’s expectations.

We’re taking two actions today.

Sell ATI (ATI)

Today, a whopping eight Profit Booster positions will expire. Most are “slam-dunk,” full-profit trades, while others will go down to the wire.

The big takeaway, before we dive in, is we are going to let the situation play itself out, and come Monday/Tuesday of next week we will revisit our profits, as well as how we will manage the remaining positions.

Enova (ENVA) shares are down sharply today after management announced it is withdrawing its regulatory applications related to the proposed acquisition of Grasshopper Bank, effectively ending the transaction.

Insiders at our psychedelics therapy company Cybin (HELP) are turning very bullish. From August 31 through September 10, the executive chair and chief growth officer bought over $4.6 million worth of stock at $11.59 to $12.09.

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 Momentum 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 Momentum Trader features.