The healthcare industry has had its share of ups and downs, with most of the attention being showered on the biotechs that hope to produce COVID-19 vaccines. But after the recent outlook upgrade of today’s recommendation, investors may want to broaden their healthcare watch list.

Current Market Outlook


Most of the issues the market had been suffering from are still out there—even after today’s rally, the intermediate-term trend of the major indexes is questionable at best (still technically down), while relatively few stocks are really moving ahead (the number of new highs remains tame). That said, we have begun to see support show up in the market, partially in the indexes but more so among leading (and potential leading) stocks; we’re seeing many show resilience and a bunch begin to set up in legitimate launching pads. That doesn’t mean these stocks are guaranteed to get going, but it’s a first step to keep an eye on going forward.

This week’s list contains a group of names that’s attracting money, including a few that have popped on news. Our Top Pick is CrowdStrike (CRWD), which is one of the few growth-oriented stocks that’s actually been slowly pushing higher in recent weeks as the market has come in.

Stock Name	Price	Buy Range	Loss Limit
Blueprint Medicines (BPMC)	88.88	84.5-87.5	77.5-79.5
CrowdStrike (CRWD)	137.38	133-138	117-120
Digital Turbine (APPS)	30.98	28-30	24.5-25.5
DraftKings Inc. (DKNG)	56.91	54-58	45-47
Generac Holdings (GNRC)	190.24	180-185	165-168
JinkoSolar Holding (JKS)	37.78	34.5-36.5	29.5-31
Owens & Minor (OMI)	21.67	19.5-20.5	17-18
QUALCOMM Incorporated (QCOM)	118.47	115-119	105-107
Sea Limited (SE)	160.00	156-161	138-141
Square, Inc. (SQ)	160.79	157-162	140-143

This morning brought some broad buying to the market, though not enough to reverse the negative signal by our intermediate-term trend-following indicator last week. And that means that raising cash—by selling your weakest growth stocks—is still a good idea.

For Cabot Stock of the Week, I’ve singled out three to sell today (Big Lots - BIG), (RingCentral – RNG) and (Global X Cybersecurity ETF – BUG), but you may have others in your own portfolio.



As for new buying, this week I’m going with a low-risk recommendation from Cabot Dividend Investor, which has a good growth story and pays a 3.1% dividend.

The market’s evidence has worsened of late, with our Cabot Tides flipping to bearish earlier this week, and going along with that is a dearth of stocks hitting new highs. To be fair, it’s not all bad news — we’re seeing fresher leadership hold up relatively well, even during this latest decline, while the longer-term signposts are still positive — but we continue to think a relatively cautious stance is appropriate. Since the last issue, we’ve had a couple sells and three buys (repositioning the portfolio into some more resilient names), but we’re still holding onto about 44% in cash.

In tonight’s issue, we go over all our positions (including the new buys, which we think are battling for pole position for the market’s next advance) and talk about one simple chart tool that can help you spot other potential leaders going forward, too.

The incredible rally from the March lows has been disrupted. After soaring a remarkable 60% from the March lows, the S&P has pulled back more than 8% from the high. The selloff was long overdue and frankly healthy. It couldn’t continue the torrid pace higher forever.

The recent pullback has put several high quality stocks back in the buy range. In this issue, I highlight one of the very best large companies on the market. The recent turbulence has caused a rare pullback in the price that presents a buying opportunity in a stock that is rarely ever cheap. It also generates substantial call premiums and fantastic income potential.

This week we are going right back to a stock that we were involved with last month, which has handled the market weakness very well.

Current Market Outlook


Today’s market dip pulled all the major indexes we track below their 50-day lines, which officially puts the kibosh on the intermediate-term uptrend. Since we pulled in our horns weeks ago, we’re not changing our stance much: We remain cautious, with the indexes having issues and rotation coming fast and furiously among individual stocks. That said, we’re not sticking our head in the sand, either, as we’re seeing a decent number of issues either show signs of bottoming out (some of the virus winners are finally finding support) or holding firm despite the market’s wobbles. We continue to advise taking it slow and holding some cash given the overall environment, but select nibbling is OK, preferably on dips and shakeouts.

This week’s list has many names acting well, though their day-to-day action remains volatile. Our Top Pick is Seattle Genetics (SGEN), which looks like it’s starting to emerge from a two-month correction; we think you can start small here or on dips.

Stock Name	Price	Buy Range	Loss Limit
AGCO Corporation (AGCO)	70.77	68.5-71.5	63-65
Brinker International, Inc. (EAT)	44.58	42-44.5	36.5-37.5
Exelixis (EXEL)	25.80	24.5-26	22-23
Kingsoft Cloud Holdings (KC)	36.80	35-37	32-33
NIO Limited (NIO)	18.80	17-18	15-15.5
Norfolk Southern (NSC)	214.26	204-208	191-193
Pinterest (PINS)	36.85	35-37	31-32
Seattle Genetics (SGEN)	178.88	175-180	158-161
Toll Brothers Inc. (TOL)	47.02	44.5-47	40-41.5
TopBuild (BLD)	157.72	149-154	136-139

With this morning’s broad selling, the intermediate-term of the market is now down—but the long-term trend is still up! How you handle this depends partly on your own risk tolerance and partly on how your stocks are acting. If your stocks look good, I favor holding, but if they’re falling, I recommend selling.

In this advisory, the only immediate change is the sale of one stock, LGI Homes (LGI) to create room for our new one.



And that new one, by the way, comes from a sector that is definitely outside our usual hunting ground. But fundamental trends look good, so this just might turn into a great investment!



Full details in the issue.

Small caps broke above their six-month trading range last Friday (albeit very modestly and very briefly) even as tech was selling off hard. The reason appears to be that money was flowing out of small cap tech and, potentially, into small cap financials, industrials and consumer staples.

In this Weekly Update, I report on a sell candidate, plus four companies that raised their dividends. I also include one question from a subscriber with my answer.

We’re focused on seeing how the market and leading growth stocks act following the Friday/Monday wave of selling; so far, there’s been some abnormal selling but most stocks are holding key support. The overall market is also still in good shape, and thus, we’re generally standing pat, with around 22% in cash.

For now, the long-term trend remains up, and so do most of our Cabot Dividend Investor positions. Here’s what’s going on with each of them as we enter summer.

While I don’t think we just saw the end of the run-up in technology stocks, I do think investors should begin to pare back their tech holdings and do these two things: raise cash, and buy undervalued stocks in other sectors.

Market continues to climb a wall of worry. I don’t know if this is the last hurrah of the bull market. A final push before a major retreat. But I do know that we should be mindful of the risks out there.

In this Weekly Update, I include a summary for Five Below (FIVE) which reported quarterly financial results during the past week. I also include a question from a subscriber along with my answer.

Despite today’s pullback, the Emerging Markets Timer is doing just fine, as the iShares EM Fund remains safely above its moving averages. We have three portfolio moves tonight, including booking our profits in two positions and dropping one stock from the Watch list.

Most of the stocks in our Cabot Dividend Investor portfolio are behaving quite well; two stocks streaked to new highs in the last few days. I have no changes to the portfolio this week.

I include summaries for 11 Cabot Benjamin Graham Value Investor companies that reported quarterly financial results or other noteworthy news during the past two weeks. I also include questions from subscribers along with my answers.

Remain mostly bullish, but hold a little cash to respect the market’s growing divergences. Our market timing indicators are still mixed, though the long-term trend and growth stocks remain in good shape.

There’s something unusual and significant afoot in the bond market so I’m going to pluck my Goldman Sachs update out of the Growth Portfolio updates, and put it right here in the intro so that nobody misses what’s going to be happening soon.

Technology stocks are the leaders, gaining an average 18.7% so far in 2019.

The shares of this auto parts supplier were recently upgraded at Guggenheim to ‘Buy’.

Two stocks in the portfolios have reported earnings and there is news on one other.

Secondly, we are taking some profits.

Three analysts have raised their EPS estimates for our first pick today, and secondly, we are taking some profits.

Coverage of the shares of this enterprise cloud computing company were recently initiated at Mizuho, with a ‘Buy’ rating, and at Stephens & Co. and Atlantic Equities, with an ‘Overweight’ rating.

While the long-term prospects for this industry remain very bright, and I’m thrilled to be your guide to these opportunities, the short-term risks are now high. Which means that someday, there will be a correction, and some investors, particularly those who bought at the top, will lose a lot of money. And I don’t want you to be one of them.

Eight analysts have increased their EPS estimates for this Chinese internet company in the past 30 days.

Crista is adding a stock to the the Buy Low Opportunities Portfolio.

The top five sector in this ETF are: Financial, 16.66%, Technology, 16.2%, and Industrials, 15.72%.

This telecom is forecasted to grow at almost 20% next year, and by triple digits in the next five years.

As part of its new North American leadership changes, this turnaround flooring company just named a new CFO from International Paper, who will replace the current retiring Chief Financial Officer.

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.