Last month’s Cabot Wealth Summit was a great success, with many of our subscribers coming together to share investment ideas and strategies. Overall, the mood was very positive with most attendees falling into the bullish category. That sentiment is supported by my surveys of our contributors, as you’ll see in our Market Views, as well as in our Advisor Sentiment Barometer.

The market looks great today. The correction is over and buyers are back in control, so I recommend heavy investment in stocks that meet your portfolio’s goals.
Last week I made a slew of ratings changes to our portfolio to get back in synch with the market, but today all looks well so there are no changes at all—though of course that will change!
As for this week’s recommendation, it’s a bit unusual, in that it’s a recent IPO that got very little notice (unlike giant Uber for example), but it has a good growth story, and could even thrive in the next recession.

Current Market Outlook


We’re still of the mind that going slow makes sense—following the vicious rotation of the past week or two, there’s still a chance of continued crosscurrents going forward, especially with the weekend news in Saudi Arabia and the usual batch of uncertainties that are out there (Fed this week, U.S.-China trade, etc.). But at the end of the day, most of the evidence out there is tilted to the bull case: The intermediate- and longer-term trends of the major indexes are up, the broad market is very strong (very few stocks hitting new lows every day) and, while leadership has definitely shifted, we’re seeing a good number of stocks and sectors that are under strong accumulation. We still favor starting with smaller-than-normal positions and holding some cash, but we also wouldn’t be in your storm cellar as the buyers are (mostly) in control.
This week’s list features stocks where the buying has been concentrated of late—and these aren’t beaten-down names, as many are at or near new-high ground. Our Top Pick is Floor & Décor (FND), a mid-sized building-related retailer that has tightened up nicely.

Stock Name	Price	Buy Range	Loss Limit
ACADIA Pharmaceuticals (ACAD)	47.84	42-44	34-35
Arconic (ARNC)	17.00	26.5-27.5	24.5-25
Elastic (ESTC)	86.17	90-93	82-84
Floor & Décor (FND)	68.03	48-50	44-45
Lam Research (LRCX)	268.47	227-232	207-210
Medpace (MEDP)	76.28	81-83.5	73-75
Micron Technology, Inc. (MU)	43.31	48-50	44-45
Shake Shack (SHAK)	92.08	95-98	85-87
Teladoc, Inc. (TDOC)	127.95	67-69	60-62
Teradyne (TER)	82.83	56-58	51-52

The market has been wild in recent days, giving investors very mixed messages—on one hand, many leading growth stocks have broken down, but on the other, the broad market is strengthening, with our Cabot Tides actually flashing a new green light. Given the crosscurrents, we’re taking things on a stock-by-stock basis, selling stocks that are cracking support and looking for new buys among fresh leadership.

The gathering at our Cabot Wealth Summit last month was lively, accompanied by markets exhibiting some pretty intense volatility. That was primarily due to the Chinese tariff issue, but with little net change. Our subscribers—as well as individual investors—continue to be bullish. The economy remains strong, but Fed watchers are calling for another 25 basis points rate cut at the September 17-18 meeting, due to the global outlook as a result of the U.S./China trade war.

And yet, the fundamentals look sound, and as you’ll see in our Market Views section, our contributors continue to be positive in their outlook.

The good news is that fears of China tariffs have passed, and our Chinese stocks look better. The bad news is that formerly leading growth stocks are now being sold, while new leadership, like juggernaut Citigroup (C), comes to the fore. And additional good news is that all our Cabot market-timing indicators are once again positive, telling us the wind is at our back.
Bad news. Good news. The important thing is to watch each of your stocks carefully, nourish the ones that are doing what you hired them to do and fire the ones who don’t measure up.
This week, thanks to the big shifts in the market, we have an unusual number of rating changes, six! Details in the issue.

Current Market Outlook


The major indexes continue to show improvement, putting together their second straight week and, for some, rising to their highest levels since late July; our own intermediate-term trend model, in fact, is close to turning positive! That’s a good thing, no doubt, but we don’t (usually) buy the indexes—we buy leading stocks. And the evidence on that front is actually worsening: Many leading growth titles have actually been flashing abnormal intermediate-term action, especially in the software and cybersecurity areas, and we advise taking action when need be. (We have a number of sells on page 12.) That said, many recently strong names, especially turnarounds and some more cyclical-oriented stocks, are acting just fine. All told, it’s a very mixed environment with lots of crosscurrents, so the goal is to ditch stocks that are acting abnormally, and on the buy side, being picky, looking for stocks showing recent power that are near decent entry points.

This week’s list reflects what we’re seeing in the market, with some fresher growth-oriented names as well as some turnarounds with big projected growth. Our Top Pick is ASML Inc. (ASML), which looks to be leading a group upmove in the chip equipment space.

Stock Name	Price	Buy Range	Loss Limit
Ambarella (AMBA)	52.79	59-62	53-55
ASML Holding (ASML)	350.01	235-241	215-218
DocuSign (DOCU)	107.98	55-58	49-50.5
Fastly (FSLY)	39.31	25.5-28	22-23
Lululemon Athletica (LULU)	304.69	193-197	178-180
Medicines Company (MDCO)	56.98	44-46	37-39
Novocure (NVCR)	0.00	77.5-81	71-73.5
RH Inc. (RH)	252.93	147-154	133-135
Sanderson Farms (SAFM)	149.54	146-150	135-137
Western Digital Corporation (WDC)	0.00	60-63	53-54.5

What happens when you implement a digital marketing platform within secure online banking and mobile banking channels? Is that even possible?
The short answer is yes, it’s possible … if you can get banks to sell you their transaction data, host your platform and accept the revenue share agreements you propose for all the deals that consumers accept while logged in.
This month’s Cabot Small-Cap Confidential stock has created such a platform, and it’s taking off.
The story, and potential, of what happens when digital marketing and fintech walk down the aisle together is inside.

After two near-record-setting months, stocks are encountering their first real turbulence since March. It’s no surprise.

While stocks go up an average of 10% a year, they rarely do so in a straight line. And after the S&P 500 rallied nearly 20% in April and May and the Nasdaq shot up nearly 30%, a pullback of some kind – or possibly even a true correction – was to be expected. It seems it’s happening all at once.

Stocks look to enter summer near all-time highs, but leadership has narrowed and volatility has ticked up thanks to renewed scrutiny on the AI trade and open-ended questions about valuations in some of the hottest areas of the market.

There’s also been more focus on the evolving macro landscape, which features a resilient U.S. economy but stubbornly high energy prices due to the ongoing Iran conflict, and somewhat elevated yields. We’re now looking at a higher likelihood of a Fed rate hike, with the odds of a hike by December now well over 50%.

The high-flying AI stocks got crushed on Friday. But those stocks started this week higher. Where do we go from here?

The technology-heavy Nasdaq index fell 4% on Friday, and the S&P 500 fell for the week for the first time in 10 weeks. A couple of things spooked investors. The AI trade turned sour after Broadcom (AVGO) reported earnings that included slightly lower revenue projections for its AI chips than were expected. Also, a blowout jobs report strengthened the case for a Fed rate hike by the end of the year.

A major economic narrative that took shape in recent years was the decline and (presumptive) inevitable death of the so-called “petrodollar,” as a growing number of countries diversified their foreign exchange reserves away from the U.S. dollar and toward gold and alternative currencies like the Chinese yuan.

WHAT TO DO NOW: The overall market remains in good shape, though we are seeing some exuberance on the upside and also a few leaders begin to act sloppy. Near term, then, it’s still a coin flip as to what comes, but the vast majority of intermediate-term evidence remains bullish. In the Model Portfolio, we took partial profits in Marvell (MRVL) earlier this week; tonight, we’re buying a half-sized position (5% of the account) in Bloom Energy (BE), which is extremely volatile but also strong and coming off a few weeks of rest. Our cash position will now be around 28%.

This market just keeps going higher.

Sure, there’s uncertainty out there. The war isn’t over. Inflation and interest rates are still too high. But stocks didn’t get the memo. After a strong April, the S&P 500 rose 5% and the Nasdaq soared 8% in May. The indexes are up 20% and 30%, respectively, since March 30 and are continuing to make new highs this week.

Despite the negative headlines and volatility, stocks just keep going.

After a strong April, the S&P 500 rose 5% and the Nasdaq soared 8% in May. The indexes are up 20% and 30%, respectively, since March 30. It’s also worth noting that despite the ongoing Iran war, the price per barrel of West Texas Intermediate crude oil closed down 17% for the month of May.

This week’s Memorial Day observance marked the traditional onset of the summer vacation season for millions of Americans. It’s a time of traveling, sightseeing, picnics and parties. It’s also the peak season for enjoying cold, carbonated beverages like soda pop and energy drinks.

With this dynamic in play, I think it’s time that we give some attention to our holding in PepsiCo (PEP), which is entering a critical period of its sales year.

On the heels of a miserable March and a euphoric April, I wrote several weeks ago in this space that I thought May would determine which direction the market is truly headed, at least in the intermediate term. We have our answer, and it’s a definitive “up.”

All three major U.S. indexes are touching record highs as of this writing, with the S&P 500 up 4.3% in May, the Nasdaq up 7%, and the slower-moving Dow Jones Industrial inching higher by 1.6%. That’s despite the ongoing Iran war and the accompanying sky-high oil and gas prices, escalating inflation, bond yields at multi-year highs, possible Fed rate hikes later this year, and record-low consumer sentiment.

Stocks have largely shrugged off this week’s dust‑ups in the Middle East as investors continue to bet on a near‑term memorandum of understanding (MOU) that would reopen the Strait of Hormuz and push bigger sticking points between the U.S. and Iran down the road.

Yields have cooled off this week and continue to do so this morning, thanks to a slightly lower‑than‑expected core PCE reading. April core PCE rose 0.2% month over month, below both March’s 0.3% reading and consensus, giving the Fed some breathing room as policymakers weigh the competing forces of inflation and growth.

The $145 trillion global bond market is under some stress due to runaway debt. The 30-year U.S. Treasury bond yielded over 5% last week, up from 4.63% at the end of February. Americans are struggling to keep up with their debt payments, as the cost of borrowing money increases. This is a global story. In Japan, the 30-year government bond yield just hit a record of 4.15%, and U.K. government debt jumped to 5.85% earlier this month.

Nothing stops this market. The S&P 500 hit another new high this week.

The spectacular earnings season helped power the rally. Average earnings growth on the S&P 500 is over 28% in the first quarter. That is far better than the expected 13.1% and the highest level of growth for any quarter since 2021.

The market and especially growth stocks fell sharply today, with the Dow losing 345 points and the Nasdaq falling 212 points, giving back all of yesterday’s bounce.

Wall Street expects this gaming company to grow at more than 15% annually, over the next five years.

Markets ended last week on a sour note as the U.S. and China imposed tit-for-tat tariffs and Facebook continued to drag tech stocks lower. The major indexes all declined more than 5% for the week, their worst weekly performance in over two years. I’m moving two of our most affected stocks to Hold today.

This insurance company beat analysts’ estimates by $0.05 last quarter.

In light of all this week’s “Trump trade war” headlines, let’s review the U.S.-China trade news so that you can quickly grasp the facts of the situation. It’s also important to understand that as much as the media might try to portray announcements about trade problems as sudden, whimsical and dangerous, they are in fact long-studied, methodical, and inclusive of a huge variety of government, industry, academic and citizen input.

The market was crushed yesterday as fears of a trade war with China picked up. At the close, the Dow had lost 724 points while the Nasdaq had fallen 179 points.

This animal health company was just recommended by Zack’s, who cited its earnings growth and positive estimate revisions.

One stock reports second quarter results and three more are rising this week.

This aerospace services company beat analysts’ earnings estimates by $.20 per share last quarter, and nine analysts have increased their forecasts for the company in the past 30 days.

If you own shares of this stock in our portfolio you were very pleased when shares rallied 28% yesterday.

This investment seeks daily investment results, before fees and expenses, that correspond to three times the inverse (-3x) of the daily performance of the NASDAQ-100 Index®.

Analysts expect this pharma to grow at more than 100% over the next five years.

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.