The broad market remains in fine health, with all major indexes trending higher and sentiment measures telling us this market has not yet reached the stage where amateurs are sucked in to buy at the top. Thus I continue to recommend that you be heavily invested in a diversified portfolio of stocks that fit your investment needs.
Today’s recommendation is a very large company in an industry that has major ebbs and flows due to circumstances that are beyond this company’s control. But right now, conditions are excellent, and the 4.3% yield is an indication that the stock is cheap as well.
As for the other stocks in the portfolio, they look great, with six at or near their all-time highs. Details inside.

Part of what makes turnaround mutual funds an inefficient and therefore profitable investing niche is that most investors avoid these securities. Managers of this small group of funds are comfortable with the contrarian approach of owning stocks that are avoided by more conventional mutual fund managers.

In this issue, we highlight seven of these turnaround-oriented mutual funds we’ve watched over the years.

Today’s recommendation is another company tapping into the explosive growth in genomic testing. It makes diagnostic tests, which pits it against larger rivals like Illumina (ILMN) and Gardant Health (GH). But this small company plays in three very specific markets where its next-gen products are emerging as market leaders. And new collaborations with the likes of Johnson and Johnson (JNJ) and Loxo Oncology, now part of Eli Lilly (LLY), are further evidence that it’s on the right path. All the details are inside. Enjoy, and Happy 4th of July!

Current Market Outlook


It’s not perfect, but from a top-down perspective, the market remains in good shape—today’s stretch toward new highs for many indexes (the S&P 500 made it, though most others didn’t) keeps the intermediate- and longer-term trends pointed up. That said, under the surface, things are a bit disjointed, with selling on strength seen in some extended growth leaders and buying picking up in names that are either cyclical (oils, financials) or fresher (those that haven’t had huge runs). That doesn’t mean you should chase every stock and sector that’s moving and ditch those that are wobbling, but it is important to avoid complacency with your winners (honor stops and take partial profits when offered) and, on the buy side, focus on stocks showing outstanding accumulation in recent weeks.
Those are just the type of charts we’re honing in on these days, and this week’s list has another batch of (mostly) newer names showing excellent action. Our Top Pick is Anaplan (PLAN), which looks like a new leader in the software space.

Stock Name	Price	Buy Range	Loss Limit
AGCO Corporation (AGCO)	76.24	75.5-78	69-70.5
Anaplan (PLAN)	47.52	47.5-50.5	42-43.5
eHealth (EHTH)	122.74	80-84	71-73
Inphi (IPHI)	120.16	51.5-53.5	46-47.5
Kratos Defense (KTOS)	24.08	21-23	18.8-19.8
Novocure (NVCR)	0.00	58-61	51.5-53.5
Roku, Inc. (ROKU)	150.46	88-92.5	77-80
Shake Shack (SHAK)	92.08	66-68	61-62
Smartsheet (SMAR)	44.12	47-49.5	42-43.5
Snap Inc. (SNAP)	16.68	13.7-14.7	12.2-12.6

The latest issue of Cabot Marijuana Investor is now available, with my current advice on the fourteen stocks in the portfolio.

The cannabis sector is currently in a correction, with both marijuana and CBD stocks trending lower, giving up some of their early-year gains—and perhaps building a bottom here.

In fact some of the biggest stocks, those supported best by institutional investors, are already looking stronger, though it will take time to know if they are in real uptrends. In the meantime, I continue to build cash, which will come in handy when it’s time to buy again.

Last week we sold a portion of three stocks and this week we’re selling portions of two more, raising the portfolio’s cash level to about 33%.

Markets are hoping for some sort of breakthrough from the Xi-Trump meeting on the sidelines of the G-20 meetings in Japan over the weekend. Most likely there will be some positive face-saving news with most key issues kicked down the road. The Chinese want no new tariffs and Huawei sanctions pulled back. Emerging market signal is still positive and we remain cautiously optimistic.

So far, the market has had a fantastic year with the S&P up 16.38% at the halfway point. It’s also been a stellar June as the index has climbed 7.3% this month alone. Now, the market is perched near all-time record highs. In this issue, I highlight a stock that is cheap in an expensive market that has a great chance of moving higher in the quarters ahead. It is the best run American refiner that has been knocked back because of temporary conditions in an environment otherwise ideal for American refiners.

The broad market sold off today, but odds are it’s just a normal pullback in the renewed bull market. Overall, our market-timing indicators tell us the trends are up. However, eternal vigilance is the price of success in investing, so today I’m recommending selling two stocks that have recently broken down.

Current Market Outlook


The market’s intermediate-term trend turned back up last week after the major indexes tacked on more gains following the Fed’s dovish words. Combined with a bullish longer-term trend and many indicators that suggest investors remain hesitant, the path of least resistance for stocks remains up. That said, the market rarely makes it easy, and on that note, we’ve seen a fair amount of rotation in recent days out of some of the strong (and in many cases, extended) growth stocks and into other areas of the market. Overall, we remain bullish, but you should take things on a stock-by-stock basis—if you own something at a good profit, consider booking partial profits and trailing a stop for the rest, while honoring loss limits on any recent purchases. On the flip side, many “fresher” names look poised for higher prices as they’ve only recently emerged from multi-month slumbers.
This week’s list contains all types, but includes a few of those fresher-looking charts. Our Top Pick this week is Iqvia (IQV), a steady, reliable medical play that just blasted off from a good-looking rest period.

Stock Name	Price	Buy Range	Loss Limit
Agnico Eagle Mines (AEM)	79.05	49-51	44-44.5
AAXN (AAXN)	87.11	70.5-73.5	63.5-65.5
CoStar Group (CSGP)	589.55	540-555	495-505
Exact Sciences (EXAS)	116.91	109-113	98-101
Insulet (PODD)	175.69	113.5-116.5	101.5-103.5
IQVIA Holdings (IQV)	157.93	153-157	141-143.5
Rapid7 (RPD)	63.52	54-56.5	50-51.5
Sea Limited (SE)	132.86	31.5-33	27-28
Tempur Sealy (TPX)	85.53	70-73	63-65
Under Armour, Inc. (UAA)	26.82	24.5-25.5	22.5-23

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.

Emerging from a scandal, this energy stock is still somewhat speculative, but two analysts have recently increased their EPS estimates, and most industry specialists expect the dividend to return.

Analysts at Piper Jaffray recently upgraded the stock of this chicken producer to ‘Overweight’.

One of our stocks reported earnings per share that beat analyst estimates. Revenue came in on target, expenses came in below estimates and operating income came in much higher than expected.

This medical device maker beat earnings estimates by $0.27 last quarter, and fourteen analysts have increased their EPS forecasts for the company in the past 30 days.

Three of our stocks reported fourth-quarter 2017 results this morning.

We sold half our WYNN shares in August for a 36% gain, and have an unrealized profit of 76% on our remaining position. I’m going to sell another half of our shares today, to protect some of our remaining profit.

This international wellness company beat analysts’ estimates by $0.14 last quarter.

Lots of uncertainty around marijuana, but the profit potential looks very attractive. Investors unsure of individual stocks may want to take a look at this ETF.

This auto seat supplier just formed a joint venture with Boeing to make airplane seats.

It remains a strong bull market, but below the surface, there are many crosscurrents, as some stocks run into trouble and others pile on big gains.

Updates on several of our stocks and one rating change.

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.