In this kind of so-so atmosphere, we are taking exactly what the market hands us and making decisions based on what the charts show us. That means a little selling today, but we also have an exciting and very new stock for our watch list. Read on for all the details.

The market seesaw continues, but overall, we’re trading at about the same levels as this time last month.

The most recent retail sales report showed improvement, as did housing starts. And with the unemployment rate and job openings steady, the economy continues on a positive trend. First quarter earnings—so far—look good, and the S&P 500 forward P/E of 16.4 tells us that values are not overblown.

The long-term trend of the market remains up, while the intermediate trend remains down, though the current rally is working to change that—and may well succeed. In any case, we’re seeing growing numbers of strong stocks, and today’s recommendation is one of them.

It’s a little-known technology stock providing a valuable public service, with a high rate of recurring income. I think you’ll like it.

Current Market Outlook


The positives are starting to accumulate when you’re talking about some secondary measures of the market’s performance—many growth stocks are holding up well, the broad market showed positive divergences when the indexes retested their February lows and the market’s clearly shrugged off a bunch of bad news. All of that is encouraging, and we’re nudging our Market Monitor up a notch in response. However, we’re still advising a relatively cautious stance because the market’s intermediate-term trend hasn’t turned up; most major indexes are still below key moving averages and, at best, are basically stuck in the middle of three-month trading ranges. We’re still in favor of giving your resilient stocks a chance to get going, and we don’t think the evidence supports being outright defensive. But holding some cash on the sideline, picking entry points carefully and/or keeping new positions on the small side still make sense.

This week’s list has many stocks that have staged breakouts (or come close) in recent days, even as the market is still iffy. Our Top Pick is WPX Energy (WPX), one of many oil stocks that’s come to life as that sector sets up.

Stock Name	Price	Buy Range	Loss Limit
Alcoa (AA)	0.00	52-55	47-50
Coupa Software (COUP)	262.20	46-48	43-44.5
Fiat Chrysler (FCAU)	0.00	22.5-23.5	20-20.5
GoDaddy (GDDY)	0.00	60-62.5	56.5-58
Heron Therapeutics (HRTX)	35.25	28.5-30.5	25-26.5
HollyFrontier Corporation (HFC)	0.00	54-56	49.5-51
Melco Resorts (MLCO)	0.00	29.5-31	27-28
RingCentral (RNG)	238.73	64.5-67	59-61
Semtech (SMTC)	51.09	41.5-43	38.5-39.5
WPX Energy (WPX)	0.00	14.5-15.5	13.1-13.7

It was another rocky month in the markets, but net-net, we are trading at about the same levels since last month’s issue.

We haven’t yet seen the buyers retake control (the intermediate-term trend is down and few stocks are moving up), so we’re sticking with a cautious stance. In the Model Portfolio, we are restoring one Buy rating, but we’re standing pat with 45% cash and are waiting patiently for the trend to turn up.

As we leave behind last week’s market lows—as well as the peak fears of tariff wars—it remains critically important to focus on the action of the market itself, and not be swayed by the news of the day. Which brings me to today’s recommendation, a fast-growing company with a revolutionary product whose stock hit new highs recently and is primed to do so again. You’ll find full details in the issue.

Current Market Outlook


While the major indexes took another hit last week, we actually saw a few encouraging signs from the market—the broad market, for instance, continues to display some positive divergences (i.e., it’s in better shape now than back in February, when the indexes were at a similar level) and many leading stocks held key support (often near their 50-day lines), with a few actually shooting to new highs. All of that is a good reason to keep your antennae up—but with the major indexes still in intermediate-term downtrends, we’re keeping our Market Monitor in neutral territory. If this is the start of a sustained rally, there will be plenty of opportunities to jump on, but right now it’s best to mostly stand pat, holding resilient stocks but also keeping some cash on the sideline.

This week’s list is a mixed bag, with lots of turnarounds and some growth stocks sprinkled in. Our Top Pick is Etsy (ETSY), which, despite a big run, has refused to budge during the market’s latest downdraft.

Stock Name	Price	Buy Range	Loss Limit
BofI Holding (BOFI)	42.93	39-41	36.5-38
Delek (DK)	0.00	39.5-41.5	36-37.5
Etsy (ETSY)	112.97	26-27.5	23.5-24.5
Kirby (KEX)	0.00	79-81.5	73.5-75
LGI Homes (LGIH)	86.04	69-73	64-66
NetApp (NTAP)	0.00	61-64	56-58
New Relic (NEWR)	103.70	72-74.5	65.5-67
Planet Fitness (PLNT)	0.00	37-39	34-35.5
Proofpoint (PFPT)	113.79	113-118	104-106.5
Urban Outfitters (URBN)	0.00	36.5-38.5	33.5-35

Has there ever been anything as overvalued as SpaceX (SPCX)?

Elon Musk’s rocket and space-based internet company reported $18.7 billion in revenue in 2025. That’s less than half the revenue declining electronics store chain Best Buy (BBY, $41.7 billion) generated last year, less than International Paper Company (IP, $23.6 billion), and barely more than Casey’s General Stores (CASY, $17.6 billion). Those three companies have a combined market cap of roughly $67 billion. As of this writing, SpaceX has a market cap of $2.7 trillion. That’s more than the combined market cap of Walmart (WMT), JPMorgan (JPM) and Visa (V). Together, those three companies generated $847 billion in revenue last year.

Small caps continue to hold up well. The S&P 600 Small Cap Index is up modestly since last Thursday and is trading just below the fresh all-time highs it hit earlier this week. The group’s resilience stands out, especially against a backdrop of narrowing leadership and ongoing rotation beneath the market’s surface.

The main macro development this week was the Fed’s June meeting and Chair Kevin Warsh’s press conference, which confirmed a shift in policy direction.

WHAT TO DO NOW: The market’s bounce has been a good one, and the intermediate-term outlook remains bright. That said, near term, there are still some crosscurrents (rotation into the broad market, Dow outperforming the Nasdaq) that tell us growth stocks could throw us another curveball in the coming week or two. Overall, then, we’re mostly standing pat, but we’re going to add a half-sized stake in Guardant Health (GH) here, leaving us with a still-good-sized cash position of 37% or so. Details below.

Stocks started this week with a huge rally as the Iran ceasefire deal appears to be the real thing.

Of course, it’s been months of supposed peace deals falling apart. It’s hard to believe. I’m sure that fact is holding the market back somewhat. But this one is different for a couple of reasons.

Stocks are starting off this week with a huge rally as the U.S. and Iran have reached a ceasefire deal.

We’ve been here before. These peace deals have fallen apart several times. I’m sure that fact is holding the market back somewhat. But this one is different for a couple of reasons. First, it’s the furthest a peace deal has gotten with both sides agreeing and independent verification from Pakistan. Second, this is what a peace deal would look like at this point if it’s real and lasting.

[Note: The Cabot Turnaround Letter weekly update won’t be published next Friday, June 19, due to the market being closed for the Juneteenth holiday.]

Before we get into the main topic for today’s newsletter update, a quick note on the portfolio is in order. I’m continuing our “spring cleaning” effort that we began last week by trimming a couple more of our holdings, but I’m also adding a new position to take the place of the recent deletions.

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 set to enter the summer near all-time highs, but leadership has narrowed, volatility has ticked up, and there’s been renewed scrutiny on the AI trade and valuation concerns in some of the market’s biggest winners.

At the same time, the macro backdrop remains a mix of resilience and intermittent turbulence. While economic data continues to hold up, energy prices remain elevated due to the ongoing Iran conflict – which has no end in sight – keeping upward pressure on inflation and yields.

Tech, commodity, AI, and Explorer stocks struggled this week as concern over capital expenditures increased. Mideast tensions intensified and inflation numbers came in yesterday at their highest rate in over three years, fueled by rising energy costs. The combination of anticipated higher interest rates and rising bond yields impacted the price of precious metals, with gold sliding below $4,200 an ounce and silver falling below $64 an ounce.

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.

The market suffered its worst day in months today, with the Dow down 238 points and the Nasdaq finished down 108 points.

This semiconductor company is forecast to grow at a 66.7% rate in 2017 and 80% next year.

The shares of this electronics company just crossed its 50-day moving average—a bullish indicator.

Adobe Systems (ADBE) reported first-quarter 2017 earnings yesterday (November year-end), after the market closed. The company outperformed analysts’ estimates by a good margin, and also increased second-quarter expectations.

This Fidelity Select Fund is a diversified way to participate in the recovery of the natural gas industry through strong companies.

This spin-off from Alcoa is expected to grow at a 35.5% rate next year.

One new stock joins the Growth & Income Portfolio, plus updates on three other stocks.

On March 20, this financial firm will become part of the S&P 500 index. The added visibility should help propel the company to the double-digit growth that Wall Street is expecting.

This semiconductor company beat analysts’ estimates by $0.02 last quarter, and is forecast to grow at a triple-digit rate this year and next.

This company is a play on the Internet of Things, as well as rising auto sales.

Sell one of our stocks. There is nothing wrong at the company, and earnings are growing at an attractive rate. However, the share price is quite fairly valued, with the 2018 EPS and dividend growth rates equal to the 2018 P/E.

We’re going to book our profits in one of our stocks today. Today’s sale will likely net us a profit of about 48%, for a total return, including dividends, of about 49%.

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.