There are roughly 200 million commercial vehicles in the world. They’re all trying to get to the right place, at the right time, at the lowest possible cost, without crashing. Managing these fleets probably isn’t as stressful as being an air traffic controller, but it’s right up there!
To help get the job done, fleet managers are increasingly turning to fleet telematics solutions. This specialized hardware and software can improve driver safety records, reduce accidents and theft, and reduce operating costs. Dramatic increases in fleet efficiency boost an organization’s bottom line. The bigger the group is, the bigger the potential opportunity.
All the details are inside this month’s issue of Cabot Small-Cap Confidential. Enjoy!

The major market indexes have talked themselves off the ledge over the past couple of days, not exactly roaring back to health, but showing signs that buying interest isn’t completely gone. Headlines about a trade war between the U.S. and China have been a major disruptor, and I have some thoughts about that in this week’s commentary. I also have a Chinese stock that’s been ignoring the market’s wobbles and etching a great rally.

Today, most major indexes have pulled back to nearly their early February lows, so short-term, a bounce from here would be quite normal, though longer-term, further weakness cannot be ruled out. But we don’t need to know where the market is going. We only need to know what it’s doing now—and watch carefully what our own stocks are doing—and react appropriately. Today that means selling two stocks, downgrading one to hold, and upgrading one to buy. Details inside.

I don’t tend to get very worked up about stock market volatility, and instead prefer to buy stocks during market dips. The S&P 500 keeps bouncing at 2,600, which means there’s good price support there that gives me confidence to buy low. Keep buying high quality stocks while the prices are low, so that your capital gain potential during market run-ups can get a head start!

Current Market Outlook


The major indexes bounced decently last week, though that was quickly given back today as the sellers reappeared. Day-to-day volatility is likely to remain high as the market remains news-driven (the 50-day average of the VIX volatility index is the highest in two years), but the bottom line for the overall market is simple: All of the major indexes we track are below their key intermediate-term moving averages, so until proven otherwise, the trend is down and you should remain cautious. As for individual stocks, many are still in good shape, but with the sellers in control, any buying should be kept small and all stops should be honored. We’re nudging down our Market Monitor another notch to reflect the growing selling pressures we see.

This week’s list does contain a bunch of solid charts despite the market’s carnage, which is an encouraging sign. Our Top Pick is Lululemon (LULU), which is one of many resilient retail names and has just gapped up on earnings.

Stock Name	Price	Buy Range	Loss Limit
Energen (EGN)	77.04	59-61	55-56
Five Below (FIVE)	134.58	70-73	64.5-66.5
Guess (GES)	0.00	19.5-20.5	17.5-18
Kohl’s (KSS)	70.62	61-63	56-58
Lululemon Athletica (LULU)	304.69	85-88	80-82
Okta, Inc. (OKTA)	148.41	37.5-39.5	34.5-36
Petrobras (PBR)	14.78	13.2-14.2	12.1-12.8
Shutterfly (SFLY)	94.71	76-79	70-72
Smart Global (SGH)	0.00	46.5-49.5	42-44
Wix.com (WIX)	302.53	74-77.5	68-71

Market action has gotten hairy, but it’s no reason to panic. In today’s issue I suggest some defensive moves, plus I have a new, nearly-bulletproof recommendation for dividend growth investors.

The market has taken a turn for the worse during the past week—the February/March rally attempt is over, and now we’re even seeing the sellers come around for growth stocks, which had been resilient. It’s not a time for panic, but we’re taking action, having sold three stocks during the past couple of weeks and, tonight, half of another, leaving the Model Portfolio with around 44% in cash.

While 2017 was one of the least volatile years ever for the market, 2018 has seen volatility return—with a vengeance! Early February brought the greatest point decline in history for the Dow, while yesterday brought the biggest one-day advance since August 2015 for the Dow, S&P 500 and Nasdaq.

Today, my recommendation is outside the U.S., and outside China, too! In fact, my recommendation is in Brazil, where a young airline is enjoying rapid growth and the chart is positive.

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.

This technology company beat earnings estimates by $0.03 last quarter, and is forecast to post double-digit growth.

Today we have important news on two of our stocks. I also comment on homebuilder stocks, and name several stocks that are looking good today.

This Xerox spin-off has an enviable list of clients and operates in a rapidly-growing sector.

This ETF is comprised of mostly consumer cyclical and basic materials companies linked to the home building industry.

This company is the subject of an investigative report published today by the Southern Investigative Reporting Foundation.

This companies shares dropped 7% on February 16 after the company released disappointing fourth-quarter results and suspended its dividend.

Ongoing problems in China’s travel industry are concerning me enough that I am moving one of our stocks from Strong Buy to Hold.

GM has officially agreed to sell its European business to Peugeot. The deal was announced this morning and GM is trading slightly higher pre-market.

This defense, aerospace, and industrial contractor beat earnings estimates by $0.11 last quarter.

Costco (COST) opened 4% lower today following the company’s second-quarter report, which missed estimates.

Today’s special bulletin brings news on one of our stocks, followed by brief comments on additional portfolio stocks.

Analysts expect this stock to earn $3.48 a share, on sales of $4.08 billion, when it reports today.

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.