In tonight’s issue, we dive into some education, revealing a long-term chart pattern that bodes well (including one stock that’s at the top of our Watch List now). We also give you all our latest thoughts on the market and our recommended stocks, and present the usual crop of new ideas if you have some cash on the sideline.

Current Market Outlook


The market’s not all peaches and cream, as many sectors have been doing more gyrating than advancing, the broad market is iffy and the number of stocks hitting new highs has been falling on each push higher. But we always place most of our emphasis on the primary evidence—the trend of the major indexes and the action of leading stocks—and on that front, the evidence is clearly positive, so we remain heavily invested. The goal from here is to simply follow the system—hold on to your strong performers (though taking partial profits here or there is fine), honor your stops with any stocks that hit potholes and look for new leaders that show explosive strength.

This week’s list is again heavy on recent earnings winners, though it has more of a small- and mid-cap flavor to it. Our Top Pick is Splunk (SPLK), a leading Big Data software firm that has gotten going after a long consolidation.

Scheduling Note: Due to the Thanksgiving holiday, there will be no Movers & Shakers this Friday or Top Ten issue next Monday (one of our two scheduled weeks off all year). Have a great holiday weekend!

Stock Name	Price	Buy Range	Loss Limit
Bluebird Bio (BLUE)	0.00	153-161	137-141
Canada Goose Holdings (GOOS)	46.21	24.5-26	22-23
Cypress Semiconductor (CY)	0.00	26-17	15-15.5
ICU Medical (ICUI)	0.00	202-207	188-192
Nutanix (NTNX)	55.91	28.5-30	25-26
Red Rock Resorts (RRR)	34.70	27-28	25-25.5
RH Inc. (RH)	252.93	96-101	86-90
Splunk (SPLK)	207.67	78-82	71.5-73.5
Westlake Chemical Corp. (WLK)	0.00	90-93	84-86
Wingstop (WING)	121.52	37-39	34.5-35.5

There has been plenty of action in emerging markets recently, but today’s strong rally pushed the Cabot Emerging Markets Timer to a clear buy signal. Part of this may be the continuing effect of a great Singles’ Day splurge in China, and I write about that. We’re making some adjustments to the portfolio to put the spotlight on the winners and switch out of one laggard.

If you bought a basket of my 10 Best Marijuana Stocks when the report was originally published in August, you’re off to a great start. Since that report was written, the average of the 10 stocks is up 32%, with the best stock up 131% and the worst down just 4%. Read on for more details.

Most of our contributors remain bullish for now, and are still finding pockets of opportunities for our subscribers. We begin this issue with our Spotlight Stock, a company that is steeped in a variety of technology channels, including some very disruptive technologies that I discuss further in my Feature.

Note: To accommodate our Thanksgiving week schedule, there will be no issue of Cabot Stock of the Week published next week. The next issue will be published November 28.

As for today, the broad market’s long-term trend remains up, and today my recommendation is an undervalued stock recommended by Azmath Rahiman, chief analyst of Cabot Benjamin Graham Value Investor.

Current Market Outlook


After a straight-up move in recent weeks, the major indexes had a couple of wobbles during the past few days, which has done some damage to certain areas—small-cap indexes are standing right on top of their 50-day lines and many individual stocks and sectors have come back down to earth, even among large-cap stocks. Even so, the vast majority of major indexes and Top Ten stocks are still acting well, with more than a few racing up the charts following positive earnings reactions. We have our eyes open should the weak broad market “infect” leading stocks, but so far, the market’s recent rest looks normal to us. Thus, you should stick with a bullish stance, giving your strong stocks a chance to continue advancing, while looking for entry points as stocks pause.

This week’s list has something for everyone, with some healthcare, some energy (for the first time in a while) and some true growth stocks. Our Top Pick is Planet Fitness (PLNT), a great cookie-cutter story that just surged on earnings. Buying on some weakness is your best bet.

Stock Name	Price	Buy Range	Loss Limit
AbbVie Inc. (ABBV)	93.53	92-95	86-88
Alnylam Pharmaceuticals (ALNY)	143.58	129-134	117-119
Continental Resources (CLR)	66.19	43-45.5	39.5-41.5
Micron Technology, Inc. (MU)	43.31	43-45	39.5-40.5
NVIDIA Corporation (NVDA)	242.42	205-213	188-192
Planet Fitness (PLNT)	0.00	28.5-30.5	26.5-27.5
ProPetro (PUMP)	23.30	15.8-16.8	14.5-15
Red Hat (RHT)	0.00	120-124	111-113
ZTO Express (ZTO)	28.84	16.1-17.2	14.5-15
Zendesk (ZEN)	82.19	33-35	30.5-32

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.

Updates on Dollar Tree (DLTR), Big Lots (BIG ), GameStop (GME) and Carnival (CCL).

Today we’re reporting on earnings for Applied Materials (AMAT), and adding two stocks to the Cabot Undervalued Stocks Advisor portfolios, Archer Daniels Midland (ADM) and Total SA (TOT).

Marrone Bio (MBII) reported yesterday after the close. The bottom line was a good quarter, with remarkably few surprises. And at this point, “good” is great.

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.