The market remains in a strong uptrend, and thus I continue to recommend that you be heavily invested in stocks that will help you meet your investment goals. At the same time, however, you need to manage risk, and it’s worth noting that the higher the market climbs, the greater the potential for loss once the uptrend ends.

Today’s featured stocks include two new additions to the portfolios, and there are a couple of rating changes after recent price run-ups.

Current Market Outlook


The market rebounded very nicely from last Monday’s big decline, with all of the major indexes shooting ahead and most notching new all-time highs. Thus, from a top-down perspective, the picture remains bright, with the intermediate- and longer-term trend of the market (and most stocks) pointed up. That said, it’s tricky out there—below the surface, the rotation is still vicious on a day-to-day basis, and many leading growth stocks remain stagnant. We’re still mostly bullish (we’re nudging the Monitor back up to 8 this week) and advise you to hold your strong stocks and look for new buys as they come. With the crosscurrents and earnings season (which is set to begin in a couple of weeks), it’s best to be selective and keep your feet on the ground.

This week’s list has a ton of very strong charts, with many showing persistent advances during the past few weeks. Our Top Pick is AbbVie (ABBV), which has come under extreme accumulation and looks like a new big-cap leader in the medical space.

Stock Name	Price	Buy Range	Loss Limit
AbbVie Inc. (ABBV)	93.53	85-89.5	77-79
Carpenter Technology (CRS)	53.25	46.5-49	42-43.5
E*Trade Financial (ETFC)	0.00	42-44	39.5-41
Eagle Materials Inc. (EXP)	0.00	103.5-106.5	97-99
Loxo Oncology (LOXO)	186.59	87-91	78-80
MKS Instruments (MKSI)	109.43	90-94	83.5-85
Meritor (MTOR)	21.46	24-26	21.5-22.5
Valero Energy (VLO)	97.40	74-77	69.5-71.5
Winnebago (WGO)	48.56	42.5-45	38.5-39.5
YY Inc. (YY)	0.00	86-89	78-80

In tonight’s issue, we details our recent moves and our thinking, as well as update the track record of our most reliable market timing indicator. We also talk about one of our favorite growth stocks we don’t own which, after a four-year (!) consolidation, looks like it could be ready to turn.

In today’s issue, we’re adding a unique play on financial markets to the Dividend Growth tier. I also have a write-up on interest rates—the driving force behind many of this month’s sector rotations—at the end of the issue.

Today’s selection is a company you’ve probably not heard of, but it provides a valuable medical technology that should see increased use in the years ahead. Also, it’s growing by acquisition.

Current Market Outlook


During the past two-plus weeks, we’ve seen the Nasdaq and most leading growth stocks lag most other indexes, and things came to a head today, with the sellers unloading on many of the market’s biggest winners this year. As for the overall market, there are plenty of areas of strength as money rotates into both turnaround situations and some growth-oriented ones, too. So what should you do? For the stocks you own, follow your plan and honor your stops; it’s OK to take a couple of partial profits, too, if you are holding some long-time winners. As for new buying, you should focus on areas that are working and stocks that have shown good-volume buying recently. We’re moving our Market Monitor back down to a level 7 tonight.

This week’s list has many such possibilities, including a few with solid stories. Our Top Pick is Guess? (GES), which looks like a solid turnaround story as it’s seeing excellent growth overseas.

Stock Name	Price	Buy Range	Loss Limit
Alnylam Pharmaceuticals (ALNY)	143.58	107-113	97-99
Blue Buffalo Pet Products (BUFF)	0.00	26.5-27.5	24.5-25.5
Guess (GES)	0.00	15.6-16.4	14.2-14.8
Juno Therapeutics (JUNO)	0.00	40.5-44	35-37.5
Lending Tree (TREE)	411.51	230-240	215-220
Navistar International (NAV)	0.00	38-40	35-37
RPC Inc. (RES)	0.00	22.5-23.5	20.5-21.5
Sociedad Quimica (SQM)	0.00	51-54	46-48
Ultra Clean Holdings, Inc. (UCTT)	0.00	26.5-28.5	23.5-24.5
Weibo (WB)	98.16	94-97	85-87

Despite a hiccup in the past couple of days from Chinese stocks, the U.S. market and the emerging markets continue to outpace their moving averages by comfortable margins. In today\'s issue, I talk about how little profit taking in a couple of our strongest stocks can protect your portfolio while maintaining your exposure.

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 downtrend in Chinese stocks is hitting many of our holdings, but has been especially hard on Baozun (BZUN), which we took a half position in on September 9. Sell BZUN.

Health care industry stocks are selling off today due to some negative earnings reports and, possibly more importantly, pessimistic management comments on earnings calls. Two of our portfolio holdings, Amgen (AMGN) and AbbVie (ABBV), are affected. Both reported earnings in the last 24 hours and we are lowering our ratings on both as a result.

Here are highlights of this week’s earnings as reported by companies within the Cabot Undervalued Stocks Advisor portfolios. In addition, Boise Cascade (BCC) moves from Buy to Hold, and Federated Investors (FII) declared a special dividend.

Shares of Mindbody (MB) are racing higher today after the company delivered revenue growth of 35.4%, and Shares of LeMaitre (LMAT) are also rallying over 10% after the company reported Q3 revenue growth of 22%

Abiomed (ABMD) and GrubHub (GRUB) snapped their uptrends and are now rated Sell.

Several of our portfolios stocks are rising this week, so I want to reiterate some trading suggestions in case the stocks reach price targets before the next weekly update of Cabot Undervalued Stocks Advisor.

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.