This month’s Spotlight Stock is a technology company that is a leader in the all-important cloud business, and Nancy’s Feature further explores that cloud industry and the up-and-coming applications that should see it expand greatly in the near future.

Today’s featured recommendation is a low-risk financial stock that will give the portfolio some stability (and income). And since the portfolio doesn’t currently own a bank stock, this will provide some healthy diversification.

Current Market Outlook


The market’s gradual improvement since mid-August continued last week, with the intermediate-term trend of the major indexes turning back up and individual stocks (including both leading growth stocks, as well as many sectors bouncing strongly off prolonged corrections) acting well. We’ve even seen an impressive rebound in the broad market, with the number of stocks hitting new lows drying up drastically. We can’t say the major indexes are incredibly powerful, as many are at or just above their prior highs, but overall, the most bullish thing a market can do is go up, and that’s what we’re seeing. We’ll push our Market Monitor up another notch this week to a level 8 (out of 10) and will continue to put money to work as the evidence improves.

This week’s list has a bunch of strong charts from a variety of industries, including three chip names as that sector reasserts itself. For our Top Pick, we’ll keep it simple and go with one of the market’s liquid leaders—Nvidia (NVDA) has exploded out of a tight base on big volume over the past two days. You could start a position here or on dips.

Stock Name	Price	Buy Range	Loss Limit
Adient (ADNT)	0.00	76-79	71-73
Allegheny Technologies (ATI)	27.78	21.5-22.5	19-19.5
Bitauto Holdings (BITA)	0.00	42-45	36.5-38.5
Celgene (CELG)	0.00	139-143	131-133
Lear Corp. (LEA)	0.00	160-166	149-152
Micron Technology, Inc. (MU)	43.31	33-35	30.5-31.5
NVIDIA Corporation (NVDA)	242.42	177-188	164-170
ON Semiconductor (ON)	24.07	16.7-17.4	15.2-16.
Square, Inc. (SQ)	91.04	27-28.5	24.5-25.5
Terex (TEX)	0.00	41.5-43.5	37.5-39

Our contributors are staying mostly on the safe side this month—with recommendations paying solid and rising dividends, but we also offer several stocks with a more adventurous bent.

Today’s recommendation is a fast-growing mass market stock that has the leading market share in the online food ordering business. The stock has been trading sideways for five weeks and I think it’s ready for a breakout.

Given the still-iffy broad market, we\'re not advising you to dive in with both feet, but we are adding one new stock to the Model Portfolio tonight and will look to put more cash to work should the bulls continue to make headway.

Current Market Outlook


Last week was another constructive week, as the major indexes and leading stocks gave back just a smidgen of their prior two weeks of gains. Plus, of course, today’s action offered more encouragement, with the big-cap indexes spiking back toward all-time highs and many individual stocks notching good gains. We can’t conclude we’re completely out of the woods, especially as volume remains light (today’s volume on the Nasdaq was below average) and the broad market is still so-so (small- and mid-cap indexes are still in the middle of multi-month ranges). Still, the evidence has grown steadily more bullish recently, so we’re following along—we’re bumping our Market Monitor up to level 7 (out of 10), and continued strength would have us getting aggressively invested.

This week’s list is a mixed bag, with some special situations, many different sectors and a few recent breakouts. Our Top Pick is ST Microelectronics (STM), a fast-growing chip maker with a good story and chart. Try to buy on dips.

Stock Name	Price	Buy Range	Loss Limit
AbbVie Inc. (ABBV)	93.53	81-85	74-76
ASML Holding (ASML)	350.01	158-162	147-150
Guidewire (GWRE)	90.60	76-79	71-73
Ligand Pharmaceuticals (LGND)	267.14	131-134	121-124
Lumber Liquidators Holdings, Inc. (LL)	0.00	36-38.5	32.5-31.5
Owens Corning (OC)	0.00	71-74	67-68.5
Pure Storage (PSTG)	25.64	13.5-14.5	12.4-12.9
Barrick Gold (GOLD)	27.20	101-105	93-95
STMicroelectronics (STM)	30.09	17.5-19	16.3-16.8
Summit Materials (SUM)	0.00	29-30.5	27-28

A few of our stocks have been taking a breather, but the Cabot Emerging Markets Timer remains resolutely positive. Investors have remained optimistic despite a truckload of negative news and the fundamentals are solid for the stocks in the portfolio. I also have an overlooked Indian stock to recommend that ties in with the recent improvement in commodity prices.

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.

E*Trade Financial (ETFC) reported blowout earnings yesterday afternoon.

Sell Reynolds American (RAI). The company received a $56.50 per share takeover offer from British American Tobacco this morning, a 20% premium to RAI’s closing price yesterday.

Today, Goldman Sachs Group (GS) reported a tremendous third quarter, with earnings per share (EPS) of $4.88 vs. Wall Street’s consensus estimate of $3.82, and up 47% vs. $2.90 EPS a year ago (December year-end).

Shares of Aerohive (HIVE) plummeted at the open today but have come back relatively strong and are now down just 2%. I’m moving the stock from Hold to Sell 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.