While U.S. indexes have been choppy-to-down during the past few weeks, emerging market stocks remain in good shape and our Emerging Markets Timer is positive. Our new recommendation tonight looks like one of the best ways to play the general boom in electric vehicle production in the years ahead.

Our pick this week is a resilient stock with great growth, a reasonable valuation and is part of a sector that\'s holding up well. We think it offers both low risk and solid returns, especially once the market resumes its longer-term advance.

Current Market Outlook


The repeated bouts of heavy-volume selling have driven the major indexes below their key 50-day moving averages, and that’s a clear sign that the bulls are not in control. We’re moving our Market Monitor down to a level 5 and advise you to hold a good chunk of cash on the sideline, cut back on new buying (keep any new positions much smaller than normal) and honor your stops. None of this is to say that we’re bearish—it’s certainly possible the market snaps back, as there’s plenty of pessimism and many liquid leaders are holding up well. But after weeks of sloppy action and distribution, the odds favor further downside in the near-term, and we’ll need to see a few strong days before concluding the overall uptrend is resuming.

This week’s list, though, has a bunch of resilient growth-oriented names, which is encouraging. Our Top Pick is DXC Technology (DXC), which is the product of a recent merger and sports giant cash flow.

Stock Name	Price	Buy Range	Loss Limit
Abiomed (ABMD)	0.00	148-152	139-141
Alibaba (BABA)	254.81	156-166	145-150
DXC Technology (DXC)	0.00	82-84	76.5-78
Insulet (PODD)	175.69	52.5-54.5	48.5-50
Kite Pharma (KITE)	0.00	120-127	105-109
Realpage (RP)	0.00	40-42	37-38
Red Hat (RHT)	0.00	99-102	94.5-95.5
Salesforce.com (CRM)	0.00	89.5-92	84-85
Stamps.com (STMP)	0.00	198-210	177-184
Weibo (WB)	98.16	85-89	77-79

In tonight’s issue we write about one stock that’s at the top of our Watch List, as well as the value of letting a stock make decisions for you. We also give you our latest thoughts on the market, our stocks and some new ideas.

We start this month with our Spotlight Stock, a company that operates in the Oil Services area. Beaten down by low oil prices, this company is pulling out all the stops to cut costs and expand into new geographical arenas—efforts that are attracting some very interesting institutional interest in its stock. My Feature article further explores the strategies that the company and its new management team are applying to manage—and expand—the company’s footprint.

Today’s stock is a name you’ll know. The company was born in the early days of the internet and today it’s all grown up—a major player in the world of financial transactions.

Current Market Outlook


Following last week’s selling storm, today’s big rebound was encouraging; three of the five major indexes we track (S&P 500, Nasdaq, NYSE Composite) bounced back above their 50-day lines today, and many leading stocks did the same. Ideally, last week’s decline, which was spurred on by obvious news (North Korea), was a sharp shakeout that cleared the decks and set the stage for a new upmove. But we’ll need to see more evidence before going there. As we stand now, the intermediate-term trend is sideways-to-down, and many stocks have either cracked or are testing support. There’s no need for wholesale selling, but we are knocking our Market Monitor down a notch; you should keep new positions on the small side and honor your stops until we see further evidence that the bulls are back in control.

This week’s list does have a bunch of good growth stories, which is encouraging after the recent selling. We’re going with Vantiv (VNTV) as our Top Pick—it’s not the most volatile stock, but it just blasted out of a long period of lackluster action following a game-changing acquisition.

Stock Name	Price	Buy Range	Loss Limit
Autohome (ATHM)	98.65	57-62	51-56
CBOE Holdings (CBOE)	0.00	93.5-96	88-90
Chegg (CHGG)	74.21	14-15.5	12.5-13.5
Exelixis (EXEL)	27.35	25-27	23-24.5
Planet Fitness (PLNT)	0.00	23.8-24.8	21.8-22.5
Royal Gold, Inc. (RGLD)	129.66	83-86	75-77
Take-Two Interactive (TTWO)	123.32	85-89	79-81
Teledyne (TDY)	0.00	143.5-147	136-138
Trade Desk (TTD)	468.02	51-55	46-48
Vantiv (VNTV)	0.00	67.5-70	62.5-64

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.

Tonight, we’re going to sell Amazon (AMZN), which doesn’t look awful but hasn’t been able to get going during the past couple of months. We’ll sell at about breakeven and hold the cash. We’ll also place Abiomed (ABMD) on Hold

Despite the continuing Buy signal from the Cabot Emerging Markets Timer, one of our stocks, Telkom Indonesia (TLK), is not pulling its weight and is now rated Sell.

USA Technologies (USAT) reported a mixed bag of quarterly results this morning. I think buying here has a relatively high probability of working out within a 30-day window.

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.