Current Market Outlook


The market remains in very strong shape. Whether you’re looking at breadth, the trends of the indexes, the action of leading stocks, or sentiment among investors (mostly apathy with some disbelief thrown in), most of the evidence continues to point to higher prices ahead. Of course, that’s for the market as a whole—for individual stocks, earnings season is likely to rock the boat a bit, with some failing while others take the leadership mantle. You should remain heavily invested, but make sure you have your plan in place when it comes to handling your stocks during earnings season. As always, we’ll ditch any stocks that crack and hop on board new leadership that emerges.

This week’s list has a nice mix of sectors, including a few that have already reported earnings. Our Top Pick is Burlington Stores (BURL), a retailer that’s firing on all cylinders and recently pre-announced bullish earnings. Try to buy on minor weakness.

Stock Name	Price	Buy Range	Loss Limit
Yelp (YELP)	41.30	28.5-30	26-27
UFPI (UFPI)	0.00	100-104	91-92
PulteGroup (PHM)	45.93	20.5-21.5	19.5-20
Proofpoint (PFPT)	113.79	69-72	62-63
MSCI Inc. (MSCI)	0.00	80-82	76-77.5
MercadoLibre, Inc. (MELI)	980.83	145-150	138-139
Ligand Pharmaceuticals (LGND)	267.14	128.5-133	116-118
Ironwood Pharmaceuticals (IRWD)	0.00	13.5-14	12-12.5
New Oriental Education (EDU)	113.97	42-44	39-40
Burlington Stores (BURL)	193.95	71-73	66-67

Current Market Outlook


We always strive to go with the evidence the market has presented. Right now, just about all of it is bullish: The intermediate- and longer term trends are up, the broad market is in terrific health (new highs are expanding while new lows are minuscule), we’ve seen some rare, powerful blastoff indicators flash (which almost always portend solid gains in the months ahead), leading stocks are perking up and many investors remain on the sideline. Obviously, a pullback could occur at any time, and earnings season is sure to create some potholes among individual stocks.

But overall, the path of least resistance is up, so we’re pushing our Market Monitor further into bullish territory. This week’s batch of stocks includes many that report earnings within a few days, which makes buying a bit tricky. For our Top Pick, we think a small position in Masco (MAS) can work—it’s shown great power, has buoyant earnings estimates and is part of the newly-strong housing group.

Stock Name	Price	Buy Range	Loss Limit
Zendesk (ZEN)	82.19	27-28.5	25-26
Tahoe Resources (TAHO)	0.00	15-16	13-13.5
Dave & Buster’s (PLAY)	57.01	46-48	42-43
Nucor Corporation (NUE)	66.20	55-56.5	50-51
Match (MTCH)	0.00	15.5-16.5	14-14.5
Mobileye N.V. (MBLY)	0.00	46-48	41-42
Masco (MAS)	0.00	33-34	31-31.5
EBIX Inc. (EBIX)	0.00	51-53	48-49
ServiceNow (NOW)	341.86	19.5-20.5	17.5-18
CBM (CBM)	0.00	54-56	48-49

Current Market Outlook


You really can’t ask for better action from the market since the Brexit vote two weeks ago—the quick shakeout in the major indexes has given way to many days of strong buying, pushing the S&P 500 briefly to new highs this morning and driving other indexes toward key levels. Moreover, a ton of individual stocks have either lifted to new highs or look ready to do so. Short-term, a pullback wouldn’t be surprising given the recent run higher, especially with earnings season set to get underway. Thus, we don’t advise going wild on the buy side. But we’re pushing our Market Monitor back into bullish territory to reflect the evidence—we think you can continue to put money to work as opportunities arise.

This week’s list has a bunch of potential leading stocks if the market keeps improving. Our Top Pick is Acuity Brands (AYI), a leader from a couple of years back that, after a long consolidation, has reasserted itself on the upside as it rides the LED revolution.

Stock Name	Price	Buy Range	Loss Limit
Vantiv (VNTV)	0.00	57-58.5	53-54
Thor Industries (THO)	104.76	69-71.5	65-66.5
Rice Energy (RICE)	0.00	22-23	20-20.5
Monster Beverage Corporation (MNST)	0.00	157.5-160.5	149-150
LifeLock Inc. (LOCK)	0.00	15-16	13.5-14
KB Home (KBH)	36.05	15-16	14-14.5
Ellie Mae (ELLI)	0.00	90-94	84-85
Acuity Brands (AYI)	0.00	260-270	238-240
Applied Materials (AMAT)	0.00	24-25	22.5-23
Acacia Communications (ACIA)	51.83	44.5-47.5	38-39.5

Current Market Outlook


Our title last week was “What Happens from Here Will Tell the Tale.” And so the market’s impressive and immediate snapback from the two-day Brexit decline is a good sign that the bears just aren’t able to take control of this market, even when obvious bad news hits. That said, while the panic low from last Monday should hold, we can’t say the bulls are in control, either, as all the major indexes are still stuck below longtime resistance levels dating back to early 2015. Altogether, we’ll nudge our Market Monitor back up a notch, but what we’re really looking for is a decisive move to new highs before getting bullish. For now, you should hold your top performers, but keeping new buys relatively small and holding some cash is also prudent.

This week’s list has a bunch of mid-cap names that are showing excellent strength—they could be among your leaders if the bulls step up to the plate. Our Top Pick is Beacon Roofing (BECN), a growing play on housing and construction, which may actually get a boost as interest rates plunge.

Stock Name	Price	Buy Range	Loss Limit
TAL Education (XRS)	0.00	60-62.5	56-57
TransUnion (TRU)	83.09	32.5-33.5	30-30.5
NetEase, Inc. (NTES)	0.00	181-185	169-170
Newfield Exploration (NFX)	0.00	41.5-43	38-39
Dycom Industries (DY)	0.00	85-88	79-80
DOC (DOC)	0.00	20-21	19-19.5
Beacon Roofing (BECN)	0.00	45-46.5	42.5-43
Activision Blizzard, Inc. (ATVI)	0.00	38.5-40	36-36.5
AG (AG)	0.00	13.5-14.5	12-13
Abiomed (ABMD)	0.00	106-109	98.5-100

Current Market Outlook


Following the Brexit reaction, all of the major indexes are now decisively below their respective 50-day lines. Thus, we consider the intermediate-term trend to be down, which means it’s best to pare back. (We’ve knocked our Market Monitor down two notches this week.) It’s fine to hold your resilient, profitable performers (there are many stocks and sectors taking this selloff in stride), but you should honor all stops and loss limits and limit new buying to just small positions in strong stocks. The net result will be a higher cash position (around 50%, give or take, depending on what stocks you own and how you run your portfolio) and a handful of top performers in your portfolio. The next few days will be important—a quick snapback would be encouraging, but continued deterioration would have us advising an even more defensive posture. We’ll be watching.

This week’s list is a combination of defensive stocks, yield stocks, some precious metals and a couple of resilient growth ideas. Our Top Pick is Dollar Tree (DLTR), a defensive-type stock that should show excellent earnings growth thanks to last year’s game-changing buyout of Family Dollar.

Stock Name	Price	Buy Range	Loss Limit
Veeva Systems (VEEV)	180.23	32-34	29.5-30
Silver Wheaton (SLW)	0.00	20.5-21.5	19-19.5
SiteOne Landscape Supply (SITE)	98.49	31.5-33	28-28.5
Royal Gold, Inc. (RGLD)	129.66	67-69	61-63
Jack in the Box (JACK)	0.00	82-84.5	77-78
Gigamon (GIMO)	0.00	33-35	30-31
Dollar Tree (DLTR)	0.00	89-92	84-85
Communication Sales & Leasing (CSAL)	0.00	26-27.5	24-24.5
Boardwalk Pipeline Partners (BWP)	0.00	16.5-17.5	15.5-16
Align Technology (ALGN)	316.20	75.5-77.5	72-73

Current Market Outlook


With some weekend polls showing the chance of a “Brexit” lessening, the market gapped up this morning and finished with solid gains. Today’s rally is obviously encouraging and hints that, should the vote on Thursday go as expected, buyers could take control afterwards. Still, as always, we don’t predict—right now, the evidence remains more bullish than not, so it’s best to hold your strong, profitable stocks and add new leaders as they develop. That said, the intermediate-term trend of the indexes is mostly neutral, and until the uncertainty clears up, it’s a good idea to keep new positions smaller than normal, and to honor your stops and loss limits.



The good news is that most top performing stocks handled the market’s 3% dip in fine fashion. This week’s list is another batch of (mostly familiar) names that look great. Our Top Pick is Weibo (WB), a little-known Chinese firm that looks like one of the market’s top glamour stocks.

Stock Name	Price	Buy Range	Loss Limit
wb (wb)	0.00	26-27.5	23.5-24.5
symc (symc)	0.00	19.5-20.5	18-18.5
simo (simo)	0.00	43-45	39.5-40.5
oled (oled)	0.00	67-69	60-62
nvro (nvro)	0.00	71.5-74	66.5-67.5
nuva (nuva)	0.00	57-59	54-55
lulu (lulu)	0.00	69.5-71.5	66-66.5
five (five)	0.00	44-45.5	41-41.5
cprt (cprt)	0.00	47.5-49.5	44-44.5
Barrick Gold (ABX)	0.00	19-20.5	17-17.5

Current Market Outlook


The market was due for a pullback after three straight good weeks, and that’s what we’re seeing now as investors ponder 50-50 polls on Britain’s upcoming E.U. vote (a yes vote is generally considered bearish), the Fed’s meeting this week and Sunday’s horrible terrorist attack. The bottom line is that many indexes are approaching their 50-day lines, though few leading stocks have broken down. As always, you should play it by the book: By our measures, the market’s trends are still sideways-to-up, so we’re sticking with our overall bullish stance; dips following strong advances still look buyable. That said, you should also honor your stops and loss limits, jettisoning any stocks that break support. Further market weakness would have us turning cautious, but today we’ll keep our Market Monitor where it’s been.

Encouragingly, we had no problem finding some great-looking stocks. Our Top Pick is Dave & Buster’s (PLAY), which has a newer retail concept that’s working well, and the firm is on a solid expansion pace.

Stock Name	Price	Buy Range	Loss Limit
Dave & Buster’s (PLAY)	57.01	44.5-46.5	41-42
Penumbra Inc. (PEN)	173.25	57-59	53-54
Match (MTCH)	0.00	13.5-14.5	12-12.5
LLL (LLL)	0.00	142-146	132-134
Halliburton (HAL)	0.00	43-44.5	39.5-40
Cornerstone OnDemand (CSOD)	51.01	39.5-41.5	36.5-37
CDK (CDK)	0.00	54-56	51-52
Burlington Stores (BURL)	193.95	61-63	56-57
AMN Healthcare (AHS)	0.00	38-40	35-36
Agnico Eagle Mines (AEM)	79.05	49-51	45-46

Current Market Outlook


The S&P 500 and Nasdaq came into last week perched just under major resistance levels. But despite the prior run-up, weak opens on every day of the week and the poor jobs report on Friday, the market couldn’t pull back! Of course, the indexes still aren’t free and clear, and there are many uncertainties out there including the Fed’s next move and the upcoming EU vote in Britain, so we can’t rule out another retreat. But the market’s resilience thus far and the improved action from many leading stocks bodes well. We’re keeping our Market Monitor in bullish territory—a breakout on the upside (with many more stocks hitting new highs) would prompt us to lean toward a fully invested posture, while a dip of a few percent would have us paring back again.

This week’s list has many enticing selections, but we’ve selected an energy stock for our Top Pick. Continental Resources (CLR) has the acreage to crank out huge profits if oil prices creep higher, and the stock has tightened up nicely after a big run. Start with a small position and add to it as it rises.

Stock Name	Price	Buy Range	Loss Limit
Zendesk (ZEN)	82.19	24-26	23-23.5
Zillow (Z)	76.64	29-30.5	25-25.5
UnitedHealth Group Inc. (UNH)	0.00	133-136	125-126
Ulta Beauty (ULTA)	331.95	227-234	208-211
Tata Motors Limited (TTM)	0.00	32-34	29-30
Steel Dynamics (STLD)	0.00	24.5-25.5	22.5-23
Sanmina (SANM)	0.00	26-27	24-24.5
Continental Resources (CLR)	66.19	40.5-43	37-37.5
Big Lots (BIG)	43.12	50-53	46-47
Broadcom Limited (AVGO)	266.26	158-162	148-150

Current Market Outlook


We think last week’s action could prove to be a turning point for the market, not just in the short-term (recovering from a four-plus week retreat) but longer-term, too (as some indexes attack key resistance levels). There are still flies in the ointment (we’d like to see more stocks hitting new highs), so we’re not fully bullish, but the combination of a healthy broad market, the intermediate- and longer-term trends of the market pointing sideways-to-up, and pervasive negative sentiment (nobody believes the market will rise significantly going forward), all bode well going forward. After a trip into neutral territory, we’re bullish again, though we’re still holding some cash in reserve as we wait for more individual stocks to kick into gear.

This week’s list has many great looking charts combined with solid growth stories. Our Top Pick is more aggressive than we’ve had in recent weeks—Veeva Systems (VEEV) has a great growth story and it catapulted higher on earnings, marking what could be a coming out party for the stock. Keep new positions small to start.

Stock Name	Price	Buy Range	Loss Limit
Veeva Systems (VEEV)	180.23	31.5-33	28-29
ONEOK (OKS)	0.00	37.5-38.5	33.5-34
Universal Display (OLED)	187.54	64-66	57-59
Masimo (MASI)	159.56	48-49.5	44-45
Jack in the Box (JACK)	0.00	81-84	74-76
Dycom Industries (DY)	0.00	80-83	71-73
Dollar Tree (DLTR)	0.00	86-88.5	80-81
Copart (CPRT)	74.80	46-48	42-43
Boston Scientific (BSX)	0.00	21.5-22.5	20-20.5
Abiomed (ABMD)	0.00	98-101	91-93

Current Market Outlook


The market has turned mostly neutral, with the intermediate-term trend slightly negative, the longer-term trend slightly positive, and individual stocks a mixed bag. In the big picture, the pullback in the major indexes during the past month is reasonable given the February-April gains, and we’re encouraged by both the broad market’s resilience (few stocks or sectors are in disarray) and the dearth of bullish sentiment. Even so, it’s best to go with the market’s action first and foremost, and right now, it’s a mixed bag. Thus, we’re knocking our Market Monitor down another notch and will keep an open mind—a big-volume selloff from here would raise the odds of a deeper correction, but a surge back above the 50-day lines for the major indexes would likely signal the resumption of the post-February advance. Stay tuned.

This week’s list again has a solid growth feel to it, including a few stocks that recently reacted well to earnings. Our Top Pick is Fidelity Information Services (FIS), a steady fundamental performer that gapped up on earnings three weeks ago and has held firm since.

Stock Name	Price	Buy Range	Loss Limit
Weibo (WB)	98.16	22-23	20-21
Ultimate Software (ULTI)	0.00	193-199	183-185
TransUnion (TRU)	83.09	30-31	28-28.5
Tallgrass Energy Partners (TEP)	0.00	46-49	42.5-44
NetEase, Inc. (NTES)	0.00	158-163	145-147
Fidelity National Information Services (FIS)	0.00	70-73	65-66
Emergent BioSolutions, Inc. (EBS)	0.00	41-43	38-39
Salesforce.com (CRM)	0.00	79-82	74-75
Becton Dickinson (BDX)	0.00	162-166	157-158
Applied Materials (AMAT)	0.00	21.5-22.5	20-20.5

Current Market Outlook


It’s been a frustrating past month in the market, with the major indexes chopping lower, the Nasdaq breaking its 50-day line, many stocks blowing up on earnings and most investors throwing up their hands in disgust. Yet, through it all, the evidence hasn’t deteriorated to a major degree—the intermediate-term uptrend hasn’t broken, and most strong, liquid stocks that weren’t maimed during earnings have held key support. Today was certainly encouraging, though it’s too soon to assume the pullback is over so we’ll keep our Market Monitor where it is today. However, the next few days should be telling—a decisive break lower from here will have us trimming our sails, but another good day or two would be a great sign that the post-February advance is resuming.

This week’s list is encouraging in that we see more true growth stories—or at least stocks with some major catalysts. Our Top Pick is Martin Marietta Materials (MLM), which is one of the big raw material suppliers for the construction industry. Buy on dips.

Stock Name	Price	Buy Range	Loss Limit
TransDigm (TDG)	599.41	244-250	230-233
NVIDIA Corporation (NVDA)	242.42	40-41.5	35-35.5
Newmont Mining (NEM)	57.31	33-34	29-30
Martin Marietta Materials (MLM)	261.52	179-184	164-166
Jacobs Engineering Group (JEC)	89.83	48-50	44.5-45
Electronic Arts (EA)	0.00	73-76	66-67
EBIX Inc. (EBIX)	0.00	45-47	41-41.5
Blue Buffalo Pet Products (BUFF)	0.00	25-26.5	23-23.5
B&G Foods (BGS)	0.00	41-43	37-38
Berry Global (BERY)	64.22	37-38	34.5-35

Current Market Outlook


The market has now been pulling back for nearly three weeks following a strong two-month rebound; currently, most indexes are hovering just above their 50-day lines (though the Nasdaq is living below its 50-day). Among individual stocks, the action has been mixed, with many stocks and sectors breaking down but a fair number holding up well (and some even emerging on positive earnings reports). All in all, we’re nudging our Market Monitor down a notch, but the rubber should meet the road in the coming days—a decisive break of support would have us advising holding more cash, while a strong resumption of the uptrend should present some excellent buying opportunities. For now, we continue to lean bullish, but we’re taking things on a stock-by-stock basis and watching the action closely.

This week’s list is another broad collection of stocks and sectors, though we’re seeing more good growth stories pop up. Our Top Pick this week is one of them: Align Technologies (ALGN) isn’t a barn-burner, but growth is accelerating, earnings estimates are excellent and the stock is hitting new highs.

Stock Name	Price	Buy Range	Loss Limit
Zillow (Z)	76.64	25-26.5	22.5-23
Pioneer Natural Resources (PXD)	0.00	155-159	141-143
Huntsman (HUN)	0.00	13.5-14.5	12-12.5
Home Depot (HD)	0.00	133-136	124-125
Facebook, Inc. (FB)	0.00	116-120	108-110
Cynosure (CYNO)	0.00	46-48.5	43-44
Continental Resources (CLR)	66.19	36-38	33-34
Activision Blizzard, Inc. (ATVI)	0.00	35-37	32.5-33
Align Technology (ALGN)	316.20	73-75.5	68-69
AMN Healthcare (AHS)	0.00	36-38	32.5-33

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.

GameStop rolled out its new Ship from Store process in all 4,100 of its U.S. stores in late February.

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.