The market remains in full bull mode, despite the “shocking” (to some) news that the U.S. economy contracted by 2.9% in the first quarter. We’re not easily shocked, and we know that the message of the market is what matters, so we continue to recommend that you invest heavily in leading stocks, particularly those that present attractive entry points. Happily, there are plenty to choose from these days, and this week’s issue offers a fine variety, from energy to medical to retail to restaurants to automobiles.

Our favorite stock in today’s crop is Agnico Eagle Mines (AEM), a gold miner that has solid growth prospects and a great technical set-up. While the big jump in gold stocks two weeks ago got a lot of attention, Agnico’s capable management has made a lot of moves that augur well for the long term.

Stock Name	Price	Buy Range	Loss Limit
Tesla, Inc. (TSLA)	818.87	232-245	215-216
Sanchez Energy (SN)	0.00	35-37.5	32-32.5
Schlumberger (SLB)	0.00	109-113	102-103
SolarCity (SCTY)	0.00	68-70	59-60
KapStone Paper (KS)	0.00	32-33	29-30
JD.com (JD)	39.58	27-28	24-25
InterMune (ITMN)	0.00	42-45	37-38
Buffalo Wild Wings (BWLD)	0.00	160-165	147-148
Allegheny Technologies (ATI)	27.78	42.5-44.5	39-40
Agnico Eagle Mines (AEM)	79.05	35-37	33-34

The market remains in good shape, with the major indexes hitting slightly higher highs and most stocks acting well. Granted, many growth stocks have been consolidating their strong mid-May to early-June advances, but we’re actually encouraged by that—despite strong run-ups back to (or somewhat above) their springtime highs, the sellers haven’t been able to make any headway. Sure, that could always change, but right now there’s no question that selling pressures are light and the buyers remain in control. Hence, it’s best to remain bullish and pick up shares of new leaders either on powerful breakouts or on dips toward support.

This week’s list has more solid growth ideas than we’ve seen in many weeks. Our favorite idea is GasLog (GLOG), which has gotten a boost from international events, but whose short- and long-term growth story is compelling. Last week, the stock blasted off on its heaviest volume ever.

Stock Name	Price	Buy Range	Loss Limit
TripAdvisor (TRIP)	55.14	99-104	92-93
SunPower (SPWR)	12.26	38-39	34-35
Royal Gold, Inc. (RGLD)	129.66	70-75	65-66
Palo Alto Networks (PANW)	236.92	77-81	70-71
Lithia Motors Inc. (LAD)	146.30	90-93	78-80
GasLog (GLOG)	21.39	28-31	26-26.5
Electronic Arts (EA)	0.00	35-37	31-32
Celgene (CELG)	0.00	160-166	148-150
Arris Group (ARRS)	0.00	31.5-33.5	30-30.5
Apple (AAPL)	248.94	89-91	83-84

After a few weeks of solid action that eased most worries, the latest shenanigans in Iraq have reminded investors that the market is a two-way street. Not that the damage has been severe—stocks have generally eased normally since Iraq grabbed the headlines last Thursday—but we’re viewing this as the rally’s first test. If dips in the indexes and individual stocks come on generally tame volume and find support, it will be highly bullish. If not … well, we’ll deal with that if we see it. Right now, the evidence remains clearly bullish, and while the bulls aren’t running wild, many stocks are making solid progress.

This week’s list has a bunch of great stories, as well as a nice mix of newer and older names. Our Top Pick is Restoration Hardware (RH), which is going about business in a unique way, leading to outstanding results. The stock is getting going after a multi-month rest.

Stock Name	Price	Buy Range	Loss Limit
RH Inc. (RH)	252.93	79-84	72-73
VeriFone Systems, Inc. (PAY)	0.00	35-36	32-33
Netflix, Inc. (NFLX)	423.92	410-430	370-380
Health Net (HNT)	0.00	38.5-40	35-36
GT Advanced Technologies (GTAT)	0.00	18-19	15-16
Keurig Green Mountain (GMCR)	0.00	115-121	105-107
Eagle Materials Inc. (EXP)	0.00	90-94	84-85
Con-way (CNW)	0.00	46.5-48.5	43.5-44
Charter Communications (CHTR)	0.00	144-147	134-135
Baidu (BIDU)	0.00	170-175	158-160

There remain a few warts on the market’s current rally, including some meaningful divergences (the Nasdaq and Russell 2000 have yet to reach new highs like some of the broader big-cap indexes) and a lack of decisive breakouts from big-cap leaders (most are still working on launching pads). But the evidence is rarely going to line up perfectly; the fact is that during the past few weeks, more and more stocks have been acting well as selling pressures ease. Now’s a time to grow gradually more optimistic as the stocks you own and follow improve.

This week’s list includes one of those classic, big-cap breakouts that we alluded to above. Top Pick Applied Materials (AMAT) is in the process of completing a major acquisition that should boost its market dominance in a big way, and the stock has exploded out of a nice consolidation on very big volume.

Stock Name	Price	Buy Range	Loss Limit
Zebra Technologies (ZBRA)	154.94	72-76	69-70
Skyworks Solutions (SWKS)	0.00	45-47	41-42
MeadWestvaco (MWV)	0.00	42-44	39-40
Lannett Company (LCI)	0.00	45-46	42-43
Illumina Inc. (ILMN)	289.74	160-170	154-155
Carrizo Oil & Gas (CRZO)	24.03	59-61	55-56
Consol Energy Inc. (CNX)	0.00	45-48	43-43.5
Bonanza Creek Energy (BCEI)	0.00	52-55	48-49
Arris Group (ARRS)	0.00	32-34	28.5-29.5
Applied Materials (AMAT)	0.00	20-22	18-19

After two and a half months of a choppy-to-down environment, the bulls have done enough good things to turn the intermediate-term trend back up. And that means our Market Monitor is back in bullish territory and you should adopt a more positive market outlook. You shouldn’t buy hand over fist, though—it’s best to pick up shares of some strong, resilient stocks (preferably newer names most investors haven’t heard of) … and then watch closely to see if the market can hold (and build on) its gains in the days and weeks ahead. If it does, you can look to extend your line.

This week’s list again contains an array of stocks from a variety of industries. Our Top Pick is Cavium (CAVM), which looks like a new leader in the still-strong chip sector. It’s very volatile, so handle it with care, but we think you can start a position around here.

Stock Name	Price	Buy Range	Loss Limit
TripAdvisor (TRIP)	55.14	94-97	88-89
T-Mobile US (TMUS)	0.00	33.5-35	31-31.5
Synaptics (SYNA)	0.00	65-68	60-61
Sanchez Energy (SN)	0.00	32-34	30-31
Palo Alto Networks (PANW)	236.92	71.5-75.5	65-67
Nabors Industries (NBR)	0.00	25.5-26.5	24.5-25
Molina Healthcare (MOH)	0.00	41.5-43	39.5-40
Cavium (CAVM)	0.00	46.5-49	43.5-44.5
Baker Hughes (BHI)	0.00	69-71.5	66-67
Air Lease (AL)	0.00	39.5-41	36-36.5

During the past couple of weeks, we’ve seen the major indexes push higher (including new all-time highs from the S&P 500), we’ve seen some growth stocks get off their duffs and we’ve seen a gradual improvement in stocks and sectors hitting new highs. In other words, the evidence has improved, and while we would prefer to see some real buying power (volume has been whisper-quiet for the most part), we’re tilting our Market Monitor a bit toward the bullish side. Bottom line: It’s OK to put some more money to work here, and then see if stocks can build on their recent gains.

This week’s list has a broad array of solid stories from a variety of industries. Our favorite is BitAuto (BITA), a great (and easy to understand) Chinese growth story that is quickly rounding out its launching pad.

Stock Name	Price	Buy Range	Loss Limit
Stillwater Mining (SWC)	0.00	16-17	14.5-15
Skechers (SKX)	0.00	41-43	38-39
Live Nation Entertainment, Inc. (LYV)	0.00	23-24	21.5-22
Kate Spade & Company (KATE)	0.00	35-36.5	32-33
ICICI Bank (IBN)	0.00	48-50	44-45
Electronic Arts (EA)	0.00	33-35	30-30.5
Dillard’s (DDS)	0.00	106-112	99-100
Ctrip.com International Ltd. (CTRP)	34.94	53-55	48-49
Bitauto Holdings (BITA)	0.00	42-44	37-38
American Airlines Group Inc. (AAL)	0.00	38-40.5	36-36.5

The market continues to chop around, with forays into new-high ground inviting plenty of sellers and sharp dips quickly attracting bargain-hunting buyers. We are seeing more set-ups out there, which is a good sign—if the market does kick into gear, there should be some solid leadership. However, until then, this is about as neutral and choppy an environment as we can remember. That doesn’t mean you shouldn’t take any action (this isn’t 2008!), but it’s best to wait for the market to show some bullish action before getting heavily invested. Patience and cash are your allies today.

This week’s list is the first in a while that has a growth tilt to it; there are still some cheap, stable-type stocks, but also some real potential leaders of the next advance. Our favorite is Arris Group (ARRS), which has excellent growth prospects, a huge backlog and a nice-looking launching pad.

Stock Name	Price	Buy Range	Loss Limit
WhiteWave Foods (WWAV)	0.00	29.5-31	26.5-27
Vipshop Holdings (VIPS)	14.25	150-160	138-140
Trinity Industries (TRN)	0.00	78-82	73-74
Rice Energy (RICE)	0.00	29.5-31	27.5-28
Pacira Biosiences (PCRX)	54.85	72.5-75.5	67-68
InterMune (ITMN)	0.00	36-38	33-34
Gilead Sciences (GILD)	75.10	79-83	75.5-76.5
CBRE Group (CBG)	0.00	28-29	26-26.5
Arris Group (ARRS)	0.00	29-31	26.5-27.5
Apple (AAPL)	248.94	580-600	530-540

This remains a split tape, with many defensive and some commodity stocks testing new-high ground, while most of the market is chopping around, and growth stocks are still lagging. That said, we have seen a few rays of light lately—the mid-cap indexes are back above their 50-day lines, many growth stocks have held support for many weeks, and we’re seeing a few more potential leaders emerge on earnings or other good news. We’re sticking with our neutral Market Monitor until we see more bullish action among a variety of stocks and sectors, but the next week or two will be interesting.

This week’s list is still relatively heavy on commodity names, but our Top Pick is a growth stock that just completed a game-changing acquisition. Avago Technologies (AVGO) has great projected earnings growth, but the company reports earnings on May 29 so keep new positions small.

Stock Name	Price	Buy Range	Loss Limit
Zillow (Z)	76.64	95-100	88-90
Nabors Industries (NBR)	0.00	25-26.5	23-24
Lazard (LAZ)	0.00	47-49	45-46
Diamondback Energy (FANG)	0.00	72-74	66-67
Extra Space Storage (EXR)	0.00	49-51	46-47
Constellium (CSTM)	0.00	29-31	27-27.5
Carrizo Oil & Gas (CRZO)	24.03	53.5-55.5	50-50.5
Broadcom Limited (AVGO)	266.26	66-69	61-62
Athlon Energy (ATHL)	0.00	39-41	36-37
AerCap (AER)	0.00	45.5-47.5	41.5-42

Not much has changed with the market’s big picture—some energy stocks are still doing well and the broad market is holding up near its highs, but many growth stocks and sectors are still in base-building phases. The goal as investors isn’t to discern what comes next (a leg up or leg down), but to be ready to act in either scenario. That means having your watch list ready (there are a good number of growth stocks beginning to set up), but also remaining defensive until you see evidence that the trend has turned up.

This week’s list is chock-full of energy stocks, which remains the clear leading group in the market. Our favorite of the week is Weatherford (WFT), a turnaround in the oil services space that recently staged a monstrous breakout on bullish earnings.

Stock Name	Price	Buy Range	Loss Limit
Weatherford International plc (WFT)	0.00	19.5-21	17-18.5
US Silica Holdings, Inc. (SLCA)	0.00	43.5-45.5	39-40
RPC Inc. (RES)	0.00	21-22.5	19.5-20
Patterson-UTI Energy (PTEN)	0.00	32-33	30-30.5
Micron Technology, Inc. (MU)	43.31	25-26	23.5-24
Level 3 Communications (LVLT)	0.00	42-43	38-39
Itaú Unibanco Holding S.A. (ITUB)	0.00	15-16.5	14.5-15
Garmin (GRMN)	97.45	55-57	52-53
Greenbrier (GBX)	57.73	48-50	45-46
Consol Energy Inc. (CNX)	0.00	42.5-44	40.5-41

We look at hundreds of charts every week, and we’ve seen worse environments than this—while high-growth stocks have taken a beating, much of the broad market is at least hanging in there. But the fact is that as long as the intermediate-term trend of the major indexes is pointed down, it’s going to be tough to make much money; the last couple of trading days has reinforced that fact. Thus, while a little buying here or there is fine, especially in resilient groups, less is generally more in this environment—preserving most of your capital and building your watch list are what will pay off down the road.

The good news is that, as earnings season progresses, we’re able to see which stocks have “it,” and which ones are being tossed out by big fund managers. This week’s list has a few recent earnings winners, including our Top Pick, Harley-Davidson (HOG), which just blasted out of a 14-week base on a great quarterly report.

Stock Name	Price	Buy Range	Loss Limit
WABCO Holdings (WBC)	0.00	104-107	97-98
Skyworks Solutions (SWKS)	0.00	39-41	35-36
SunEdison (SUNE)	0.00	18-19	15.5-16
SunPower (SPWR)	12.26	34-35	29-30
Salix Pharmaceuticals (SLXP)	0.00	102-106	98-100
Matador Resources Company (MTDR)	27.89	26-27	24-24.5
Harley-Davidson Inc. (HOG)	0.00	70-72	66-67
Delta Air Lines (DAL)	54.28	35-36.5	33-34
Comstock Resources (CRK)	0.00	25-27	22-23
Cabot Oil & Gas (COG)	0.00	36.5-38	35-35.5

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.

I will sell BK from the Buy Low Opportunities Portfolio today, representing an approximate 11% total return in 31 days

We have two changes to the Growth & Income Portfolio.

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.