The market finally bounced following last Tuesday’s big-volume support day, which has allowed many beaten-down growth stocks to get off their knees. It’s also allowed many energy stocks to show their muscle—many have lifted to new highs after multi-month launching pads! Overall, we’re keeping our Market Monitor neutral, as there’s no evidence yet that a sustainable bottom has been reached. But we’re OK with a little buying in the energy sector (as well as some other strong commodity stocks), because if the current rally gains momentum, many of these names could prove to be leaders of the upmove.
This week’s list did pick up on a few growth stocks that are beginning to separate from the pack, but half the stocks are commodity-related. Our favorite of the week is GasLog (GLOG), a shipper of liquefied natural gas that sports both rapid and predictable growth.

Stock Name	Price	Buy Range	Loss Limit
Weatherford International plc (WFT)	0.00	17-18	16-16.5
Vipshop Holdings (VIPS)	14.25	140-148	128-130
Taiwan Semiconductor (TSM)	78.41	19.5-20.5	18.5-19
SanDisk Corp. (SNDK)	0.00	80-82	76-77
Rice Energy (RICE)	0.00	28-29.5	25.5-26
Garmin (GRMN)	97.45	55-57	52-53
Gulfport Energy (GPOR)	0.00	71-73	66.5-67.5
GasLog (GLOG)	21.39	25.5-27	23.5-24
Finisar (FNSR)	0.00	26-27	24-24
Allegheny Technologies (ATI)	27.78	38.5-40	35-36

The selling pressures have been spreading during the past couple of weeks, moving from just the highfliers of the past year to much of the broad market. Most stocks (especially growth stocks) have suffered severe damage on their charts, and that will take time to repair; the odds are against a sustained rally from this point. That said, a few commodity-related groups continue to trade well, including a bunch of energy stocks that are beginning to push higher—they could prove to be new leaders if the market stabilizes. Overall, you should remain in a defensive stance because the overall trend is down, but buying a little of a resilient name or two is OK.

This week’s list is very heavy on commodity names, and our Top Pick is Athlon Energy (ATHL), a fast-growing producer in the Midland Basin. Its recent land grab is helping the stock push out from its first-ever base.

Stock Name	Price	Buy Range	Loss Limit
Zillow (Z)	76.64	85-90	77-79
Stillwater Mining (SWC)	0.00	15-16	14-14.5
Pacific Ethanol (PEIX)	0.00	13-14.5	11-12
Huntsman (HUN)	0.00	23-24.5	20-21
HDFC Bank Limited (HDB)	0.00	38-40.5	33-34
HD Supply Holdings, Inc. (HDS)	0.00	24-25	22-22.5
Diamondback Energy (FANG)	0.00	65-67	61-62
Concho Resources (CXO)	0.00	122-127	118-119
Athlon Energy (ATHL)	0.00	36.5-39	34-35
Archer Daniels (ADM)	0.00	43.5-44.5	41-42

Growth stocks remain dead in the water, with the sellers still focusing their efforts on the high valuation names that led the market higher during the past eight months. But now we’re beginning to see the weakness is that niche spread—broader indexes like the S&P 500 are feeling the heat, and while few cyclical-type stocks have broken down, most are starting to look ragged as big investors head toward defensive names. All told, it’s not 2008 all over again, but now is the time to hold plenty of cash, build a watch list and, if you buy, keep position sizes small and make sure you have your stops in place.

This week’s list is heavy with still-resilient cyclical stocks with great projected growth during the next couple of years. Our Top Pick is Devon Energy (DVN), a big company with a solid turnaround story and a stock that’s just getting going after a few down years.

Stock Name	Price	Buy Range	Loss Limit
Williams-Sonoma (WSM)	64.96	62-64	58-59
Ultra Petroleum (UPL)	0.00	26.5-28	25-25.5
Schlumberger (SLB)	0.00	95-97	91-92
RH Inc. (RH)	252.93	68-70	63-64
Southwest Airlines (LUV)	0.00	23-24	21.5-22
GT Advanced Technologies (GTAT)	0.00	15.5-17	14-14.5
Electronic Arts (EA)	0.00	27.5-29	25.5-26.5
Devon Energy (DVN)	0.00	66.5-68.5	62.5-63.5
CARBO Ceramics (CRR)	0.00	130-135	120-121
AerCap (AER)	0.00	38-40	34-35

After huge runs during the past six months, the evidence of the past few weeks indicates that most growth stocks have topped for the intermediate-term; sure, things can always change during earnings season, but most of the “hot” growth stocks will likely need time to build new launching pads. The key going forward will be whether the selling in growth stocks spreads to the broad market—that hasn’t happened yet, and in fact, we’re seeing many quality set-ups (and a few real breakouts) among some cyclical-type stocks. It’s encouraging, but for now we’re content to watch and wait to see if selling spreads or if buyers return.

This week’s list features many resilient names in less-sexy industries that nevertheless still have great potential. Our favorite of the week is Diebold (DBD), an older tech player whose earnings should boom in the quarters ahead.

Stock Name	Price	Buy Range	Loss Limit
Domtar (UFS)	0.00	108-114	100-102
Under Armour (UA)	0.00	110-120	102-104
Tata Motors Limited (TTM)	0.00	32-34	29-30
US Silica Holdings, Inc. (SLCA)	0.00	34-36	31-32
Martin Marietta Materials (MLM)	261.52	123-126	112-115
Ingram Micro (IM)	0.00	28-29.5	26-27
Horizon Therapeutics (HZNP)	49.89	14-15.5	12-13
Diebold (DBD)	0.00	38-40	34-36
Comstock Resources (CRK)	0.00	21-22	19-19.5
Baker Hughes (BHI)	0.00	63-66	60-61

Large-cap indexes like the S&P 500 continue to hang in there, but under the market’s hood, the selling in leading stocks that began three weeks ago has intensified, with many now showing abnormal action. Most fast-moving stocks are in a correction, and that’s enough for us to switch our Market Monitor to neutral, meaning you should limit new buying and raise some cash. That said, we’re not making any bold predictions; we’ve seen these rotations out of growth stocks before, and they often reverse themselves quickly. But right now, it’s best to pull in your horns and wait for leading stocks to find support.

Despite the carnage in certain sectors, we’re encouraged by this week’s list—there are many solid stories here, not just defensive or mega-cap names. Our Top Pick is Nabors Industries (NBR), one of a few energy stocks that are acting well.

Stock Name	Price	Buy Range	Loss Limit
Zulily (ZU)	0.00	52-56	45-48
Zillow (Z)	76.64	92-95	85-86
WhiteWave Foods (WWAV)	0.00	27-28.5	25-26
SanDisk Corp. (SNDK)	0.00	78-80	73-74
Nabors Industries (NBR)	0.00	22.5-23.5	20-20.5
Kate Spade & Company (KATE)	0.00	37-39	33-34
First Solar (FSLR)	83.74	68-72	60-62
Finisar (FNSR)	0.00	26-27.5	23.5-24
E-Commerce China Dangdang (DANG)	0.00	14-15.5	12-12.5
Activision Blizzard, Inc. (ATVI)	0.00	20-21	18-18.5

Following the huge lift-off in February, a pullback was likely, and the Ukraine-related tensions have been the excuse for persistent selling (especially among growth stocks) during the past couple of weeks. At this point, we think it’s fair to say the situation is on the fence—many leading stocks are down to key support, so if all’s well, the major indexes and individual names should find support soon. If they don’t, it’s likely that the market is in for a deeper consolidation; if they do (today was a decent start), then this news-driven pullback could be near an end. We’ll be watching.

In the meantime, this week’s list has many new names, including many that have just began their major advances within the past few months. Our Top Pick is Freescale Semiconductor (FSL), part of the strong chip group and a stock that is pulling back for the first time since an ultra-powerful breakout.

Stock Name	Price	Buy Range	Loss Limit
XPO Logistics (XPO)	0.00	30-31.5	28-28.5
Tesla, Inc. (TSLA)	818.87	220-235	190-200
TripAdvisor (TRIP)	55.14	100-105	91-92
Salix Pharmaceuticals (SLXP)	0.00	108-112	97-99
Palo Alto Networks (PANW)	236.92	74-77	68-69
Ligand Pharmaceuticals (LGND)	267.14	75-77	64-66
GT Advanced Technologies (GTAT)	0.00	16-17	13-14
Freescale Semiconductor (FSL)	0.00	21-22.5	19-19.5
Diamondback Energy (FANG)	0.00	62-64	56-57
AngloGold Ashanti (AU)	20.45	18-19	16-17

Last week we wrote that usually the first shakeout after a multi-week thrust isn’t the last, and indeed, we’ve seen some follow-on profit-taking among the market’s strongest stocks. There has been a little abnormal action here and there (mostly in biotech, but some elsewhere, too), but so far, the vast majority of stocks are simply pulling back after big-volume moves to new highs. If the selling spreads and the uptrend fails, then we’ll change our advice. But, as usual, we advise going with the weight of the evidence, which today remains bullish. Thus, hold your top performers, and adding a stock or two on dips is still favored.

This week’s list has a diverse flair to it—it’s not all high-flying stocks like we saw during February. But there is still plenty to like, including our Top Pick, Novo Nordisk (NVO), which has a solid growth story and a chart that’s at a fine entry point.

Stock Name	Price	Buy Range	Loss Limit
Under Armour (UA)	0.00	110-115	99-102
Trina Solar (TSL)	0.00	17-18	14-15
SouFun (SFUN)	0.00	88-90	78-80
Qihoo 360 (QIHU)	0.00	112-120	97-100
Novo Nordisk (NVO)	0.00	44.5-46.5	41-42
MasTec, Inc. (MTZ)	66.65	40-42	37-38
Magna International Inc. (MGA)	0.00	94-96.5	88-89
CoStar Group (CSGP)	589.55	200-208	182-185
Athenahealth (ATHN)	0.00	178-182	154-156
Alaska Air Group (ALK)	0.00	87-90	80-81

Trouble comes from where investors least expect it, so it’s not surprising to us that the Russia-Ukraine situation is making investors nervous. Is there a chance this is the event that capsizes the market? Of course there is—and that’s why you should watch your stops and risk. But after such a powerful rally for much of February among the major indexes and many stocks, the odds favor the first dip being buyable, at least among leading stocks. That doesn’t mean the pullback can’t last a few days (news-driven ups and downs are likely in the short-term), but with the overall uptrend intact, we remain optimistic.

This week’s list isn’t as growth-oriented as the past few weeks, but there are still more than a few good stories here. Our Top Pick is Avis Budget (CAR), a well-known firm with surprisingly solid earnings growth prospects as global travel increases.

Stock Name	Price	Buy Range	Loss Limit
58.com (WUBA)	0.00	46-48	41-42
Trimble Navigation (TRMB)	0.00	36-38	34-35
Signet Jewelers (SIG)	0.00	93-95	85-87
Spirit Airlines (SAVE)	57.03	54-57	49.5-50.5
Regeneron Pharmaceuticals (REGN)	512.96	320-330	275-280
Penn Virginia (PVA)	0.00	14-14.5	12-12.5
Michael Kors Holdings Limited (KORS)	73.22	95-100	85-90
Keurig Green Mountain (GMCR)	0.00	105-112	91-92
Avis Budget Group (CAR)	0.00	45-47	41-42
Basic Energy Services (BAS)	0.00	21.5-23	19-20

We wrote last week about how the unusually persistent rebound in the market bodes well going forward. And the good vibes have continued since then, with gaggles of growth stocks rising nearly every day and a vacuum of selling pressure. Also impressive is how stocks have reacted to their quarterly reports—earnings season is nearly over, but we can’t remember a time when so many stocks have gapped up on their results. Of course, the market isn’t a one-way street, and forgotten are many of the worries of a month ago; some shakeouts are sure to occur. But such power on the upside usually doesn’t just disappear. We remain optimistic.

This week’s list reveals a broad swath of strong stocks from many industries. Our Top Pick is AerCap Holdings (AER), a firm that buys and leases airplanes. Business is strong, earnings estimates are huge and a recent acquisition is a game changer.

Stock Name	Price	Buy Range	Loss Limit
Domtar (UFS)	0.00	104-110	96-97
Trinity Industries (TRN)	0.00	65-67	59-60
RetailMeNot (SALE)	0.00	41-43	36.5-37.5
O’Reilly Automotive (ORLY)	0.00	150-155	142-143
Nabors Industries (NBR)	0.00	21-22.5	19-19.5
Harman International Industries, Inc. (HAR)	0.00	102-105	93-95
Freescale Semiconductor (FSL)	0.00	21-22	18-19
FireEye (FEYE)	0.00	73-75	63-65
HomeAway, Inc. (AWAY)	0.00	45-48	41-41.5
AerCap (AER)	0.00	41-43	35-36

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.

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.