We’ve been writing that the recent straight-up move in leading stocks, combined with signs of speculation in early October, all happening right in front on earnings season, was a recipe for lower prices in the short-term. And voilà! Stocks got hit hard last week and early this morning, as the sellers gained traction. At this point, the major market trends are up, so we believe this correction will eventually lead to higher prices … but we’d still be a bit cautious in the short-term, as selling pressures usually don’t disappear after just one week. This week’s Top Ten contains a few earnings winners from last week (always good candidates for further upside), as well as a few new names. Our favorite of the week is New Oriental Education (EDU), a Chinese firm that gapped up on strong earnings last week, but has pulled back with the market in recent days. It’s a bit thinly traded, and thus jumpier, but we think buying a little here will work out.

Stock Name	Price	Buy Range	Loss Limit
ANR (ANR)	0.00	24-26	-
AUO (AUO)	0.00	18 1/2 - 20	-
BIDU (BIDU)	0.00	310-320	-
EDU (EDU)	0.00	65-75	-
ISRG (ISRG)	0.00	260-272	-
LIFC (LIFC)	0.00	38-41	-
LULU (LULU)	0.00	45-55	-
MTL (MTL)	0.00	60-66	-
SA (SA)	0.00	32-36	-
SPWR (SPWR)	0.00	91-96	-

After weeks of straight-up action, leading stocks finally came under some selling pressure late last week, and it appears more selling is on the way, short-term. We’ve written that such a pullback is likely (you often see peaks and troughs near the 15th of the month of earnings season), so if you’re holding a couple of laggards, now’s the time to kick them out of your portfolio. Longer-term, however, we believe any retreat will result in buying opportunities – our OptiMo stock screening system continues to uncover a wide array of great-looking stocks with even greater-sounding stories. Thus, while you should expect some choppiness in the near-term, you should be putting money to work on weakness. Our favorite idea this week is Aecom Technology (ACM), part of the strong engineering and construction group. It’s a new issue, which helps, and looks like a good buy around here, or on a slight pullback.

Stock Name	Price	Buy Range	Loss Limit
ACM (ACM)	0.00	33-36	-
ANW (ANW)	0.00	39-43	-
CRM (CRM)	0.00	53-56	-
FLR (FLR)	0.00	145-155	-
GIGM (GIGM)	0.00	17-20	-
GOLD (GOLD)	0.00	32 1/2 - 34 1/2	-
HNSN (HNSN)	0.00	27-31	-
JASO (JASO)	0.00	45-49	-
LVS (LVS)	0.00	130-138	-
VIP (VIP)	0.00	26-30	-

The market continues to perform well, with the market’s leading stocks outperforming the broad market indexes. These are good times, so enjoy them! But remember to guard against complacency; hundreds of earnings reports are about to flood Wall Street, and we’re sure that some leaders will fail, while others will soar. Thus, while the overall bull market shows no sign of ending, the next few weeks will be volatile. This week’s Top Ten contains another well-rounded batch of stocks, with a couple of biotech names highlighting the newfound strength in that sector. Another group that’s quietly improved has been the steel stocks, with Schnitzer Steel (SCHN) leading the way. The stock is in a mild pullback following a powerful breakout in recent weeks. We think it’s buyable around here.

Stock Name	Price	Buy Range	Loss Limit
TKC (TKC)	0.00	19-23	-
ALNY (ALNY)	0.00	30-35	-
AUXL (AUXL)	0.00	21-23	-
CIEN (CIEN)	0.00	44-46	-
FSLR (FSLR)	0.00	125-135	-
HANS (HANS)	0.00	56-60	-
OVTI (OVTI)	0.00	22-24	-
QMAR (QMAR)	0.00	19-22	-
RIMM (RIMM)	0.00	106-114	-
SCHN (SCHN)	0.00	65-70	-

If your portfolio is full of growth or materials stocks, you’re likely a happy camper, as these types of issues are being gobbled up by institutional investors these days. Indeed, we’re glad to see the Nasdaq – a good representation of growth stocks – outperforming the broader S&P 500, a sign that investors are growing more bullish. That’s a good sign for the market as a whole, but remember that with a new quarter underway, earnings season is about to begin, so be prepared for increased volatility (both upside and downside) going forward. This week’s Top Ten contains something for everyone, whether it’s China, oil, chips or even engineering and construction. Our favorite of the week is Focus Media (FMCN), a great growth company that just leaped out from a nice basing structure. It’s already reported earnings, and we think you can buy a little on weakness.

Stock Name	Price	Buy Range	Loss Limit
Aecom Technology (ACM)	0.00	30-35	-
CMED (CMED)	0.00	40-44	-
Crocs (CROX)	0.00	65-67	-
New Oriental Education (EDU)	113.97	62-65	-
Focus Media Holdings (FMCN)	0.00	53-58	-
Flotek (FTK)	0.00	40-44	-
HANS (HANS)	0.00	52-55	-
OMTR (OMTR)	0.00	27-30	-
OmniVision (OVTI)	0.00	21-23	-
VeriFone Systems, Inc. (PAY)	0.00	42-44	-

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.

Goldman Sachs Group (GS)
from The Prudent Speculator

Goldman is a global investment banking, securities and investment management firm with leading positions in M&A, equity underwriting and equity trading. The company also generates significant revenue from its investing, lending and FICC businesses, while the asset management business is a major focus.

We were...

Here’s a turnaround Indian stock supported by urban demand.

Tata Motors (TTM)
from Global Investing

Deutsche Bank and Société Générale analysts have upgraded my stock idea, Tata Motors (TTM).

Jaguar-Landover provides most of TTM revenues but my focus is on the Tata side, which was straggling when we sold. My skepticism has ended.

Now Tata...

This cosmetics company is an institutional favorite, with 89.78% of shares outstanding held by institutions. Big money buyers have also increased their positions by 6,773,735 shares recently. The sell recommendation is based on earnings pressure on the stock.

Buy: ULTA Salon, Cosmetics & Fragrance, Inc. (ULTA)
from Cabot Growth Investor (formerly Cabot...

Sell LinkedIn (LNKD)
from Cabot Growth Investor (formerly Cabot Market Letter)
Updated from Investment Digest 761, September 17, 2014

LinkedIn (LNKD) was crushed on earnings last week (due to worries over ad growth, currency swings and continued heavy investments) and hasn’t been able to find its footing since. We don’t think the stock...

This fund that targets gains from special events and is benchmarked against the Russell 3000. It has returned 4.44% year-to-date.

Fidelity Event Driven Opportunities (FARNX)
from Fidelity Monitor & Insight

In the case of Fidelity Event Driven Opportunities (FARNX), you can’t really consider performance as it’s just 17 months old. Instead, we’re making...

Insider buying is spurring momentum in these two biotech companies. One is a “buy now”, and the other is a “buy on a pullback.”

EPIRUS Biopharmaceuticals, Inc. (EPRS)
from Cotton’s Technically Speaking

On February 4, 2015, EPIRUS Biopharmaceuticals, Inc. (EPRS) insiders Scott Rocklage, and 5AM Partners III, LLC bought 400,000 shares of their...

Seattle Genetics, Inc. (SGEN)

Seattle Genetics, Inc. (SGEN) is an interesting stock. Insider Felix Baker has been buying millions of shares of this stock for the last several years at a cost of at least $200,000,000. They specialize in drug and biotech companies, so I can only conclude that these drugs...

This ATM manufacturer beat its quarterly earnings estimates by $0.04, posting EPS of $0.43.

NCR Corp (NCR)
from Sound Advice

NCR Corp (NCR) makes automatic tellers (ATMs), retail point-of-sale (POS) workstations, self-service kiosks, and other self-service checkout systems. 485 million people use NCR products every day, and there is room for substantial growth...

This natural food company just reported a good quarter, but the stock remains discounted.

Hain Celestial Group (HAIN)
from Cabot Stock of the Month

Hain Celestial (HAIN) is best known for its teas, but tea makes up just 5% of the company’s revenue. The remainder comes from a wide variety of natural and...

Coverage of this wireless charging company’s shares were just initiated at Ascendiant Capital and Roth Capital with a Buy rating.

Energous Corp. (WATT)
from Top Stocks under $10

We are ready to jump back into a stock that did very well for us previously and now is a bargain again after getting unfairly...

This maker of biomaterials and bioimplants consistently beats estimates and is rewarding shareholders by buying back shares at a rapid pace.

MiMedx (MDXG)
from BI Research

MiMedx (MDXG) is hitting on all cylinders with the best yet to come in the remaining three quarters of this year. For the latest quarter, EPS was...

Analysts’ estimates for 2016 for this trucking company have risen $0.16 per share in the past 90 days, based on synergies and growth from its latest acquisition.

Forward Air (FWRD)
from The Periscope Report
Updated from Investment Digest 741, April 24, 2013

Forward Air (FWRD) is a trucking company. FWRD picks up packages from...

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.