With the earnings season in its final stretch, a number of names have benefited from (mostly sanguine) Q2 results, making for a better environment for momentum traders. The intermediate-term trend has returned to positive across the main indexes, with several major stocks in the lagging tech sector getting back above their 50-day lines—and with even some beleaguered semiconductor names snapping back of late. Importantly, the financial sector remains solid. We’ll put the Market Monitor at level 7.

This week’s list has a fair number of stocks that are benefiting from the sanguine earnings season. Our Top Pick is showing solid momentum and has excellent potential with some promising—and innovative—new financial products.

The bull market is back on, thanks to mind-bending second-quarter earnings growth (50%!) and dwindling chances of a Fed rate hike next month. The renewed rally is only about 10 days old, but – as in April and May – it makes sense to strike while the iron is hot. Today that means taking a big swing on a drone maker that grew revenues by 133% last year. The stock is the newest recommendation from Carl Delfeld in his Cabot Explorer advisory. After a huge decline in the first half of the year, the stock is showing major signs of life.

Details inside.

A continued strong earnings season helped push the S&P 500 and Dow to fresh record highs by midweek last week. Then Friday’s softer-than-expected July Jobs Report all but erased the odds of a September rate hike, which helped propel stocks to their best week since April. For the week, the S&P 500 surged 3.6%, the Dow gained 3.0%, the Nasdaq led with a jump of 5.2%, and the Russell 2000 tacked on 3.5%.

A continued strong earnings season helped push the S&P 500 and Dow to fresh record highs by midweek last week. Then Friday’s softer-than-expected July Jobs Report all but erased the odds of a September rate hike, which helped propel stocks to their best week since April. For the week, the S&P 500 surged 3.6%, the Dow gained 3.0%, the Nasdaq led with a jump of 5.2%, and the Russell 2000 tacked on 3.5%.

A continued strong earnings season helped push the S&P 500 and Dow to fresh record highs by midweek last week. Then Friday’s softer-than-expected July Jobs Report all but erased the odds of a September rate hike, which helped propel stocks to their best week since April. For the week, the S&P 500 surged 3.6%, the Dow gained 3.0%, the Nasdaq led with a jump of 5.2%, and the Russell 2000 tacked on 3.5%.

The market has certainly improved in recent days, with some top-down indicators (Cabot Tides) returning to a green light and some growth measures (like our Aggression Index) perking up. That’s good, and given our large cash position, has us doing a little buying—but individual growth stocks are still bringing up the rear, with few breakouts (yet) and still some names cracking. Thus, we’re optimistic, but playing it by the book—adding a bit of exposure this week, but looking to floor the accelerator only if more stocks kick into gear.

Grocery stores are becoming the new dinner table. More and more shoppers want fresh, convenient meals without paying restaurant prices, while retailers want prepared-food sales without adding kitchen labor.

This month’s small-cap stock pick is building a nationwide platform to solve that problem. It has evolved from a small meatball company into a one-stop-shop supplier for the grocery deli department.

All the details are inside the August 2026 issue of Cabot Small-Cap Confidential.

Wall Street closed out another volatile week with a Thursday and Friday rally that papered over some real turbulence underneath the surface of the market. A closely divided Federal Reserve held rates steady on Wednesday—three officials actually voted for a hike—and stocks sold off hard on the news, with the Dow dropping more than 1,100 points. But the damage didn’t last: Microsoft (MSFT) and Amazon (AMZN) delivered earnings strong enough to convince traders the AI story still has legs, and the market clawed all the way back by Friday, even as Apple’s (AAPL) disappointing quarter and a surge in long-term bond yields kept things interesting. For the week, the S&P 500 and Dow each added roughly 1%, and the Nasdaq climbed about 1.6%—though small caps, which had been leading the market for weeks, essentially sat this rally out.

Once again, the story mostly remains the same, with AI stocks still looking worse for wear and many other growth stocks making little progress. Really, we think earnings season, which ramps up this week and next, will tell the tale: With a lot of stocks, sectors and indexes having leveled out for two months, it’s possible we see some upside breakouts, and if so, we’ll definitely extend our line, but, as always, we want to see it happen before taking the leap. We’ll stay at a level 6 on the Market Monitor, but we could be moving that in the days ahead.

This week’s list has a bunch of newer names (to us), including a few that have already popped on earnings. Our Top Pick is under accumulation thanks to a great Q2 report and excellent longer-term growth story.

Stocks have bounced back in recent days, and it’s possible the AI trade is back on thanks to some encouraging earnings results from Microsoft (MSFT) and Amazon (AMZN). This week may tell the tale as to whether the type of risk-on investing we saw in April and May is back in vogue. But today, we add a stock that has been thriving even without an AI assist – and should continue to do so. It’s a railroad-related name that Mike Cintolo just recommended to his Cabot Momentum Trader audience. And it’s been one of the best-performing stocks in the last few weeks thanks to a very promising earnings report.

Details inside.

Wall Street closed out another volatile week with a Thursday and Friday rally that papered over some real turbulence underneath the surface of the market. A closely divided Federal Reserve held rates steady on Wednesday — three officials actually voted for a hike — and stocks sold off hard on the news, with the Dow dropping more than 1,100 points. But the damage didn’t last: Microsoft (MSFT) and Amazon (AMZN) delivered earnings strong enough to convince traders the AI story still has legs, and the market clawed all the way back by Friday, even as Apple’s (AAPL) disappointing quarter and a surge in long-term bond yields kept things interesting. For the week, the S&P 500 and Dow each added roughly 1%, and the Nasdaq climbed about 1.6% — though Small Caps, which had been leading the market for weeks, essentially sat this rally out.

Wall Street closed out another volatile week with a Thursday and Friday rally that papered over some real turbulence underneath the surface of the market. A closely divided Federal Reserve held rates steady on Wednesday — three officials actually voted for a hike — and stocks sold off hard on the news, with the Dow dropping more than 1,100 points. But the damage didn’t last: Microsoft (MSFT) and Amazon (AMZN) delivered earnings strong enough to convince traders the AI story still has legs, and the market clawed all the way back by Friday, even as Apple’s (AAPL) disappointing quarter and a surge in long-term bond yields kept things interesting. For the week, the S&P 500 and Dow each added roughly 1%, and the Nasdaq climbed about 1.6% — though Small Caps, which had been leading the market for weeks, essentially sat this rally out.

It’s another new high! The S&P 500 closed last week at an all-time closing high amidst unbelievably strong earnings.

Despite high oil prices, corporate profits are booming. According to FactSet, second-quarter earnings growth for the average S&P 500 company is on pace to rise 50% over last year’s second quarter. It’s the highest earnings growth since 2021 and unprecedented outside of recessionary rebounds.

Barron’s recently published a thoughtful interview with Samantha Dart, the co-head of global commodities research at Goldman Sachs. I think it’s worth mentioning here since she touched on several of the themes that we’ve repeatedly discussed this year.

As an analyst who is heavily focused on the resources sector, Dart’s views on commodities will obviously carry a degree of professional bias. But a lot of what she said in the interview makes sense from both a current event and secular trend perspective.

Interest rates continue to edge up, and I’m closely watching 10-year Treasury bond yields. If they go from the current rate of 4.7% to the 5% level, stock markets will take a hit. This would also likely push mortgage rates way past 7%.

Explorer stocks had a good week. Microsoft (MSFT) shares were up 24.8% this week as its cloud services soar. AeroVironment Inc. (AVAV) shares jumped 18.2% in its first week as an Explorer stock. Coeur Mining (CDE) shares surged 19.3% this week ahead of today’s quarterly earnings and a weaker dollar.

It’s a new high! Last time the S&P hit a new high was June 1^st. For the next two months, the market bounced around en route to nowhere. What’s changed?

Technology has changed. It’s earnings season. And earnings have been spectacular this quarter. The average S&P 500 company earnings growth after most companies have reported is around 26%. That’s phenomenal for a quarter not following a recession. But earnings grew by over 20% last quarter. And investors are expecting it this time.

Lots of things are happening. But the market remains in the sideways funk it’s been in for the past two months.

The S&P is within less than 1% of the all-time high set on June 2. Stock prices are hanging tough. The market hasn’t been going up, but it’s not down either. It has spiked higher over the last week on better news in the technology sector. This could be a breakout. We’ll see.

I don’t normally discuss the market’s sentiment profile in depth, especially since sentiment is more a concern for short-term traders than for long-term investors. But I think the present case provides for an exception.

Now, to an extent, sentiment is a concern for even long-term-oriented turnaround investors like us. After all, we like to know when a particularly attractive company is so undervalued and overlooked that it merits our attention; hence, the sentiment angle. But what I’m referring to here are various bull/bear ratios and other indicators that concern broad market sentiment.

WHAT TO DO NOW: Remain cautious. The market finally saw a nice relief rally today, with the most beaten-down stocks bouncing, but our Cabot Tides remain neutral while our Aggression Index is negative. We sold the rest of our small stake in Marvell (MRVL) yesterday, leaving us with north of 60% in cash, though we’re flexible here—we could dip a toe back into a new name or two soon, but with our growth indicators still looking sour and so many stocks reporting earnings in the next week or two, we’ll stand pat tonight and look for evidence the buyers are taking control.

Stocks are cheap right now.

That sounds like an inaccurate statement, given the AI bloat and relentless run-up in semiconductor stocks through much of the first half of the year. But on a forward price-to-earnings ratio, the S&P 500 has dipped below 20 for the first time since early April. April, of course, marked the beginning of a historic two-month rally that has carried the indexes in what has otherwise been a muted year for stocks. Prior to this spring’s massive rally, the biggest rally since the start of 2025 came last spring … after the S&P 500 had again dipped below 20 on a forward P/E basis.

The market has felt a lot more volatile over the last week than the major indexes would suggest. Through 10:00 a.m. ET today, both the S&P 600 SmallCap Index and the S&P 500 are essentially flat since last Thursday’s close. But those relatively calm index-level returns mask some significant movement beneath the surface.

It’s wild and woolly out there with earnings, Iran, the Fed, and big tech. Any one of these factors could potentially move the market either way.

After falling near pre-war levels, oil prices spiked above $90 per barrel last week as Middle East hostilities intensified. Prices are down sharply so far this week as the bombings have halted for now. But it’s anybody’s guess how things will play out and affect the price of oil.

It’s not often that we discuss currencies in the Cabot Turnaround Letter, but given the persistent relative strength of the U.S. dollar right now, I think it’s imperative that we address it—mainly because of how it will likely impact our portfolio holdings going forward.

The top haven asset for the first half of 2026 wasn’t gold, U.S. Treasury bonds or the Japanese yen.

After spending much of the year leading the market higher, small caps have finally run into a little turbulence. Through midday today, the S&P 600 Index is down 1.8% from last Thursday’s close, roughly in line with the S&P 500’s 1.9% decline.

That said, it’s important to keep the recent pullback in perspective. Small caps remain the market’s clear leader in 2026, with the S&P 600 up 20.2% year to date versus an 8.1% gain for the S&P 500.

WHAT TO DO NOW: We’re making three moves in the Model Portfolio today, increasing our overall exposure a bit and positioning in stronger names. We’re going to cut our modest loss in Clear Secure (YOU) while also buying half-sized positions in both Hinge Health (HNGE) and Cloudflare (NET). Our cash position will still be around 50% after these moves, which gives us cushion should the sellers re-appear, though we’re looking to add more exposure (either through new names or averaging up in current names) should the market continue to improve.

National Energy (NESR) Crushes Expectations, Again

Sell Three Quarters of Avita Medical (RCEL)

Triple Flag (TFPM) & ATI (ATI) Report. Clear Secure (YOU) Moves to Sell

Envela (ELA) and FTAI Infrastructure (FIP) Deliver

Clear Secure (YOU), Primo Brands (PRMB) and Royalty Pharma (RPRX) Report

One of the usually successful dynamics I look for in insider analysis is insiders buying their own turnarounds.

RBC Bearings (RBC) Reports

Xometry (XMTR) and IDEAYA Biosciences (IDYA) Deliver Q2 Results

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 Momentum 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 Momentum Trader features.