This market is impressively resilient. It continues to forge higher even in the historically cranky post-summer environment.

Stocks could boom for the rest of the year. After all, the optimists have been right. And the longer-term prognosis is positive for stocks. However, the near-term direction is more precarious. There is still plenty of uncertainty swirling around with the market indexes perched at lofty valuations.

The tariff issues may be fading but they’re still out there. The Fed and the economy are also wild cards. Meanwhile, the S&P 500 currently sells at a price/earnings ratio of 28.8 times. That’s the highest valuation in the last 25 years. Anything can happen.

The current situation calls for a certain kind of stock that can thrive in almost any market environment. If the market takes off, it can participate. If the market goes flat, it can generate positive returns. And if the market turns south, it can yield superior relative returns.

In this issue, I highlight an existing portfolio position that is one of the very best midstream energy companies on the market. It pays a huge 6.9% yield, deals primarily with natural gas, sells at a cheap valuation, and has a massive growth spurt ahead as new projects come online.

The growing natural gas demand from utilities and exporters will provide an unprecedented runway for growth in the years ahead that historical performance doesn’t reflect.

The market had another week of heavy sector and index rotation nearly every day, as hot money seemingly chased the new fad/theme based on every economic data point and earnings reaction. Yet despite the day-to-day market wiggles, by week’s end, not much ground was gained or lost as the S&P 500 gained 0.3%, the Dow lost 0.3% and the Nasdaq rose by 1.1%.

After a tough start following the long weekend, the market did find some support by week’s end, but overall, the situation remains the same: The evidence is more positive than not, but when looking at individual stocks, there are many areas that are struggling, while on a day-to-day basis, money continues to thrash around. To be clear, that action doesn’t predict doom—this is a bull market after all—but it does mean that making and holding onto money in this environment remains a challenge. We’ll stick with a Level 7 on the Market Monitor.

Interestingly, this week’s list does have a bit more of a growth flavor, though it’s not all AI, as other areas are seeing a bit of leadership emerge. Our Top Pick has been a clear mid-cap leader of the advance and is now exhaling to its 10-week line.

So far, so good in September, as there’s no market correction in sight. The increasing likelihood of a Fed rate cut later this month is helping to counteract the negative effects of seasonality during the traditional “spooky season.” Let’s hope the Fed doesn’t disappoint when they convene next week. In the meantime, the investing waters are warm, so let’s take a bigger swing this week by adding one of the world’s greatest and highest-profile growth companies to our portfolio. It’s a recent recommendation from Carl Delfeld to his Cabot Explorer audience. And it’s a former market darling that, after a rough couple years, is starting to gain traction with investors again.

Details inside.

The market had another week of heavy sector and index rotation nearly every day, as hot money seemingly is chasing the new fad/theme based on every economic data point and earnings reaction. Yet despite the day-to-day market wiggles, by week’s end not much ground was made or lost as the S&P 500 gained 0.3%, the Dow lost 0.3% and the Nasdaq rose by 1.1%.

The market had another week of heavy sector and index rotation nearly every day, as hot money seemingly is chasing the new fad/theme based on every economic data point and earnings reaction. Yet despite the day-to-day market wiggles, by week’s end not much ground was made or lost as the S&P 500 gained 0.3%, the Dow lost 0.3% and the Nasdaq rose by 1.1%.

The bull market is alive and well, but the growth stock environment remains tricky at best, with more names either testing or cracking intermediate-term support during the past couple of weeks. Eventually, there will be another run in growth, possibly soon given the many stocks that have built launching pads during the past two-plus months; we do have an expanding watch list of solid setups. But for now, we’re playing things cautiously, trying to give our positions a chance but also holding a good chunk of cash until the meat-grinder environment shifts.

Rumors of the global economy’s imminent demise have been greatly exaggerated – at least so far. Indeed, the IMF estimates that worldwide GDP will expand by more than 3% both this year and next, which is in line with the normal GDP growth rate since the Great Recession. And yet, certain stocks are being treated like it’s 2009 out there. That includes this month’s addition to our Growth & Income Portfolio. It’s a big-cap, big-name company whose shares are nearly 30% off their highs, but the firm is on track for its best year in terms of sales and earnings outside of a Covid-era anomaly. It’s a company that flourishes when the global economy is healthy. And the stock is on sale, having not fully recovered from the spring tariff worries.

Details inside.

Today we’ll take a half-sized position in a small-cap company that’s like the Amazon of manufacturing. Its marketplace is revolutionizing this outdated industry and bringing it into the digital age.

Despite several years of depressed manufacturing in the U.S., the company is growing. That’s a testament to its platform. And there’s also a potential growth kicker … Trump’s tariff policies and desire to kick off an onshoring boom.

All the details are inside the September Issue of Cabot Small Cap Confidential.

Despite two big potential market-moving events (NVDA earnings and PCE inflation data), the S&P 500, Dow and Nasdaq all finished the week mostly unchanged to marginally lower, while the Russell 2000 (IWM) rose marginally.

For the past two months, the market has been positive by most top-down indicators, but it’s gotten a lot trickier as time has gone on, with many growth areas cracking intermediate-term support, with repeated bouts of rotation and with upward progress slowing down. The good news is that even after today’s broad selling, the intermediate-term trend remains pointed up and many Top Ten stocks are holding their own, but just going with what we’ve seen, it’s getting tougher to make (and keep) much money. Right here, we’ll keep our Market Monitor at a level 7, but we think holding some cash and taking some profits on the way up remains a good strategy.

Despite the rotation, we did see some earnings winners last week among growth stocks, and this week’s list has a few alongside names from other areas of the market. Our Top Pick is a smaller name that broke out powerfully last month and has a solid story—shares are a bit thinly traded, so start small and aim for dips.

The market’s traditional “spooky season” is here, and stocks are dutifully selling off as they normally do the first week of September. The selling could last a few days or a few weeks. But on the other side of it, there will be big buying opportunities. Until then, let’s try and limit the damage, which we do in today’s issue by selling off one underperformer that’s taken a beating after an underwhelming earnings report and buying a deep value consumer staple that’s too oversold. It’s a stock Clif Droke recommended to his Cabot Turnaround Letter audience last week, and we follow suit here today.

Details inside.

This was a good week for Explorer stocks with Agnico Eagle Mines (AEM) up 6.2%, Alibaba (BABA) up 5.9%, Banco Santander (SAN) shares rising 6.2%, and BYD (BYDDY) shares surging 8.1% this week.

It was a painful process with America’s most valuable ally, but a trade/investment deal was finally reached with Japan, which buoyed markets. Frameworks for deals with the Philippines and Indonesia were also agreed to, sending the S&P 500 to a new high. The market seems mostly concerned with China. The reason is that annual S&P 500 revenue from China is $1.2 trillion, roughly four times the U.S. trade deficit with China.

GameStop (GME) became a household name to investors long after it was a household name to young gamers who liked to play Call of Duty, Grand Theft Auto and EA Sports video games. In January 2021, the struggling and widely shorted stock experienced an almost unprecedented resurgence thanks to a Reddit message board-fueled short squeeze orchestrated by someone named Keith Gill, under his more public alias Roaring Kitty.

The renewed tariff uncertainty is affecting the market. Stocks are going up slower now.

It looks like a market that wants to go higher. The tariff stuff is just holding it back for now, but just barely. The S&P 500 still made a new high on Monday. And earnings season is starting to heat up. Later this week and next week, several big tech companies report. Good news could ignite a market rally despite anything going on in the world besides artificial intelligence.

Just when it looked like happy days were here again, volatility has reared its ugly head.

Granted, this week’s volatility spike was muted by historical standards, but relative to the ultra-low volatility of the last few weeks, it was enough to give pause for the bulls.

WHAT TO DO NOW: We remain overall bullish, but fewer growth stocks and sectors are making headway of late, and with earnings season revving up, we’re becoming more selective on the buy side while tightening stops on some laggards. In the Model Portfolio tonight, we’re going to sell our stake in Take-Two Interactive (TTWO), start a half-sized position in Life360 (LIF) and place Uber (UBER) back on Hold. Our cash position will remain around 32%.

After hitting multi-month highs last Thursday, the S&P 600 SmallCap Index has since pulled back modestly.

Given all the talk of tariffs and Trump firing Powell, and the beginning of earnings season (so far so good), I’d say a modest pullback is a win.

Summer stasis has taken hold of the market as it often does this time of year, with the S&P 500 virtually unchanged (+0.3%) since the calendar flipped to July. Considering stocks entered the month at all-time highs despite a slew of existential threats (tariffs, high interest rates, two major overseas wars, etc.), holding the line counts as a victory.

Will it last? I’m guessing we’ll get a pullback of some kind – probably at least 5% – sometime in the next couple months, perhaps not until just after Labor Day, when institutional investors and hedge funder types return from their summer getaways in the Hamptons and Martha’s Vineyard and start selling out of their long-neglected weakest positions (a major reason why September is by far the worst month for stocks, historically).

The market is stuck in the mud. But that might be a good thing, considering that tariff uncertainty is back. This time, tariff fears are just keeping stocks from going higher and not crushing the market, so far.


The administration is currently threatening to enforce 30% tariffs on Mexico and the European Union (EU) starting on August 1. However, investors perceive a strong chance that President Trump will either back off the threat or make deals.

Tariff uncertainty is back. But this time it’s just keeping stocks from going higher, not dragging the market lower.

The administration is currently threatening to enforce 30% tariffs on Mexico and the European Union (EU) starting on August 1. However, investors perceive a strong chance that President Trump will either back off the threat or make deals. Meanwhile, the S&P 500 continues to hover right near the high.

In today’s note, we discuss pertinent developments for some of the stocks in the portfolio, including Alcoa (AA), Centuri Holdings (CTRI), Dollar Tree (DLTR), GE Aerospace (GE), Intel (INTC) and Paramount Global (PARA).

Note: Due to a technical issue, publication of your Cabot Cannabis Investor update has been delayed by one day. We apologize for any inconvenience; future updates and issues will be delivered per the normal publishing schedule.

If you have been steadily averaging down in cannabis stocks during the sector’s dark days all year, well done.

You are finally being rewarded.

Action in the small-cap indices continues to be very encouraging.

Since the beginning of June, both the S&P 600 SmallCap Index and Russell 2000 have outperformed the S&P 500 and the Nasdaq.

Right on the heels of yesterday’s Issue featuring new addition Byrna Technologies (BYRN) management released preliminary Q2 revenue. The press release came just after the closing bell yesterday.

Sell a Quarter Position in Pan American Silver (PAAS)

Hannan management was out with two updates this morning.

Sell a Quarter Position in Dollar Tree (DLTR)

Today, a whopping eight Profit Booster positions will expire. Most are “slam-dunk,” full-profit trades, while others will go down to the wire.

The big takeaway, before we dive in, is we are going to let the situation play itself out, and come Monday/Tuesday of next week we will revisit our profits, as well as how we will manage the remaining positions.

WHAT TO DO NOW: The market remains in good shape, but leadership is still developing, with many resilient stocks getting hit while buying moves elsewhere. Today we’re cutting bait with our small position in Penumbra (PEN), which is slicing through support, and replacing it with Rubrik (RBRK), which looks like a new leader in the strong cybersecurity group. Details below.

WHAT TO DO NOW: The news this past weekend that the U.S. and China have slashed tariffs sent the market soaring yesterday. Of course, there are still headwinds out there (Cabot Trend Lines not yet positive, relatively few new highs among growth stocks), and we wouldn’t be surprised to see a pullback now that the “good” news is out.

The broad market indices are up nicely today on news of significant de-escalation of U.S.-China trade tensions following weekend talks in Switzerland.

Earnings Roundup

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.