Issues
The market has bounced off of last week’s low, and given the number of secondary extremes seen during that selling panic, we think the odds are good that low will hold for a while--if not longer. That said, bottoms are usually a process, not an event. so there’s a good chance the market is now building a bottom area, which will likely prove hectic on a day-to-day basis (as we’ve seen this week) but allow the leaders of the next advance to start separating from the pack.
That’s a first step, and we’re busy building our watch list--but when you look at the primary evidence, all of it remains negative, as the trends of most everything are still down. Thus, while we won’t rule out a small new position or two if the market continues to stabilize, we’re remaining very close to shore and keeping our eyes on the big prize -- hopping on some new leaders early in the next sustained uptrend.
That’s a first step, and we’re busy building our watch list--but when you look at the primary evidence, all of it remains negative, as the trends of most everything are still down. Thus, while we won’t rule out a small new position or two if the market continues to stabilize, we’re remaining very close to shore and keeping our eyes on the big prize -- hopping on some new leaders early in the next sustained uptrend.
Despite the crazy market, there are still stocks out there that are acting extremely well.
This month’s Issue covers five standout performers in the sports betting, gold mining, natural foods, insurance and pharma markets.
This month’s Issue covers five standout performers in the sports betting, gold mining, natural foods, insurance and pharma markets.
The previous weekend’s worry about a crash last Monday proved to be incorrect as the market had some early-week struggles, but those were, at least in the short term, washed away on Wednesday as the indexes exploded higher. By week’s end, the S&P 500 had rallied 5.7%, the Dow had gained 5%, and the Nasdaq had rebounded by 7.3%.
We think the odds favor the market has found a short-term low (last Monday) amid lots of panic selling, and it’s probably starting to repair the damage from the prior few weeks … but that process is likely to take some time, as the market deals with the tariff and economic uncertainty and as new potential leaders try to round out launching pads. Of course, how the market acts from here will be key, so we’re remaining flexible, but we always advise going with what’s in front of us, and right now the odds favor more patience will likely be needed before a sustained advance can develop. We’ll leave our Market Monitor at a level 3.
As the correction has gone on, it’s become easier to spot the names that are resisting the decline. Our Top Pick is a newer name to most and it’s shown accelerating accumulation the past three weeks.
As the correction has gone on, it’s become easier to spot the names that are resisting the decline. Our Top Pick is a newer name to most and it’s shown accelerating accumulation the past three weeks.
Tariffs aren’t gone, but the 90-day pause has served as a tourniquet for a market that was bleeding out. Who knows what this week will bring after total extremes the first two weeks of April. But for now, relative calm has been restored. So today we capitalize on it by adding a growth stock with momentum via Mike Cintolo’s Cabot Top Ten Trader advisory.
Details inside.
Details inside.
The previous weekend’s worry about a crash last Monday proved to be incorrect as the market had some early-week struggles, but those were at least in the short term washed away on Wednesday as the indexes exploded higher. By week’s end the S&P 500 had rallied 5.7%, the Dow had gained 5%, and the Nasdaq had rebounded by 7.3%.
The previous weekend’s worry about a crash last Monday proved to be incorrect as the market had some early-week struggles, but those were at least in the short term washed away on Wednesday as the indexes exploded higher. By week’s end the S&P 500 had rallied 5.7%, the Dow had gained 5%, and the Nasdaq had rebounded by 7.3%.
On the surface, the economic numbers still look pretty good. Although unemployment edged up to 4.2% from 4.1% last month, the number is still low. Jobless claims are down; jobs added, up. Manufacturing looks good, but housing continues to be weak, due to sticky prices and high interest rates.
But the good economic news is on pause, due to tariffs. Already, we’ve seen the 30-year mortgage rate rise to 6.85%, and economists are back to predicting a recession, based on rising business and consumer costs related to the tariffs—which are not yet reflected in the economic stats.
But the good economic news is on pause, due to tariffs. Already, we’ve seen the 30-year mortgage rate rise to 6.85%, and economists are back to predicting a recession, based on rising business and consumer costs related to the tariffs—which are not yet reflected in the economic stats.
This has been a week for the history books with record-breaking volatility and uncertainty.
My advice? Stay on the conservative side, leaning to blue-chip dominating stocks not tied to U.S.-China trade. Buy more gold. Since early 2022, gold has strongly outperformed inflation-protected Treasurys, so gold is now the world’s preferred safe-haven asset by many investors.
The President Trump reversal yesterday as Treasury bond market yields jumped and the U.S. dollar fell sent markets soaring. The U.S. raised China tariffs and China responded in kind. Unfortunately, both sides remain on a collision course.
My advice? Stay on the conservative side, leaning to blue-chip dominating stocks not tied to U.S.-China trade. Buy more gold. Since early 2022, gold has strongly outperformed inflation-protected Treasurys, so gold is now the world’s preferred safe-haven asset by many investors.
The President Trump reversal yesterday as Treasury bond market yields jumped and the U.S. dollar fell sent markets soaring. The U.S. raised China tariffs and China responded in kind. Unfortunately, both sides remain on a collision course.
The S&P crashed more than 5% on consecutive days last week for the first time since the onset of the pandemic. The index came within a whisker of a bear market, down 20% from the high on a closing basis.
It’s easy to get spooked out of the market these days. Few people believe the market has hit bottom when it does. Unheeded warnings play over in your mind as Judgement Day seems to have arrived. Stocks were overvalued. The trade war will cause a global recession. Excesses of the last several decades are being called. It’s time to get out of the market and save yourself.
Markets are emotionally driven in the short term. Fear and greed tend to be the dominant forces. But over time, emotions take a back seat to money and profits. When the market tanks, our emotions tell us to run for the hills. But history tells us it’s the best time to invest.
There are some truly stellar stocks in the portfolio that have generated returns comparable to the most successful stocks on the market. The problem is that these stocks are rarely cheap. But the recent market has put these phenomenal investments back within reach.
The recent panic has provided a rare entry point. Even if prices fall further before they rise, these stocks can easily make up for lost time when they move higher again. In this issue, I highlight two of the best stocks in the market to own at valuations not seen in years.
It’s easy to get spooked out of the market these days. Few people believe the market has hit bottom when it does. Unheeded warnings play over in your mind as Judgement Day seems to have arrived. Stocks were overvalued. The trade war will cause a global recession. Excesses of the last several decades are being called. It’s time to get out of the market and save yourself.
Markets are emotionally driven in the short term. Fear and greed tend to be the dominant forces. But over time, emotions take a back seat to money and profits. When the market tanks, our emotions tell us to run for the hills. But history tells us it’s the best time to invest.
There are some truly stellar stocks in the portfolio that have generated returns comparable to the most successful stocks on the market. The problem is that these stocks are rarely cheap. But the recent market has put these phenomenal investments back within reach.
The recent panic has provided a rare entry point. Even if prices fall further before they rise, these stocks can easily make up for lost time when they move higher again. In this issue, I highlight two of the best stocks in the market to own at valuations not seen in years.
A quick note: we have several stocks that are near our stops, or broke below them last week as the market quickly fell 10% following the tariff announcements. For now, I am going to give these trades a bit more time, though if conditions worsen again, we will be exiting these trades very quickly.
It was a historic week for the market, and not for any positive reasons as the S&P 500 fell 9.1%, the Dow lost 7.9% and the Nasdaq declined by 10%. Perhaps the weekend gave traders a bit of time to better digest the tariff news and the market will stabilize this week after an up-and-down Monday (futures are up big on Tuesday, but that can change quickly in these tariff times). It’s also possible that the uncertainty is just too much for traders to digest.
It was a historic week for the market, and not for any positive reasons as the S&P 500 fell 9.1%, the Dow lost 7.9% and the Nasdaq declined by 10%. Perhaps the weekend gave traders a bit of time to better digest the tariff news and the market will stabilize this week after an up-and-down Monday (futures are up big on Tuesday, but that can change quickly in these tariff times). It’s also possible that the uncertainty is just too much for traders to digest.
It doesn’t take a proprietary timing system to know the trend is down—we’ve been cautious and defensive since late February when the market and leaders first went over the falls, and we remain so today. That said, we’re also students of the market, and there’s no question we’re in the midst of an outright panic, with some truly extreme readings (north of 1,000 new lows on the NYSE on Friday and today; 95% of the S&P 1500 below their 50-day lines, etc.) that have a history of showing up near some sort of market low. That’s not a reason to turn bullish—again, the trends are clearly down—but it’s best to keep your head up and stay alert should some actual “good news” hit the wires. We’ll leave our Market Monitor at a level 3.
This week’s list is chock-full of defensive growth stocks—firms that have steadier growth stories that shouldn’t be affected by the tariff or economic headwinds. Our Top Pick is showing great relative strength and has a huge runway of growth ahead.
This week’s list is chock-full of defensive growth stocks—firms that have steadier growth stories that shouldn’t be affected by the tariff or economic headwinds. Our Top Pick is showing great relative strength and has a huge runway of growth ahead.
Updates
In today’s note, we discuss developments and institutional ratings upgrades for some of the stocks in the portfolio, including Fidelity National Information (FIS), Paramount Global (PARA) and Starbucks (SBUX).
The famed “Santa Claus Rally” is underway and, assuming a successful conclusion, portends a bullish early part of the coming New Year.
The famed “Santa Claus Rally” is underway and, assuming a successful conclusion, portends a bullish early part of the coming New Year.
It was a better year for value stocks, as the Vanguard Value Index Fund (VTV) is up 14.6% year to date with just a few days still to go in 2024. Barring a complete implosion this week, it will be the best year for the VTV since 2021 and the third best in the last decade. That’s good … but the last decade is quite the grim comparison.
It’s a busy and short Christmas week and like many of you, I was doing last-minute shopping and preparing to visit family.
Therefore, this is a brief update and instead of the usual stock-by-stock update, I can summarize as follows.
Therefore, this is a brief update and instead of the usual stock-by-stock update, I can summarize as follows.
In today’s note, we discuss developments and institutional ratings upgrades for some of the stocks in the portfolio, including Agnico-Eagle Mines (AEM), Atlassian (TEAM), GE Aerospace (GE), SPDR S&P Retail ETF (XRT) and Starbucks (SBUX).
First and foremost, all of us here at Cabot wish you a very Merry Christmas and a happy holiday season. Just a heads up that we’ll be publishing our last issue of Growth Investor this year next Thursday (December 26).
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WHAT TO DO NOW: Remain close to shore. Given the huge run, elevated sentiment and some cracks in growth stocks, we pared back fairly aggressively a couple of weeks ago, coming into this week with 37% in cash. And today we’re paring back further as the under-the-hood selling has come to the surface this week—we’ll take the rest of our profit in Cava (CAVA) and cut our loss in ProShares Russell 2000 Fund (UWM), which will leave us with around half in cash. Details below.
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WHAT TO DO NOW: Remain close to shore. Given the huge run, elevated sentiment and some cracks in growth stocks, we pared back fairly aggressively a couple of weeks ago, coming into this week with 37% in cash. And today we’re paring back further as the under-the-hood selling has come to the surface this week—we’ll take the rest of our profit in Cava (CAVA) and cut our loss in ProShares Russell 2000 Fund (UWM), which will leave us with around half in cash. Details below.
Note: Due to the Christmas holiday, there will be no Cabot Small-Cap Confidential update next week. Happy holidays!
In last week’s update I spoke about the potential for a market retreat early in 2025 given that investors are sitting on sizeable paper profits, and selling after December 31 would allow them to postpone capital gains taxes.
My projection may have been off by a week and a half.
In last week’s update I spoke about the potential for a market retreat early in 2025 given that investors are sitting on sizeable paper profits, and selling after December 31 would allow them to postpone capital gains taxes.
My projection may have been off by a week and a half.
The Dow is in a tailspin.
After Wednesday’s Fed-ignited selloff, the 118-year-old index has now fallen for 10 consecutive days – its longest string of down days since 1974. Prior to yesterday, the index hadn’t fallen much during the first nine days of this losing streak, down just 3.47%; but yesterday’s 2.58% decline stretched those losses to an even 6%. So what once was a modest pullback is now hurtling toward a correction.
After Wednesday’s Fed-ignited selloff, the 118-year-old index has now fallen for 10 consecutive days – its longest string of down days since 1974. Prior to yesterday, the index hadn’t fallen much during the first nine days of this losing streak, down just 3.47%; but yesterday’s 2.58% decline stretched those losses to an even 6%. So what once was a modest pullback is now hurtling toward a correction.
It looks like the election euphoria has run out of gas. The market has digested the election and is now back to business as usual.
The Dow Jones Industrial Average has lost ground for nine consecutive sessions. Most of the S&P 500 sectors have been down over the past month. Of course, the S&P is still within a whisker of the high. It hasn’t pulled back. But it hasn’t gone up in a while either.
The Dow Jones Industrial Average has lost ground for nine consecutive sessions. Most of the S&P 500 sectors have been down over the past month. Of course, the S&P is still within a whisker of the high. It hasn’t pulled back. But it hasn’t gone up in a while either.
Quick Note: Due to the Christmas holiday, you will receive the next Cabot Turnaround Letter issue a week early, on Wednesday, December 18, 2024.
In today’s note, we discuss a number of positive developments and bullish outlooks for several of our portfolio positions, including American Airlines (AAL), SLB Ltd. (SLB), the SPDR S&P Retail ETF (XRT) and Super Hi International Holding (HDL).
In today’s note, we discuss a number of positive developments and bullish outlooks for several of our portfolio positions, including American Airlines (AAL), SLB Ltd. (SLB), the SPDR S&P Retail ETF (XRT) and Super Hi International Holding (HDL).
The big macro news of the week wasn’t specific to small caps, but it sure helped in stopping a sliding small-cap index at its 25-day moving average line yesterday.
I’m referring to the CPI print for November, which was released at 8:30 AM ET yesterday and gave most of the major market indices a boost, with the exception of the Dow.
I’m referring to the CPI print for November, which was released at 8:30 AM ET yesterday and gave most of the major market indices a boost, with the exception of the Dow.
I recently noticed a few popular stocks such as MicroStrategy (MSTR) offering exposure to leveraged Bitcoin which to me seems like excessive risk and a sign of potential trouble.
This is like pouring gasoline on a roaring fire. It reminds me of a quote from Edward Chancellor’s book The Price of Time, which offered this gem:
“……as a rule, panics do not destroy capital; they merely reveal the extent to which it has previously been destroyed by [the taking on of excessive leverage in good times].”
This is like pouring gasoline on a roaring fire. It reminds me of a quote from Edward Chancellor’s book The Price of Time, which offered this gem:
“……as a rule, panics do not destroy capital; they merely reveal the extent to which it has previously been destroyed by [the taking on of excessive leverage in good times].”
The market is getting a little frothy.
The S&P 500 is up 5.5% in the five weeks since election day, though that’s a historically normal bump following an election. The bull/bear ratio topped 3.9 last week – just shy of the 4.0 “danger zone” that often precedes pullbacks, though it’s not the first time it’s been this high in recent months. And Bitcoin, an asset that thrives in bull markets and typically tops right before a major pullback, just crossed the $100,000 threshold for the first time and has more than doubled in the last three months.
The S&P 500 is up 5.5% in the five weeks since election day, though that’s a historically normal bump following an election. The bull/bear ratio topped 3.9 last week – just shy of the 4.0 “danger zone” that often precedes pullbacks, though it’s not the first time it’s been this high in recent months. And Bitcoin, an asset that thrives in bull markets and typically tops right before a major pullback, just crossed the $100,000 threshold for the first time and has more than doubled in the last three months.
Alerts
Yesterday we learned that the Drug Enforcement Agency (DEA) has decided to hold an administrative law judge (ALJ) hearing on rescheduling cannabis. It is set for December 2.
The decision dashes all hopes of rescheduling before the election, sending cannabis stocks much lower.
The decision dashes all hopes of rescheduling before the election, sending cannabis stocks much lower.
Artivion (AORT) Delivers Q2 Beat; Sell Remaining Half of EverQuote (EVER)
Quick Takes: Vertex (VERX), Rivian (RIVN), Apple (AAPL) and Modine (MOD)
Portfolios
An updated portfolio for Cabot Options Institute – Quant Trader.
An updated portfolio for Cabot Options Institute – Fundamentals Portfolio.
An updated portfolio for Cabot Options Institute – Fundamentals Portfolio.
An updated portfolio for Cabot Options Institute – Quant Trader.
An updated portfolio for Cabot Options Institute – Earnings Trader.
An updated portfolio for Cabot Options Institute – Fundamentals Portfolio.
An updated portfolio for Cabot Options Institute – Earnings Trader.
An updated portfolio for Cabot Options Institute – Income Trader.
An updated portfolio for Cabot Options Institute – Quant Trader.
An updated portfolio for Cabot Options Institute – Earnings Trader.
An updated portfolio for Cabot Options Institute – Income Trader.
An updated portfolio for Cabot Options Institute – Quant Trader.
Strategy
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.