Issues
There’s no question that, from a top-down perspective, the evidence has continued to improve over the past few weeks, with today seeing the market surge as the U.S. and China slashed tariffs on each other. That said, even with today’s run in the indexes, leadership is hard to spot—many names that approach old highs are rejected, with the buying focused on beaten-down names for the most part. Don’t get us wrong: We’re encouraged and extending our line, but we’re doing so slowly until some real leadership develops. Our Market Monitor stands at a level 6.
This week’s list has a mix of names from different sectors and with some at different areas on their charts. Our Top Pick staged a classic gap to new highs after earnings last week. We’re fine starting small here or on dips.
This week’s list has a mix of names from different sectors and with some at different areas on their charts. Our Top Pick staged a classic gap to new highs after earnings last week. We’re fine starting small here or on dips.
Tariff fears have eased, or are at least on extended hold, and the market feels jubilant for the first time in months. Is it the start of an extended rally that could get us back to new highs? Probably too early to tell. But it’s been a boon for our portfolio, led by Tesla (TSLA), which is up 14% in the last week. Today we add an undervalued travel stock to the portfolio that’s a household name that got hammered during Covid but has come out the other side with flying colors – and yet shares are still playing catch-up. It’s a stock I recommended to my Cabot Value Investor audience earlier this month.
Details inside.
Details inside.
The Federal Reserve event came and passed without much volatility last week as stocks were mostly quiet. For the week the S&P 500 fell 0.5%, the Dow lost 0.2%, and the Nasdaq declined by 0.3%
The Federal Reserve event came and passed without much volatility last week as stocks were mostly quiet. For the week the S&P 500 fell 0.5%, the Dow lost 0.2%, and the Nasdaq declined by 0.3%
While the volatility continues, the markets made some upward progress since our last issue, with all the broad indexes rising—although both Growth and Value stocks are still negative, year to date.
Sector-wise, all sectors— except for Energy (-6.02%), Technology (-7.34%) and Consumer Discretionary (-11.17%)—are in the black, led by Utilities (+5.10%), Consumer Staples (+3.66%), and Real Estate (+2.98%).
The Federal Reserve meets this week, but most economists expect no change in interest rates (for now). We’ll see how inflation is faring next week, which should give us some insight as to future Fed action and whether or not we can anticipate any rate relief this summer.
Sector-wise, all sectors— except for Energy (-6.02%), Technology (-7.34%) and Consumer Discretionary (-11.17%)—are in the black, led by Utilities (+5.10%), Consumer Staples (+3.66%), and Real Estate (+2.98%).
The Federal Reserve meets this week, but most economists expect no change in interest rates (for now). We’ll see how inflation is faring next week, which should give us some insight as to future Fed action and whether or not we can anticipate any rate relief this summer.
Japan is back as a place to invest some capital for a number of reasons.
Japanese retail investors have cash positions above 50% versus about 15% for Americans.
Japanese corporates have long been criticized for hoarding cash on their balance sheets and low capital expenditures due to cross-shareholdings with sister companies. But over the past 12 months, share buybacks are on track to increase 96% year-over-year, and the reduction in cross-shareholdings has increased by 75% in the last fiscal year.
All this leads us to consider today a second Japanese stock as an Explorer recommendation.
Japanese retail investors have cash positions above 50% versus about 15% for Americans.
Japanese corporates have long been criticized for hoarding cash on their balance sheets and low capital expenditures due to cross-shareholdings with sister companies. But over the past 12 months, share buybacks are on track to increase 96% year-over-year, and the reduction in cross-shareholdings has increased by 75% in the last fiscal year.
All this leads us to consider today a second Japanese stock as an Explorer recommendation.
The market continued its strong rebound from its early-April lows as the indexes rose all five days last week. The S&P 500 gained 2.9%, the Dow rallied 3% and the Nasdaq advanced by 3.4%.
Given where we stood a month ago, you couldn’t have asked for much better action from the market—now it’s a matter of following through: The intermediate-term trend is on the fence, and many individual stocks have been (possibly temporarily) rejected near obvious resistance levels. Thus, if we see further strength this week, turning the trend up for many indexes and allowing some fresh leaders to take off, we’ll look to extend our line—but if the sellers dig in, more patience will be needed. Right now, we’re sticking with our Market Monitor at a level 5, and we’ll adjust if need be in the days ahead.
This week’s list has a lot of strong names, including a few that have recently reacted well to earnings. Our Top Pick is one of the stronger names in one of the strongest growth areas (cybersecurity). We’re OK starting small here.
This week’s list has a lot of strong names, including a few that have recently reacted well to earnings. Our Top Pick is one of the stronger names in one of the strongest growth areas (cybersecurity). We’re OK starting small here.
Stocks are in a much better place than they were a couple weeks ago. That’s what nine consecutive days of gains will do, as earnings season and a cooling of tariff rhetoric have combined to inject some positivity into what was a doom-and-gloom market environment as recently as mid-April. We surely haven’t heard the last about tariffs, and this week’s Fed meeting can always reopen some old wounds. But we can only go with the evidence in front of us, and right now it’s pointing upward. With that in mind, today we add a growth stock recently recommended by Mike Cintolo in his Cabot Top Ten Trader advisory.
Details inside.
Details inside.
The market continued its strong rebound from its early April lows as the indexes rose all five days last week. The S&P 500 gained 2.9%, the Dow rallied 3% and the Nasdaq advanced by 3.4%.
The market continued its strong rebound from its early April lows as the indexes rose all five days last week. The S&P 500 gained 2.9%, the Dow rallied 3% and the Nasdaq advanced by 3.4%.
We’re putting our mining helmets back on today and taking a position in a speculative micro-cap gold and copper exploration company that’s just about to get the drills turning.
This type of stock is intended to scratch the speculator’s itch. It’s not suitable for investing money that you need. That said, if things go well – and I think there’s a good chance they will – the returns could be spectacular.
But please, go in with eyes wide open. This is supposed to be fun.
This type of stock is intended to scratch the speculator’s itch. It’s not suitable for investing money that you need. That said, if things go well – and I think there’s a good chance they will – the returns could be spectacular.
But please, go in with eyes wide open. This is supposed to be fun.
Updates
Here are my top eight predictions for the cannabis sector for 2025.
1. Cannabis rescheduling goes through
Promises made, promises kept. Trump loves a “deep state” challenge. Put these two together, and it seems probable that rescheduling could happen in 2025.
1. Cannabis rescheduling goes through
Promises made, promises kept. Trump loves a “deep state” challenge. Put these two together, and it seems probable that rescheduling could happen in 2025.
The market sobered up in December after a big post-election rally in November. The S&P fell 2.5% in the last month of the year. But January has started out with stocks up 2.2% already.
Technology is driving the market higher. The sector is taking off after Nvidia (NVDA) issued bullish statements about demand for its artificial intelligence chips. AI is a huge growth catalyst for the market’s largest sector and has proven it can drive the indexes higher all by itself. In fact, technology has been the primary catalyst for the S&P over most of this bull market. But things might be changing.
Technology is driving the market higher. The sector is taking off after Nvidia (NVDA) issued bullish statements about demand for its artificial intelligence chips. AI is a huge growth catalyst for the market’s largest sector and has proven it can drive the indexes higher all by itself. In fact, technology has been the primary catalyst for the S&P over most of this bull market. But things might be changing.
In today’s note, we discuss pertinent developments and institutional ratings changes for some of the stocks in the portfolio, including Alcoa (AA), Duluth Holdings (DLTH), SLB Ltd. (SLB) and the SPDR S&P Retail ETF (XRT).
The fabled “Santa Claus Rally” failed to appear this season, prompting concern for the early part of 2025 among many investors. We discuss what it entails for our investment approach.
The fabled “Santa Claus Rally” failed to appear this season, prompting concern for the early part of 2025 among many investors. We discuss what it entails for our investment approach.
WHAT TO DO NOW: Happy New Year! December’s weak action has created some decent setups and taken a chunk out of sentiment, both of which are good to see—but the underlying evidence hasn’t changed, with our Cabot Tides negative and few names heading higher. We came into the year with around half the portfolio in cash, and we’re remaining cautious today—our only change is placing Flutter (FLUT) on Hold.
The year 2024 was another great year for stocks. The S&P was up over 23% for the year. It’s a nice addition to the 26% return last year. It is the first back-to-back 20%-plus return years for the index since 1998.
But the year ended on a sour note. Usually, good years in the market finish strong. But not this time. True, the S&P 500 was down less than 2% in December. But that’s only because the big tech companies are still doing okay. The rest of the market had a terrible month.
But the year ended on a sour note. Usually, good years in the market finish strong. But not this time. True, the S&P 500 was down less than 2% in December. But that’s only because the big tech companies are still doing okay. The rest of the market had a terrible month.
It was a rare rough December for stocks.
Sure, the S&P 500 and the Nasdaq were down just over 2%, propped up as usual by enduring strength in the Magnificent Seven. But the losses were far greater in almost every other corner of the market, with 10 of the 11 major sectors declining, small caps tumbling nearly 8%, value stocks off by more than 6%, and energy and materials stocks retreating by double digits.
Sure, the S&P 500 and the Nasdaq were down just over 2%, propped up as usual by enduring strength in the Magnificent Seven. But the losses were far greater in almost every other corner of the market, with 10 of the 11 major sectors declining, small caps tumbling nearly 8%, value stocks off by more than 6%, and energy and materials stocks retreating by double digits.
And we were having such a good time. Stocks were killing it in November after the election. But December turned out to be a real stinker.
Sure, the S&P 500 is only down about 1% over the past month. But that’s only because the big tech companies are still doing okay. The rest of the market is getting slapped around. Eight of the eleven S&P sectors are down in December. And many individual stocks are having a terrible month.
Sure, the S&P 500 is only down about 1% over the past month. But that’s only because the big tech companies are still doing okay. The rest of the market is getting slapped around. Eight of the eleven S&P sectors are down in December. And many individual stocks are having a terrible month.
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.
Alerts
WHAT TO DO NOW: Remain cautious. Due to the poor action in growth stocks in recent weeks, we’ve been steadily paring back and came into today with a 61% cash position—just as the market went over the falls this morning with some panic selling. Near term, it’s possible the market will bounce, and indeed most stocks are well off their lows today, so we’re going to hold onto our remaining positions for now—though we’ll be in touch if we make some changes later this week.
Shares of new addition FTAI Infrastructure (FIP) are trading down modestly today but outperforming the market after delivering Q2 results at the crack of dawn this morning (not after the bell yesterday, as they were supposed to).
WHAT TO DO NOW: After a sharp reversal lower yesterday, the market is suffering a selling storm today with most major indexes down 2%+ and growth stocks remaining very weak, including another chunk that are giving up the ghost. We’re going to sell our half-sized stake in Robinhood (HOOD) and put the ProShares Ultra Russell 2000 Fund (UWM) on hold. That will bring our cash position to 60%.
Enovix (ENVX), Weave (WEAV), TransMedics (TMDX) and Zeta (ZETA) Deliver
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 – Quant Trader.
An updated portfolio for Cabot Options Institute – Income 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 – Quant Trader.
An updated portfolio for Cabot Options Institute – Income 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 – Quant Trader.
An updated portfolio for Cabot Options Institute – Income 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.