Issues
While there have been some encouraging signs here and there, the market never could quite kick into gear during the past two months, which didn’t necessarily portend doom but is why we never turned very bullish in recent weeks—and now we’ve seen a sudden rug pull, as leaders have hit air pockets. Now, to this point, the selling has been mostly seen in the growth arena, so there are still many names that are handling themselves just fine. We’re open to this being the final shakeout to a two-month-long grinding period, but as always we’re taking the evidence as it comes: We’ll yank our Market Monitor down to a level 5, though a lot of it comes down to entry points and what stocks you own.
This week’s list is a hodgepodge of names, with some growth, some turnaround and a few others sprinkled in. Our Top Pick is a great short- and long-term growth story that acts well and could be ready to help lead if the market can turn back up.
This week’s list is a hodgepodge of names, with some growth, some turnaround and a few others sprinkled in. Our Top Pick is a great short- and long-term growth story that acts well and could be ready to help lead if the market can turn back up.
After weeks of withstanding a geyser of negative headlines – higher inflation, tariffs, slower interest rate cuts, the DeepSeek impact on AI, etc. – the market finally took on water last Thursday and Friday. Whether that’s the start of a deeper correction, we’ll likely know in the next few days. Even if it is, it’s nothing abnormal. After all, the S&P just touched new all-time highs three trading days ago. A pullback was probably inevitable.
Out of respect for the about-face in U.S. stocks in recent days, however, today we’ll turn our attention to Europe, where stocks have been outperforming their U.S. counterparts by more than 2-to-1 so far this year. Our new addition comes from Spain and is a company that’s been in Carl Delfeld’s Cabot Explorer portfolio for several months.
Details inside.
Out of respect for the about-face in U.S. stocks in recent days, however, today we’ll turn our attention to Europe, where stocks have been outperforming their U.S. counterparts by more than 2-to-1 so far this year. Our new addition comes from Spain and is a company that’s been in Carl Delfeld’s Cabot Explorer portfolio for several months.
Details inside.
After notching an all-time high earlier in the week, the S&P 500 and its index peers came under intense selling pressure to close the week. By week’s end, the S&P 500 fell by 1.7%, while the Dow and Nasdaq both lost 2.5%.
After notching an all-time high earlier in the week, the S&P 500 and its index peers came under intense selling pressure to close the week. By week’s end, the S&P 500 fell by 1.7%, while the Dow and Nasdaq both lost 2.5%.
The market remains relatively mixed from a top-down perspective, but growth stocks remain a different story -- some still look fine, but the action is very hit or miss, and recently, more have come under pressure, with air pockets appearing all over the place this week. That doesn’t portend doom -- in fact, some things like sentiment are encouraging, and the indexes aren’t in bad shape -- but we’ve pared back this week and will look to reinvest the proceeds once big investors decisively step up to support growth stocks.
The February 2025 Issue highlights a variety of both new and familiar names across the software, delivery, MedTech, appliance and land management markets.
As always, this Issue should have something for everyone.
As always, this Issue should have something for everyone.
Despite early-week wobbles on inflation worries, the market again held its ground and in fact advanced as the week wore on. By week’s end the S&P 500 had gained 1.5%, the Dow had risen by 0.5%, and the Nasdaq had added 2.6%.
Most of the overall evidence out there is the same as it has been for weeks, but there is one factor that is very encouraging for the bulls: Earnings season, which continues to produce a good-sized batch of gaps higher in growthy names, with another round of winners this past week; as things stand now, there should be plenty of leadership for the market to ride ... if big investors finally click the buy button. We’re far from flooring the accelerator, but we’ll nudge up our Market Monitor to a level 7.
As an example of what we just wrote, seven of this week’s Top Ten gapped on earnings last week, and while some still need a little work, all should have good potential if the market kicks into gear. Our Top Pick has reemerged after a long base-building effort last year and as some industry worries fade into the background.
As an example of what we just wrote, seven of this week’s Top Ten gapped on earnings last week, and while some still need a little work, all should have good potential if the market kicks into gear. Our Top Pick has reemerged after a long base-building effort last year and as some industry worries fade into the background.
The market’s resilience in the face of bad headlines (tariffs, higher inflation, an increasingly cautious Fed, etc.) continues to impress. And with the major indexes currently trading near their 2025 highs despite all the outside attempts to derail them, perhaps the next big market move will be up. With that in mind, today we add to our growth stockpile in the form of a former market (and Cabot) darling that was recently recommended by Mike Cintolo to his Cabot Growth Investor audience. After a rough stretch in mid-2024, the stock is soaring again.
Details inside.
Details inside.
Despite early-week wobbles on inflation worries, the market again held its ground and in fact advanced as the week wore on. By week’s end the S&P 500 had gained 1.5%, the Dow had risen by 0.5%, and the Nasdaq had added 2.6%.
Despite early-week wobbles on inflation worries, the market again held its ground and in fact advanced as the week wore on. By week’s end the S&P 500 had gained 1.5%, the Dow had risen by 0.5%, and the Nasdaq had added 2.6%.
In his Fed semiannual testimony before the Senate Committee on Banking, Housing, and Urban Affairs, Federal Reserve chair Jerome Powell said, “Labor market conditions have cooled from their formerly overheated state and remain solid. Inflation has moved much closer to our 2% longer-run goal, though it remains somewhat elevated.”
Yes, it has. This morning, it was reported that stubborn inflation, as denoted in the CPI index, rose to 3.0%, a bit higher than the 2.9% economists had predicted.
Yes, it has. This morning, it was reported that stubborn inflation, as denoted in the CPI index, rose to 3.0%, a bit higher than the 2.9% economists had predicted.
Updates
In today’s note, we discuss the recent developments concerning Barrick Gold (GOLD) and V.F. Corp. (VFC), while taking a nice profit in the latter stock.
China’s benchmark CSI 300 index has surged 25% in the five days following Beijing’s stimulus measures to unleash its economy and financial markets. This has led to some catch-up growth for Explorer stock and fund recommendations.
The action was not limited to just Chinese stocks but also stocks looking to China for growth. I mentioned commodities last week, but another winner was the luxury business.
The action was not limited to just Chinese stocks but also stocks looking to China for growth. I mentioned commodities last week, but another winner was the luxury business.
The third quarter ended with the market looking good. The S&P 500 was up 2% in September after a rough start, 4.3% for the third quarter and over 20% YTD. Can the good times last?
The market is wrapping up another good month and quarter. The S&P posted strong gains in September, after three straight winning weeks in a row, following a rough first week. The index is also up nicely for the third quarter and near the all-time high with a better than 20% gain year-to-date.
The latest upward leg is being driven by cooling inflation, falling interest rates, and a still-resilient economy. We’re getting the rate cuts without the economic pain and an expected soft landing. What’s not to like?
The latest upward leg is being driven by cooling inflation, falling interest rates, and a still-resilient economy. We’re getting the rate cuts without the economic pain and an expected soft landing. What’s not to like?
In today’s note, we discuss the recent developments concerning Tyson Foods (TSN) and Alibaba Group Holding (BABA), with a particular emphasis on exit strategies for both stocks.
WHAT TO DO NOW: Remain optimistic, but pick your spots. The evidence remains more good than bad, and many growth stocks are acting well—that said, the flies in the ointment we’ve repeatedly mentioned are still hanging around and, near term, many stocks are extended to the upside. We’re still leaning bullish, but tonight we’re going to stand pat, holding what we have and seeing how the market and stocks behave in the days ahead. Our cash position remains in the neighborhood of 30%.
Small caps have bounced around this week, taking a break from the rally that began on September 11 and continued through the 19th.
Behind the scenes, analysts have been increasing their earnings expectations for the asset class. This is largely because rates are falling, but also because the economy is holding up.
Behind the scenes, analysts have been increasing their earnings expectations for the asset class. This is largely because rates are falling, but also because the economy is holding up.
Value stocks are starting to play catch-up.
The Vanguard Value Index Fund ETF (VTV), a good proxy for value stocks, is up 9% since the first week of August, more than half its year-to-date gain of 16.6%. While value stocks still trail the S&P 500 (+20.9% YTD) and growth stocks (the Nasdaq is +22.4% YTD), the gap is narrowing. Now that the Fed is finally cutting interest rates from multi-decade highs, perhaps this “in name only” bull market will spread to more corners of the market beyond just the Magnificent Seven, artificial intelligence stocks, and the other mostly tech-related plays that have carried this 23-month rally.
The Vanguard Value Index Fund ETF (VTV), a good proxy for value stocks, is up 9% since the first week of August, more than half its year-to-date gain of 16.6%. While value stocks still trail the S&P 500 (+20.9% YTD) and growth stocks (the Nasdaq is +22.4% YTD), the gap is narrowing. Now that the Fed is finally cutting interest rates from multi-decade highs, perhaps this “in name only” bull market will spread to more corners of the market beyond just the Magnificent Seven, artificial intelligence stocks, and the other mostly tech-related plays that have carried this 23-month rally.
The market is hot stuff again. The S&P made a new high this week after making up all the early September losses and then some. It is the 40th record close for the index, which is now up 20% YTD with another quarter left.
In today’s note, we discuss the recent developments concerning Duluth Holdings (DLTH), Gannett (GCI) and Zillow (Z), with a particular emphasis on the latter due to recent interest rate-related strength.
Despite our focus on primarily mid-stage turnarounds with exceptional momentum potential in recent weeks, I’m looking for potential opportunities in early-stage candidates due to the additional improvement in the market’s intermediate-term outlook, thanks to the Fed’s latest rate cut.
Despite our focus on primarily mid-stage turnarounds with exceptional momentum potential in recent weeks, I’m looking for potential opportunities in early-stage candidates due to the additional improvement in the market’s intermediate-term outlook, thanks to the Fed’s latest rate cut.
Finally! The Fed met yesterday and, as expected, began a rate cutting cycle. The market, and small caps, love it.
The magnitude of the September cut, 50 bps, is a bit of a surprise. Despite what Fed Chair Jerome Powell said during the press conference yesterday, this is partially a make-up cut. Since there was no meeting in August, and the Fed didn’t cut in July, it was time to make a statement.
The magnitude of the September cut, 50 bps, is a bit of a surprise. Despite what Fed Chair Jerome Powell said during the press conference yesterday, this is partially a make-up cut. Since there was no meeting in August, and the Fed didn’t cut in July, it was time to make a statement.
The Federal Reserve has voted to lower interest rates by a half percentage point, the first since 2020 and more than many expected. The overwhelming Fed board vote suggests more rate reductions are likely this year. This Fed move was clearly already baked into markets but keep in mind that the Fed only controls overnight interbank interest rates. Nevertheless, this action will help support the market and boost interest rate-sensitive stocks such as real estate and utilities.
Alerts
Intuitive Surgical (ISRG) has a great story (next-gen Da Vinci 5 platform) but shares have been irresponsive to the potential and failed to make any sustained progress after the March 18 earnings report.
Soleno (SLNO) gave a business update/reported Q1 results after the close yesterday. Not much new to talk about given the recent (April 29) announcement (covered in a Special Bulletin that day) that the FDA granted the company’s lead drug candidate (DCCR) Breakthrough Therapy Designation for the treatment of adults and children ages 4 years and older with Prader-Willi syndrome (PWS).
Shares of Docebo (DCBO) opened lower this morning after the company delivered a Q1 beat after the close yesterday but lowered full-year guidance.
When it comes to small appliances, SharkNinja (SN) is one of the more innovative players out there, and the company’s mass-market appeal and expansion into new categories continue to deliver impressive results.
Rivian (RIVN) has been our dog in the portfolio but I’ve held on because I think the potential for shares to come back and ultimately work well is still there. Yesterday’s first-quarter results don’t suggest that will happen right away, but there are certainly some bright spots.
Shares of Intapp (INTA) should open higher today after the company beat Q3 fiscal 2024 expectations after the close yesterday. Revenue grew 20.2% to $110.6 million, beating by $2.4 million (2.3%), while EPS of $0.14 was up from a penny in the year-ago quarter and beat by $0.07.
New kid on the block Zeta (ZETA) is starting the week off with a bang after the Q1 report yesterday sailed past expectations.
Shares of GoDaddy (GDDY) are trading about flat today as the stock digests yesterday’s slightly better-than-expected Q1 report. The story here remains intact as we look forward to the full launch of Airo, the company’s new AI-powered solution for website creation and management, a significant pain point/roadblock for creators.
Portfolios
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 – Income 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 – Quant Trader.
An updated portfolio for Cabot Options Institute – Fundamentals Portfolio.
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.