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.

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.

Centrus Energy (LEU) shares rocketed 40% this past week and have surged 78% so far in 2025 while newcomer American Superconductor’s (AMSC) shares jumped 18% this week.

You may also have noticed that our BYD (BYDDY) recommendation is already up 24% in 2025 and has increased about 80% over the last year. This highlights an important trend in China that is unlikely to reverse.

In China, a consumer preference for multinational brands from everyday items like coffee to luxury markets was clear for decades, boosting the sales and value of companies like LVMH (LVMUY) and Starbucks (SBUX). Since the pandemic, however, preferences have shifted. Which brings us to today’s new recommendation.

Other stocks are picking up the slack while technology is wobbling. The grossly lopsided performance that dominated this market for so long couldn’t last. And there’s more to the story than just sector rotation. Earnings are catching up.

I’m still bullish on the portfolio AI stocks. But other sectors of the market are overdue for stronger relative performance. These stocks are taking over and likely to post much better relative performance over the course of the year.

Healthcare is perhaps the best of all sectors that aren’t technology. It’s an all-weather industry that offers a very seldom-found combination of safety and growth. Plus, these stocks are poised ahead of the megatrend of the rapidly aging population. Healthcare demand is skyrocketing. And the best stocks should get a great ride.

In this issue, I highlight four healthcare stocks currently in the portfolio. Despite the lopsided bull market returns so far, a couple of these stocks have been among the very best performers. And now they should be poised for a strong run in 2025.

The volatile and sloppy start to 2025 continued last week as the indexes fell hard on Monday, recovered in the middle part of the week, and then lost ground again on Friday. For the week the S&P 500 fell 0.2%, the Dow lost 0.5%, and the Nasdaq declined by 0.5%.

Housekeeping: Seeing as next Monday is Presidents’ Day, your next issue will be Tuesday, February 18.

When we look at the overall evidence, we continue to see more good than bad out there: Most indexes are testing the top end of their ranges; we see more breakouts than breakdowns among growth stocks; earnings season has gone well so far; and all of this has happened as headline uncertainty has crept into the picture. That said, we’re still waiting for buyers to truly step up, as most peppy stocks are still seeing lots of selling on strength and most every index is trending sideways. We’ll leave our Market Monitor at a level 6 for now but could move that meaningfully by week’s end depending on how things go.

All that said there are opportunities out there, and this week’s list has many of them, with a ton of recent earnings winners. Our Top Pick has turned super-strong after earnings as investors look forward to what should be a huge 2025 and 2026.

Though the market has been stagnant of late, its resilience in the face of the DeepSeek surprise, a barrage of tariff news and threats, an uncertain interest-rate climate and ongoing geopolitical strife has actually been impressive. It’s clear stocks want to go up, if they can just get a sufficient catalyst. For now, the best earnings season in three years is propping up the market, and breadth has improved from much of the last two years. With that in mind, today we add a small-cap stock that’s a household name. It was a Covid-era darling that fell severely out of favor the last few years. Now, it’s showing signs of a comeback. I recently recommended the stock to my Cabot Value Investor audience. Now, we add the stock to our Stock of the Week portfolio.

Details inside.

The volatile and sloppy start to 2025 continued last week as the indexes fell hard on Monday, recovered in the middle part of the week, and then lost ground again on Friday. For the week the S&P 500 fell 0.2%, the Dow lost 0.5%, and the Nasdaq declined by 0.5%.

The volatile and sloppy start to 2025 continued last week as the indexes fell hard on Monday, recovered in the middle part of the week, and then lost ground again on Friday. For the week the S&P 500 fell 0.2%, the Dow lost 0.5%, and the Nasdaq declined by 0.5%.

Today’s new addition is an emerging MedTech company that’s developed a whole-organ therapy system to treat liver-dominant cancers.

These are very difficult-to-treat cancers where survival rates are low. But this company’s system, which was just approved for its first indication last summer, is improving the odds.

It’s an exciting story, both from a treatment and investment perspective.

This market just continues to impress with the S&P within a whisker of the all-time high in these waning days of summer.

Why shouldn’t the market be strong? Everybody expects the Fed to start cutting the Fed Funds rate next month. The benchmark 10-year Treasury rate has fallen below 4%. And there’s no recession in sight. We’re getting the lower rates without the requisite economic pain.

In today’s note, we discuss the recent earnings report from Advance Auto Parts (AAP). We also discuss two new additions to the portfolio in the form of YETI Holdings (YETI) and Alibaba Group Holding (BABA).

While the S&P 600 Small Cap ETF (IJR) hasn’t yet challenged its high for the year of 120.7, hit just prior to the market rout a few weeks ago, the index’s performance lately has still been impressive.

For most of this year the IJR bumped up against overhead resistance near 111. It finally blasted through in the second week of July. But that market turbulence from a few weeks ago seemed like it could put a lid on the index for a while.

That hasn’t been the case.

Small caps have come back swiftly, jumping back above that 111 level a week ago and acting very well this past week.

Explorer stocks had a good week, but I wanted to highlight that recently, Warren Buffett sold almost 400 million of Apple (AAPL) stock during the second quarter. The Oracle of Omaha sold about 390 million shares of Apple stock, reducing Berkshire Hathaway’s ownership to roughly 400 million shares.

Granted, Berkshire booked some giant investment gains during the second quarter, with Apple accounting for a big share of those winnings. This is nothing to sneeze at, but why did Buffett and company decide to sell the shares, thereby missing out on some big capital gains? Forbes notes that Apple’s average closing price in the second quarter was 186, which is well below the 226 at which the stock closed on August 20.

The success of headliners Walmart and Target in the last week has helped drive consumer staples stocks as a group up nearly 5% in August. No other S&P 500 sector has performed better this month. And yet, consumer staples are “only” up 14% year to date, trailing the gains in the S&P 500 (17.3%).

Thus, the sector as a whole is still undervalued. That spells opportunity.

What a difference two weeks make! From the close on Monday, August 7 to the close on Monday, August 14, the S&P 500 was up about 8% and is again flirting with the high.

The market fell a lot from mid-July to early August. But it has since recovered all the losses. While the S&P is back near the high, the last month has been a wild ride to nowhere. Now what?

What recession? After a terrible start to August, the market has completely turned around. The S&P 500 has moved 7.5% higher since August 5 and is again near the high.

The recession fears that contributed to the worst day for the market in over a year were overblown. And numbers have come out since that indicate a recession is unlikely any time soon. But the Fed is still expected to start slashing rates next month. It looks like we will still get the rate cuts without a recession. The market loves it.

In today’s note, we discuss the recent earnings reports from Berkshire Hathaway (BRKB), B2Gold (BTG) and Kopin (KOPN), among others. We’re also making a new addition to the portfolio in the form of YETI Holdings (YETI).

WHAT TO DO NOW: The market’s rebound has been very encouraging, especially when looking at individual growth names—we’re seeing more constructive action now than we were during the narrow advance of June and July, including among all of our holdings. That said, the intermediate-term trend for most everything is still neutral at best (negative for lots of stuff), so the possibility of a partial or full retest still exists. Given our large cash position, we’re going to add half-sized positions tonight in Palantir (PLTR) and Axon Enterprises (AXON), two strong potential leading titles, but we’ll also still hold a 50%-ish cash position as we watch to see how things play out from here. Details below.

With this week’s PPI inflation number (Tuesday morning) coming in lower than expected and the CPI reading (Wednesday morning) coming in as expected, the trend of lower inflation remains intact.

That’s a good thing, unless you have a hankering to buy more Treasuries and have held off.

The 2-year Treasury yield is now below 4%.

Inflation is dead.

OK, it’s not “dead.” But at 2.9% in July, as reported Wednesday morning, it has now (narrowly) reentered the Federal Reserve’s magical 2% realm for the first time in nearly three and a half years – since March 2021. For all the inflation angst during those past three and a half years, the market has fared pretty well overall – the S&P 500 is up 30% since the first CPI print north of 3% was reported in mid-May of 2021. On a per-year basis, that only slightly trails the average annual return in the large-cap index of 9.9% since its inception in 1928.

The cannabis sector has a dream ticket with Kamala Harris and Tim Walz. Investors act like they haven’t even noticed. This seems like a big mistake.

The key takeaway: Cannabis stocks look buyable in the current bout of dramatic sector weakness. Cannabis investors are notoriously bipolar. Right now, they are in a dark mood. That’s usually been the best time to add to positions, especially when there are potential catalysts on the horizon like now. In today’s update, I outline the main ones and the possible timing.

I’m going to hold on to my March SPY iron condor and will close towards the end of the trading session tomorrow or Friday depending on the price action over the next two days. When I do close, I only plan on closing the bear call side and will allow the bull put side to expire worthless.

For those who are new and wish to enter a trade, all of the details are listed in the alert (as always) for those wanting to initiate a position. As always, if you have any questions, please do not hesitate to email me at andy@cabotwealth.com.

Spotting a “top” in in high-flying stocks is impossible but sticking to a system of taking partial profits on a very fast-moving stock is pretty darn easy, if you can manage your emotions.

Cadre (CDRE) and Soleno (SLNO) Report

Alerts- VNQ, EEM, IBM

Sell Braze (BRZE)

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.