The market is still in fine overall shape, but under the hood, it’s becoming more and more of a mixed situation. To be clear, there remains a lot more good than bad when examining the evidence, but for the here and now, we advise simply taking things on a stock-by-stock basis—holding your strong performers (albeit also raising stops and potentially booking a partial profit here or there), while cutting bait with those that lag or crack support and keeping some powder dry. We’ll again leave our Market Monitor at a level 7—we’ve had good success finding winners but don’t advise flooring the accelerator at this point.

This week’s list is growth-ier despite some potholes seen last week, which is a plus. For our Top Pick, we’re going with a blue chip in the AI theme, with its recent post-earnings pullback setting up an opportunity.

Stocks finally took on some water last week, though the damage was minimal. Under the surface, there are a few more cracks, with the number of stocks hitting 52-week lows on the rise. Still, there’s no cause for concern yet. Just in case there is a more extended pullback in the offing, however, today we add a “boring” insurance play, but one that pays a high dividend and whose share price has been on steady uptick for the last couple months. It’s a recommendation from Tom Hutchinson to his Cabot Dividend Investor readers.

Details inside.

The story of last week was under-the-surface weakness in growth stocks, while money rotated into “everything else.” And by week’s end the S&P 500 had lost 0.3%, the Dow fell 0.1%, and the Nasdaq declined by 0.7%.

The story of last week was under-the-surface weakness in growth stocks, while money rotated into “everything else.” And by week’s end the S&P 500 had lost 0.3%, the Dow fell 0.1%, and the Nasdaq declined by 0.7%.

To begin, I would like to highlight that I have decided to omit the brief company review section that followed our weekly stock updates. This section caused some confusion and the information about each company is widely available. Likewise, I’m ending the Explorer watch list. If you own the stocks on the list right now, I see no reason to sell them.

Moving on to the market, the debates regarding the market’s direction seem endless.

While investor-friendly cannabis reform marches ahead at the state level, it’s still a “wait and see” game in Washington, D.C.

Rescheduling by the Trump administration remains the big potential near-term federal catalyst. If it happens, it will be a “sell the news” event for at least part of your cannabis exposure over the subsequent two or three trading days, for these reasons:

My modus operandi when writing the monthly version of the Cabot Turnaround Letter is to focus solely on a single stock when making a purchase recommendation. And in keeping with that spirit, I’ll be doing the same in this month’s edition of the newsletter. But I will also highlight two additional stocks with what I see as having excellent mid-to-long-term turnaround potential.

The market looks great. But the indexes are teetering around the highs while uncertainty is still swirling around.

Fortunately, some of the highest dividend paying stocks are still reasonably priced ahead of an increasingly promising future. Midstream energy stocks have been flying under the radar while paying some of the highest dividends on the market. These stocks are also well suited for whatever lies ahead.

Midstream energy stocks have provided a high income and a solid return throughout most market cycles. And that makes them ideal for the current unpredictable environment. But that was before. Things are changing for the better. The environment for energy is undergoing a radical transformation that could make these stocks better than ever before.

The growing demand from utilities and exporters will provide an unprecedented runway for growth in the years ahead that historical performance doesn’t reflect. In this issue, I highlight one of the very best midstream energy companies on the market.

Before we dive into this week’s idea, I do want to note that our September IBKR, GLW and RKT covered calls finished in-the-money which means we walked away from those trades with our full profits, and no longer own a stock or option position in these stocks.

It was another solid week for the market, with a bit more leadership emerging on the upside, with some medicals and online outfits joining the AI infrastructure group and a smattering of other names—though we’re still seeing plenty of choppy (selling on strength) action, too. Near term, we do think risk is a bit elevated, partly due to the recent run, partly due to the calendar and partly due to some near-term complacency—that said, when it comes to the intermediate-term (and longer-term) evidence, it remains much more positive than negative, so we’re not making any grand adjustments here. We’ll keep our Market Monitor at a level 7.

This week’s list is another well-rounded one, with some fresher breakouts and setups from a variety of sectors. Our Top Pick is a well-run firm that has lifted off powerfully from a two-month rest period. Try to enter on dips of a few points.

Fed Week has come and gone, and Jerome Powell and company did just what investors expected them to do, nudging stocks further into record territory. How long the market can keep this up, at least in the short term, is anyone’s guess. But we can only go with the evidence in front of us, and right now it’s a good time to buy. So today, we add another big growth name that has emerged as a leader of the recent rally. It’s a stock that has stood out enough to gain approval from both Mike Cintolo and Tyler Laundon.

Details inside.

The stock market rallied nicely into the Federal Reserve meeting, and then tacked on even more gains following it, and by week’s end the S&P 500 had risen 1.2%, the Dow had rallied 1%, and the Nasdaq gained 2.2%.

Small caps raced to multi-month highs early last week and, despite the weakness in the tech-heavy Nasdaq this week, small caps are holding up relatively well.

The iShares Core S&P Small-Cap ETF (IJR) is trading right around 114, which was the zone of overhead resistance in July that the index punched through last Wednesday.

Historically, small caps – and especially small-cap value stocks – have tended to do well during the beginning of rate-cutting periods. This puts a lot of pressure on Fed Chair Jerome Powell’s speech tomorrow in Jackson Hole.

“Bull markets are born on pessimism, grow on skepticism, mature on optimism, and die on euphoria.” -Sir John Templeton

Tech stocks and a couple of Explorer stocks are having a tough week, but the rest of the market is calm as investors await Federal Reserve Chair Jerome Powell’s speech on Friday at the central bank powwow in Jackson Hole, Wyoming.

The market’s tectonic plates are shifting.

Last week, I wrote that big tech – namely, the top 20 stocks in the S&P 500 by market cap – had led the way as the market emerged from a sharp late-March/early-April downturn and stretched to new all-time highs earlier this month. Now they’re retreating, with growth stocks – as measured by the Investors’ Business Daily 50 (FFTY) – off roughly 8% in the last week, with some big names (CRWV, -55%; PLTR, -22%; APP, -17%; SMCI, -31%, etc.) plummeting much further than that.

Just when the market appeared vulnerable to selling pressure, news from an unexpected source rode to the rescue, lifting stocks.

On Tuesday, the Labor Department announced that inflation rose 2.7% in July from a year earlier, which was the same as the previous month and up from a post-pandemic low of 2.3% in April. “Excluding the volatile food and energy categories, core prices rose 3.1%, up from 2.9% in June,” according to the Associated Press.

The bull market has become top-heavy again.

Since the early-April lows, the top 20 stocks in the S&P 500 by market cap – nearly all of which are in the technology sector, and fueled in some way by the artificial intelligence bonanza – are up an average of 40.6%, versus a net gain of 27.9% for the index itself in that time, according to DataTrek Research co-founder Jessica Rabe.

WHAT TO DO NOW: The market is still singing a similar tune, with the big-cap indexes looking fine (and, now, some broader indexes looking better), but growth stocks remain tricky, with many names marking time and more looking iffy. In a special bulletin yesterday, we took partial profits in GE Aerospace (GE), and tonight we are moving Rubrik (RBRK) back to Hold as it’s been unable to escape the weak sector action. That will leave us with 43% cash, which we’ll sit with for now, though we could put some to work in some of our strong performers if growth stocks can perk up.

There were a lot of headlines over the last couple of days about the emerging small-cap rally.

That’s because small caps surged on both Tuesday and Wednesday after a somewhat cool CPI inflation report drove expectations for a 25bps September rate cut to 99%.

On Wednesday, the S&P 600 SmallCap Index jumped 2.0%, trouncing the 0.3% rise in the S&P 500 Index.

Unlike Rodney Dangerfield, cannabis stocks continue to get some respect. They are up 66% since I last suggested them here on July 30, using the AdvisorShares Pure U.S. Cannabis (MSOS) as a guide. In the past month, the sector is up 72%.

The reason: We continue to get high-profile confirmations that the administration of President Donald Trump will reschedule cannabis. This really isn’t news. I’ve been saying this since Trump promised rescheduling in his election campaign a year ago. But mainstream media attention is drawing money into the sector.

The market is still right near the high. But the dog days of summer are setting in.

Stocks are resilient. News regarding tariffs and the economy got better and then got worse. The market is taking it in stride and meandering near the high. Now we are at that time of year when investors focus on squeezing in the last bit of summer fun.

Last week’s release of the latest job market outlook did more than shock the market; it reopened a debate that has been intermittently raging over the last couple of years, namely: will the U.S. dodge an inflationary recession (i.e., stagflation)?

Super Micro Computer (SMCI) stock sank more than 19% yesterday after the troubled AI server maker’s results underperformed Wall Street’s expectations.

Super Micro reported adjusted earnings per share of $0.41 for its 2025 fiscal fourth quarter, less than the $0.44 expected by Wall Street analysts, according to Bloomberg consensus estimates. Its quarterly revenue of $5.76 billion was below the $6 billion expected, while its roughly $551 million gross profit for the period fell a little short of the estimated $601 million.

The resilient summer market got a cold slap in the face last week. There was a big recovery on Monday. But the market still looks wobblier than it did a week ago.

One day’s headlines seemed to undo the positive market narrative.

National Grocers (NGVC) stock should have a good day after posting a solid Q3 FY 25 and raising guidance for the rest of the year. Revenue in Q3 grew 6.3% to $328.7, daily average comparable store sales grew 7.4%, net income grew 26% to $11.6 million and adjusted EPS grew 34% to $0.54. The company declared a $0.12 dividend, payable on September 17.

Primo Brands (PRMB), Dynatrace (DT) and Dutch Bros (BROS) Report

Sell Remaining Quarter of Paramount Global (PARA). Bloomin’ Brands (BLMN) Earnings Update.

Shares of A10 Networks (ATEN) are trading higher today after the company beat Q2 expectations on both the top and bottom lines. Revenue grew 15.5% to $69.4 million (beating by $3.3 million) while adjusted EPS grew almost 17% to $0.21, beating by $0.02.

ThredUp (TDUP), Sportradar (SRAD) and Alamos Gold (AGI) Report

WHAT TO DO NOW: The market has finally seen some selling this week, with two downside reversals and then today’s big drop on tariff and economic fears. Our Cabot Tides are now on the fence as the broad indexes have sagged, though with 30% cash already on the sideline, we’re taking things on a stock-by-stock basis. Today that means pulling the plug on Snowflake (SNOW), which is cracking support today. This will raise our cash level to 39%—some of which we might redeploy into a stronger name when the indexes find support. Details below.

Enovix (ENVX) reported Q2 results after the closing bell yesterday. Results were generally in line with the pre-announced results (from early July), with $7.5 million in revenue and an EBITDA loss of $20.1 million ($1.3 million less than the pre-announced amount).

Carpenter Technology (CRS) & Microsoft (MSFT)

WHAT TO DO NOW: The market remains in good shape, and we remain overall bullish, though we’re not flooring the accelerator given that earnings season is revving up. Today’s bulletin concerns Uber (UBER), which is cracking some support today on another round of autonomous news from others—we’re going to cut bait. On the buy side, we’re starting a half-sized stake in Oracle (ORCL), which quacks like a liquid leader.

Sell a Half Position in Paramount Global (PARA)

Here are two points to bear in mind when you’re setting a target price for your small-cap stock stop-loss.

Here’s exactly what I look for in dividend-paying stocks, whether they’re joining the High Yield, Dividend Growth or Safe Income tiers of our portfolio.

If professional investment companies are not making their decisions based on the price of the stock, neither should you.

Here are some common-sense, down-to-earth ways to control your risk, so that the market’s inevitable potholes never cause fatal damage to your portfolio.

More than six years after the Fed lowered the Federal Funds rate to 0%-0.25% in December 2008, the economy has strengthened to the point that the Fed is considering raising rates to prevent inflation.

I created Cabot Dividend Investor’s three-tiered portfolio to address the needs of the widest possible variety of investors with some combination of these goals. But this variety means that you need to figure out how to mix and match my recommendations to best fit your goals.

Our sell rules demand we sell under a number of conditions, which can be roughly dividend into two broad categories: fundamental weakness or unacceptable risk.

Here are some ways you can use options to hedge or create additional yield in your portfolio. In addition to covered calls, which generate additional income on stocks you already own, I also share hedging strategies using puts and spreads.

Remaining invested in high-quality dividend paying stocks means your investments will continue to reward you even during bear markets.

Here are some common questions we’re received about Cabot Dividend Investor.

Today, we take a look back at every sale made from the Cabot Dividend Investor portfolio from inception in February 2014 to the end of April 2015 to see how our sold stocks have fared.

Diversification is usually one of the first risk management principles investors learn. It’s simple enough to understand. At its most basic, diversification is simply an extrapolation of the old advice not to put all your eggs in one basket. And it’s good advice.