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Top Ten Trader
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The trends of the indexes remain up and the leading growth stocks remain firm, although many big tech names are showing signs of entering what appears to be an overdue pullback.

Volatility is also on the rise and a classic split tape environment is emerging, with some sectors weakening while others show strength. We’re keeping a weather eye out for any sudden changes, continuing to hold our winners, building some cash, but also taking advantage of recent sector rotation. This week’s Top Pick is a name making waves in the app publishing market while also harnessing the power of AI to grow its customer base.
Housekeeping: Just a heads up that next week’s issue will come after the close on Tuesday, February 20 due to the Presidents’ Day holiday.

The story remains the same as it has for a couple of weeks now: The trends of the indexes remain up and the action of leading stocks (especially leading growth stocks) remains excellent, but most of the market has just sat around since the start of the year (though we are seeing some broadening out of buying pressures the past couple of days) and, for some of the tech/AI names, the action is definitely short-term frothy. We’re leaving our Market Monitor at a level 7, holding our winners but also a little cash, while focusing on fresher names (both inside and outside of tech) that are emerging with some power.

This week’s list has a bunch of fresh ideas in a variety of areas—dips in many of them would be tempting. For our Top Pick we’re going to go with a zinger in the AI space—a liquid name with a great, leading position that’s just gotten going on earnings. If you enter, use a loose leash, as the stock is bound to be super volatile.
The primary evidence remains bullish, so we’re still thinking mostly positive, especially when looking at the big picture. But there’s no question things are getting more and more divergent: The broad market and even most big-cap stocks are flat to down so far this year, and more recently, as interest rates have backed up and financial stocks get hit, we’re seeing selling pressures start to spread. That doesn’t necessarily portend doom, but coming on the heels of a multi-month advance, this kind of action does raise the risk of a change in character; we’re going to pull our Market Monitor down a notch to level 7—still bullish, but holding a little cash, booking some partial profits on the way up and being more discerning on the buy side makes sense.

This week’s list has its share of hot stocks, and we’re impressed that we’re still seeing some strong earnings winners that are moving on very, very strong volume. For our Top Pick, we’ll go outside the tech space with a name that just lifted out of a multi-month base on earnings and could be leading a new group move. Try to buy on dips.
We could pretty much cut and paste last week’s write-up here, as nothing much has changed with the evidence, and thus, with our positioning—the primary evidence remains bullish, with the trends of the indexes pointed up, and the action of leading stocks remains very solid. With that said, the broad market is mostly marking time, while interest rates are testing key intermediate-term levels. Long story short, we’re still bullish and are keeping our Market Monitor at a level 8, but are being more discerning on the buy side.

This week’s list has everything from popular tech names to cyclical tech to development-stage biotech, though as mentioned above, we like that we’re seeing some big-volume moves. Our Top Pick has a history of trending in good times and looks set for a big turnaround.
The vast majority of our work is based on the trends of the major indexes and the action of leading stocks, and on those two fronts, things look very good; we’ve even seen the broad market perk up after a tough stretch, too, which helps the cause. About the only thing to worry about here is that ... there’s not much to worry about, and that many leading stocks are showing some near-term exhaustion patterns. Big picture, we’re moving our Market Monitor back to a level 8, but you should still keep your feet on the ground, looking for decent entry points in strong stocks.

This week’s list has a lot of stocks that not only have excellent overall charts but have either consolidated calmly for the past few weeks—or have shown outstanding buying volume in recent days. Our Top Pick is one of the latter, gapping up to new highs last week on earnings.
After a sour first week of the year, leading stocks snapped back very nicely last week, and when you add in the other encouraging intermediate-term vibes (trends of the indexes and most sectors are up), we remain bullish overall. That said, we’re also keeping our feet on the ground: The current advance is now about two and a half months old, earnings season is here and the broad market was a notable laggard last week, all of which means further volatility and crosscurrents are possible, even likely. We’ll leave our Market Monitor at a level 7.

This week’s list is another where’s there’s something for everyone. Our Top Pick is one of many medical-related stocks that’s showing strength thanks to a new product, great Q4 guidance and expectations of accelerating growth this year.
Heads up: Because of MLK Day, next week’s issue will be published next Tuesday (January 16) after the close.

As for the market, we don’t want to repeat ourselves, but early January is known for sharp moves, and that might be playing out now. We’re not ignoring the short-term gyrations, especially if a stock really cracks key support, and, frankly, we’d expect some more tossing and turning, but we advise focusing more on the intermediate term—and on that front, the vast majority of evidence remains in the bull camp. We’re going to nudge our Market Monitor down to a level 7 to respect the wobbles we’ve seen, but overall we’re leaning bullish until the evidence changes.

This week’s list is an interesting one, with a batch of proven performers along with some off-the-bottom and more speculative situations. Our Top Pick is a name that was left for dead during the bear phase but has the makings of a powerful turnaround as revenue growth accelerates from modest levels and some newer offerings take root.
Happy New Year! Now that the calendar has flipped, early January is upon us, and as we saw today, that’s almost always a tricky time: There are many crosscurrents that pop up, and when you combine that with the market’s straight-up move since the start of November, today’s sour (and rotational) action wasn’t a total surprise and is a reason why we’ve been advising picking your spots of late. If you’re looking for something to worry about, we’d say that growth stocks (which led the way up in November) stalled out three weeks ago, so if the selling continues, that could be a canary in a coal mine of sorts—but at this point, we’re seeing normal (albeit unpleasant) downside action in many stocks. Right now we’re thinking the next couple of weeks will likely prove tricky, yet the path of least resistance remains up. We’ll keep our Market Monitor at a level 8, though we’ll be in touch if that changes.

This week’s list has something for everyone, from newer names trying to emerge to established leaders that have rested for two or three weeks. Our Top Pick has moved out on the upside and has excellent numbers, all while its sector remains in favor.
Note: We will have a Movers & Shakers update later this week, but just a heads up, there will be no Top Ten issue next week (December 26), as it’s the second of our two weeks off all year. For those that celebrate, we hope you have a very, very Merry Christmas!

On to the market, things can always change, but after two years of rate hikes and hawkishness, it looks like the Fed is finally “officially” off the market’s back. Interest rates have been the tail that’s wagged the market for two years, so that’s obviously good, and it’s no surprise that stocks (especially the broad market) catapulted on that news. With all of that said, it’s important to keep your feet on the ground; we’re not expecting a major dip, but it’s certainly possible stocks could wobble a bit or we could see some rotation now that the good news is out. Even so, the rubber-meets-the-road evidence is strongly positive; we’re moving up our Market Monitor to a level 8.

This week’s list is a balanced one, with some growth, some cheap names coming back from the depths, some cyclicals and more. Our Top Pick is a Bull Market stock that should do very well if this advance continues. Try to buy on dips.
We continue to see some near-term tremors, but beyond that, the evidence looks pretty great, both from a top-down perspective and, even more so, among leading stocks, which continue to behave themselves, with a lot of controlled pullbacks and tight action among those that have dipped—while many others are still pushing higher. All in all, we’re encouraged, though for the moment we do think it’s best to pick your spots. Our Market Monitor stands at a level 7.

This week’s list has another balanced collection of ideas, with many different sectors and types of stocks. Our Top Pick is one of many turnaround-type retailers that’s cheap, has new-ish management and should have solid growth ahead—and the stock is perking up, too.
Most of the rubber-meets-the-road evidence is positive when it comes to the intermediate-term, that said, short-term, some wobbles and rotation are beginning to creep in—some growth areas (like chips) are weakening while the broad market (small-caps, etc.) are perking up, and after five weeks of strong gains, investor sentiment has gotten a bit comfortable. That doesn’t have us growing more cautious, and in fact, we’re bumping up our Market Monitor to a level 7—though we are still favoring moving gradually and picking your stocks and entry points carefully.

This week’s list has another nice collection of stocks, including everything from precious metals to chemicals to some powerful earnings gaps in the tech space. Our Top Pick is a tech infrastructure name that isn’t early in its run, but after a choppy three months, it appears ready for its next move.
The intermediate-term trend has turned up for all of the major indexes, the number of stocks hitting new lows is drying up nicely, individual leading stocks are acting well and, while it’s not a torrent, we are seeing some more breakouts and setups as the days go by. It’s not 1999 out there, with wide swaths of the market still repairing the damage from recent months, so we continue to favor a step-by-step approach when it comes to extending your line. We’ll move our Market Monitor up to a level 6 and will continue to raise it should the rally continue to gain steam.

This week’s list has another crop of super-strong charts, and from a variety of industries, too. Our Top Pick isn’t a lightning-fast mover, but it looks like the leader in a group that’s shown exceptional strength off the lows and has a history of trending nicely when conditions are favorable.
Updates
The market has certainly had an interesting couple of weeks as volatility has picked up—the Nasdaq and especially leading stocks saw a big drop early last week, a sharp recovery through last Friday, followed two days of fairly heavy selling—and then we had Nvidia’s (NVDA) report Wednesday evening, which caused another rush of buying yesterday. Our thoughts:
The market had accumulated some short-term yellow flags of late, some of them simply due to the market’s success (big, prolonged run), but also due to the relative narrowness of the advance (even the equal-weight S&P 500 is unchanged during the past two months, net-net) and a bit of frothiness that popped up (some AI names are acting like meme stocks). That led into Tuesday’s worse-than-expected inflation report and a broad (something like 90% to 95% of all volume traded in stocks that fell on the day), across-the-board decline.
Whereas last week was driven more by macro factors, the focus this week was on the earnings deluge, with tons of leaders and potential leaders reporting. As we roll into Super Bowl weekend, most indexes are up modestly (0.5% to 1.5%) on the week, led by the Nasdaq, with the broader indexes again lagging a bit.
It was Fed and jobs week in the market, which implied a lot of volatility—and that’s just what we’ve seen, with a big drop after the Fed said no cuts were likely in March, a nice rebound yesterday, and this morning is looking more mixed, as some big tech earnings are helping the Nasdaq but the rest of the market is suffering as a strong jobs report has rates spiking.
It’s been another up week for the market, though as of this morning, the gains have been relatively muted, generally up 1% or less.


Even so, that keeps all of the primary evidence intact: The intermediate-term (and longer-term) trends of the indexes, along with most stocks and sectors, are pointed up, and the action of most leading stocks (especially on the growth side of things) has been excellent, with many names kiting higher. Thus, we remain bullish and are holding most of our strong, profitable stocks.
Net-net, it’s been a quiet week for the major indexes, with most up or down less than 1%. That said, there are some interesting things happening under the market’s surface.
Reminder: Because of the MLK holiday this coming Monday, your next Top Ten issue will be sent after Tuesday’s close (January 16). Have a great long weekend.


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Last week saw a lot of leading stocks take some ugly hits, but in true January fashion, this week brought the reverse, with many strong snapbacks, including more than a few names that rebounded to new highs. It hasn’t hurt that interest rates backed off a bit (down seven basis points on the 10-year Treasury), too.
The New Year has gotten off to a poor start, with just about everything selling off and with growth-oriented names taking the worst of it. As of this morning, the S&P 500 is down about 1%, the Nasdaq is off nearly 3%, broader indexes are off 2%-plus and growth-y funds are off 4% to 7%! Even interest rates are reversing their recent trend, with the 10-year Treasury yield up around 0.11% this week (though they have made a nice reversal lower so far today).
First and foremost, all of us at Cabot hope you’re having a great holiday week and wish you and yours a healthy and prosperous new year. Our offices will be closed Monday, but your next issue of Top Ten Trader will be published Tuesday (January 2) after the close.
Note: As a reminder, there will be no Top Ten issue next week—it’s one of our two weeks off and we’ll be busy relaxing with the family for much of it. For those that celebrate, have a fantastic Christmas and we’ll be back in touch later next week with another Movers & Shakers Update. I will be in and out of the office next week but should be able to get back to any questions you have on individual stocks—you can email me directly at mike@cabotwealth.com.
The big events this week were the November inflation report and the Fed’s meeting, and both (especially the latter) were very pleasing to the market—the fact that the Fed is forecasting three rate cuts next year tells us at the very least that the rate hike cycle is almost surely over, which helped stocks and bonds rally nicely. As of this morning, big-cap indexes are up about 2.5% on the week, while small- and mid-cap indexes are up more than 5%.
It’s been a relatively quiet and mildly positive week for the major indexes, with most up less than 1% (though small caps have been a little stronger) following this morning’s jobs report. It’s a similar story with interest rates, which, despite a pop higher today, are unchanged to slightly higher on the week.
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.
Cabot Top Ten Trader is meant to be something where we do the first four or five steps of the process for you and then let you take it from there.
Guidelines to improve your investment results with Cabot Top Ten Trader.
The Cabot Top Ten Trader system evaluates price and relative performance of 8,000 charts each week to select the strongest momentum stocks.
A brief guide on using the Cabot Top Ten Trader.
By following thse guidelines, we’ve always been able to get on board relatively early in each new bull cycle.
This is a collection of tips on stock chart reading, something that’s key to Mike Cintolo’s growth stock methodology, but something few individual investors (and even professional investors) understand too well.
If you follow these rules, you’re sure to boost your portfolio’s results.
Here some of the most common questions Mike Cintolo gets from the readers of Cabot Top Ten Trader.