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Top Ten Trader
Discover the markets strongest stocks
Issues
First off, a quick note: Due to our regular schedule (50 weeks a year), there won’t be a Movers & Shakers update this shortened week, or a Top Ten issue next Monday—but we will send out a Movers & Shakers update next Monday and will be around all next week if you have any questions. Have a fantastic Thanksgiving!

Nothing much changed with the market last week: The major indexes were down, but not severely, and the intermediate-term trend continues to point up. That said, under the surface, it remains a very mixed bag—some areas look great, but there are as many (or more) wobbly names out there compared to names in solid uptrends. We’ll keep our Market Monitor at a level 5 this week, though we’d like to individual stocks act better soon.

This week’s list is heavy on old world companies, though there are a few great-looking growth names, too. Our Top Pick is in that space and has shown great power before and after its recent earnings report.
The major indexes quickly retreated after the prior couple of good weeks, with growth-oriented areas falling the most, a lot of stocks being rejected near resistance and some old winners being taken out and shot. Despite that, there are some green shoots out there—by the letter of the law, some broad indexes (like small- and mid-caps) are in intermediate-term uptrends, and we’re also seeing some sectors assert themselves, especially in the commodity space. We’re not bullish, and will leave our Market Monitor at a level 4, though our overall advice remains basically unchanged: Hold plenty of cash, honor your stops and, if you do some buying, keep it small.


This week’s list is again heavy on commodity-type names, though we’re also seeing a few recent earnings winners that have some growth to them. Our Top Pick straddles the line between growth and commodity and is one of the few names to move out to recently all-time highs.
The major indexes quickly retreated after the prior couple of good weeks, with growth-oriented areas falling the most, a lot of stocks being rejected near resistance and some old winners being taken out and shot. Despite that, there are some green shoots out there—by the letter of the law, some broad indexes (like small- and mid-caps) are in intermediate-term uptrends, and we’re also seeing some sectors assert themselves, especially in the commodity space. We’re not bullish, and will leave our Market Monitor at a level 4, though our overall advice remains basically unchanged: Hold plenty of cash, honor your stops and, if you do some buying, keep it small.


This week’s list is again heavy on commodity-type names, though we’re also seeing a few recent earnings winners that have some growth to them. Our Top Pick straddles the line between growth and commodity and is one of the few names to move out to recently all-time highs.
The market and many stocks staged a nice bounce last week, and despite many ups and downs and news-driven moves, they’ve all stopped going down for the past three to four weeks—and that means a few good days could actually produce an intermediate-term green light. Still, as has been the case for weeks, we need to see it before taking any big action: Until proven otherwise, the onus remains on the buyers to show up for more than a day or two, which means keeping plenty of cash on the sideline. As has been the case for a while, our Market Monitor remains at a level 3, though we’ll let you know if that changes going forward.


This week’s list is heavier on commodities than it has been in a while, though there are a few nascent earnings winners in there, too. Our Top Pick fills both bills, as shares are picking up steam after their Q3 report following a 13 month period of no progress.
Last week was another doozy for the bulls, with the major indexes suffering a good-sized decline and many growth stocks taking it on the chin. With the major evidence still pointed down, we continue to advise holding plenty of cash and doing little on the buy side. That said, it’s also important to remain flexible, as there remains plenty of underlying potential positives, including another round of hugely pessimistic sentiment measures and a positive divergence in the broad market. As we’ve written before, if something actually goes right in the world, it’s possible the bulls could make a run at things, but we have to see it for more than a day or two to believe it. Our Market Monitor remains at a level 3.

This week’s list actually has a lot of names that look poised for intermediate-term moves … if the market can get out of its own way. Our Top Pick is an old friend in the medical device space that actually has four months of positive momentum on its chart.
There were a few positives last week, including some intriguing early-week strength, with some very powerful breadth, and, even with the slide of the past couple of sessions, far fewer stocks were hitting new lows compared to a couple of weeks ago. Given how everyone is leaning bearish, there’s plenty of upside potential if the market can catch a spark, but the jobs report-induced selling reinforces the pattern of selling on each and every rally. Long story short: While our eyes are open, nothing has changed with the major evidence. We’ll stick with a level 3 on our Market Monitor.


This week’s list is heavier on energy and medical areas, though our Top Pick is a name that should benefit from higher rates. As usual, though, we think aiming for dips is the right move.

As volatility picks up in the market, so too do the dramatic headlines, and we’re starting to see that now—but once again, nothing has really changed with the evidence: The trends of the major indexes are still pointed down, and most strength is being rejected, both of which argue for a continued defensive stance. As for rays of light, we’re still seeing a fair amount of names holding up well, as well as some minor positive divergences. All in all, our antennae remain up—we think upside surprises are possible—but our Market Monitor remains at a level 3.


This week’s list has another crop of resilient stocks from a variety of different areas, from medical to energy to restaurants. Our Top Pick is a familiar growth stock that went through the wringer and is now base-building normally despite the market’s grumpiness.

There’s not much to say when it comes to the market—the downturn that started in late August continues, with the major indexes back down to their May/June lows, keeping the intermediate- and longer-term trends pointed down. Moreover, after last week’s Fed meeting, the sellers finally came around for many resilient names, causing a bunch to crack support. Today, we’re staying cautious and continuing to hold plenty of cash, but we’re keeping an open mind as we see how this retest phase plays out. Our Market Monitor is down to a level 3.



This week’s list is mostly names that have taken on water (like everything else) but are still acting “normally.” Our Top Pick is a name that’s acting very unusually good, and it has a good story and excellent growth, too.


Last Tuesday’s hot inflation report, along with Thursday evening’s earnings warning from FedEx, led to a terrible week for stocks, which keeps the negative top-down evidence in place: Both the intermediate- and longer-term trends of the market, as well as most stocks and sectors, remains pointed south. On the positive side, we still see many stocks doing a solid job of holding their own, and sentiment is firmly on the bearish side of the fence, and both of those represent dry tinder—if something goes right in the world (what a concept!), we think there’s a chance of a really solid rally. But bear markets are all about patience; we’ll leave our Market Monitor at a level 4.


This week’s list has another batch of resilient stocks, and our Top Pick has been bottoming out for months, and a decisive push higher should be buyable.

Compared to the prior three weeks when the major indexes imploded, last week was a breath of fresh air. As we like to say, up is good, so the action is certainly a plus—and, more important, we still see a good number of stocks in multi-month setups. All that said, much of the recent buying has been from the off-the-bottom crowd, and at best, the intermediate-term trend of the overall market is sideways while the longer-term trend remains down. We’re certainly OK holding onto our resilient names, but we continue to need to see more before we advise becoming aggressive. We’re leaving our Market Monitor at a level 4.


This week’s list has a few more turnaround and steady Eddie-type names despite the market’s rally. Our Top Pick is a cheap name near the top of a huge launching pad that also has a decent long-term cookie-cutter story, too.

We’re still thinking there’s a decent chance that the market’s action since May and June is part of a big bottoming process, but it’s also pretty clear that, even if that’s true, the market has more work to do—the selling of the past three weeks has erased many of the positive top-down signals from the prior month or two, with the intermediate-term trend of the major indexes pointed down, the broad market unhealthy and growth stocks in general again underperforming. We’re still aiming to hold onto resilient names, but having plenty of cash is also a must, as is staying flexible.


This week’s list has a bunch of good charts, reflecting the fact that many nooks and crannies of the market are still looking somewhat solid. Our Top Pick is a leader in a commodity niche that has a good launching pad and has come under strong accumulation.

No student of the market is going to look at the action of the past week and shrug it off; that said, looking at the evidence, we can’t say the rally has gone kaput, at least not yet: By our measures, the intermediate-term trend is still pointed up, and a lot of high relative strength stocks (like those found in Top Ten) are pulling back very normally at this point, We’re not going to whistle past any graveyard: We’ll move our Market Monitor back down to a level 5, and if things worsen from here, we’ll quickly bring that down another notch or two--but we’re still holding our resilient names until something changes.



This week’s list reflects the renewed strength we’ve seen in commodity and “old world” names, even as the market has retreated. Our Top Pick is a name we missed a couple weeks back but think this pullback marks a decent entry point.

Updates
The major indexes have been up and down this week, with this morning’s better-than-expected jobs report likely to offset a chunk of Wednesday’s post-Fed gains.
NOTE: Given our publishing schedule (50 issues a year), this is one of Top Ten’s “weeks off,” but we’re sending a Movers & Shakers update today to stay in touch, update stops and share our latest thoughts.
The indexes are flat-ish this week after this morning’s upmove, which marks a normal consolidation after the strong inflation report-induced rally last week.
The big event this week was yesterday’s tamer-than-expected inflation report, which caused a huge jump in the indexes. While this doesn’t cure all the market’s sins, it adds to the modest positive evidence that’s been emerging in recent weeks.
It’s been a poor week for the major indexes even including this morning’s post-jobs-report pop, with most giving up a chunk of their recent off-the-bottom gains. As has been the case, the big-cap indexes (S&P 500 and Nasdaq) have fared the worst, down 3% to 5%, while the broader measures (small/mid-cap) are down “only” 1% to 2%.
After sinking to new bear lows last Friday, the indexes have bounced back some this week (up 2% to 3%), though we’ve seen some selling on the early-week pop after a Fedhead implied at least a couple more big rate hikes are likely before year end (markets now see two more 0.75% hikes). Even so, nothing has changed with the primary evidence—the intermediate- and longer-term trends are down for the indexes and most stocks are still buried (80% of names below their 50-day and 200-day lines). Thus, we remain defensive.
Officially, nothing has changed with the market’s story: The intermediate- and long-term trends of the indexes (and the vast majority of stocks and sectors) remain down, hundreds of stocks are hitting new yearly lows every day and very few are doing the opposite. Thus, we continue to advise a defensive posture with cash being your largest position.
Overall, it’s been an interesting week: The major indexes have bounced nicely even including a morning selloff on the jobs report, up in the 3% range, and early this week we did see some unusual upside breadth—Tuesday’s NYSE up volume outpaced down volume by 20- to 25-to-1 (depending on exactly how you measure it), which, when coming after a selling deluge, has frequently marked low points.
The week is shaping up to be down yet again for stocks, the sixth down week of the past seven, with every index basically re-testing their May/June low area (and some slicing to new lows). As of this morning, most major indexes were down in the 1% to 1.5% range for the week.
Late September is usually the weakest part of the year for the stock market, and when you throw in a still-aggressive Fed, you have the result you see this week, with the major indexes effectively giving up the ghost, falling another 4% to 5% on the week (as of early this morning), which obviously keeps the intermediate-term (and longer-term) trends pointed down.
The minor positive vibes from last week were taken out and shot this week, with Tuesday’s inflation report causing a huge selloff, and last night’s FedEx earnings warning throwing fuel on the fire. As of this morning, the major indexes are all down in the 5% to 6% range on the week.
The market’s action during this post-holiday week has been about as positive as you could have hoped for after the prior, Fed-induced correction. As of this morning, most major indexes are up in the 2% to 3% range and we saw many resilient stocks pop higher too.
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.