Cabot Growth Investor Issue: May 15, 2025

Increasingly Bullish—but More Tests to Pass

When it comes to the overall market, you really couldn’t ask for a better past few weeks given where things stood following the massive tariff-induced plunge. Indeed, the market has been passing just about every test thrown at it. Hold the panic lows after the tariff mess? Check. Show some rare strength and trigger some blastoff indicators when the rally began in earnest? Check. Have the intermediate-term trend turn up while the broad market returns to health? Check. It’s been pretty much on script in terms of a textbook rally.

Of course, the headlines are still coming fast and furiously, and for weeks they’ve been mixed, with some worrisome news (negative GDP, an initially escalating U.S.-China tariff war) and some encouraging headlines more recently (U.K. and China trade truces, solid jobs report). And there are still many uncertainties out there, not the least of which is how trade negotiations go; for better or worse, tariffs are still much higher now than they were a few months ago.

But as always, the news isn’t what counts most for gleaning the health of the market, which is looking ahead by three to nine months. Instead, it’s the market’s reaction to the headlines that counts, and in recent weeks bad news has been (mostly) shrugged off and good news has been embraced. Following the Three Day Thrust (and Zweig Breadth Thrust) green lights in late April, which was certainly an initial sign that this rally could have legs, we’ve now seen our Cabot Tides and Two-Second Indicator turn positive, along with our Aggression Index, all of which is increasingly bullish. Our Cabot Trend Lines still have work to do, but if all goes well, they could flip next Friday, too.

So we should all be buying hand over fist, right? Well, if your portfolio solely consists of broad funds, maybe—at heart, we think the panic is likely over, and while the near-term could see some weakness now that the good news (U.S.-China deal) is out, the setup (panic selling and horrid sentiment) and recent strength bode very well for the months ahead.

What we’re really waiting for is leadership. Thus far, the rally has been led by off-the-bottom names; in fact, we’ve seen the many resilient growth stocks during the correction actually crack while the beaten-down names rally. As we write later in this issue, that’s not abnormal in the early stages of a move after a big decline, and we’re starting to see some fresh leaders actually emerge—but more stocks hitting new highs are needed for things to really ramp from here.

What to Do Now

In sum, we’re optimistic the path of least resistance has turned up, and we’ve put a chunk of money to work this week. But growth stock leadership is still developing, so we’re kicking out names that aren’t working and focusing on where the buyers are swarming. Since the last issue, we’ve made a bunch of moves: On the buy side we’ve added GE Aerospace (GE), Uber (UBER), Toast (TOST), ProShares S&P 500 Fund (SSO) and, today, Rubrik (RBRK), but we’ve also dumped our small positions in Argenx (ARGX), Halozyme (HALO) and Penumbra (PEN) as all things medical have been under pressure. Our cash position will still be around 53%, though we’re aiming to put more of that work if and as growth stocks emerge.

Model Portfolio Update

The rally has hit another gear of late, with our Cabot Tides turning positive last Friday, our Aggression Index doing the same and our Two-Second Indicator giving an all-clear for the broad market—all of which comes on the heels of the Three Day Thrust a couple of weeks before. Throw in the strong upside in the indexes and we’ve put a chunk of money back to work.

That said, we’re still holding around 53% in cash, and the reason is the bottom-up evidence—while some fresh leaders have gotten going in recent days, many resilient names are actually seeing selling; a lot that were in pole position getting hit and others were slow off the blocks. As we write later in this issue, such action isn’t abnormal early after a big decline, and we’ve latched onto some storng names this week—but we want to see more leaders take flight (and more new highs in general) before doing a bunch more buying.

Overall, though, we’re optimsitc and are looking to slowly acquire leaders in the portfolio as they lift off. After the recent flurry of moves, we’ll stand pat tonight, but will be on the horn if we have any changes (TTWO reports earnings tonight) in the days ahead.

CURRENT RECOMMENDATIONS

Argenx (ARGX)—ARGX is a poster child for what we’ve seen a lot of during the past two or three weeks: Stocks that held up relatively well during the correction and rallied initially when the market turned up … only to give up the ghost soon after. ARGX got back to within 4% of its highs last week, but (a) fears of some pharmaceutical tariffs and then (b) the Q1 report that missed estimates served to crack the chart, with the stock heading back to its correction lows. Longer-term, we wouldn’t be shocked to see shares eventually get going again—Vyvgart’s sales should continue to kite higher for a long time to come—but the double top and big selling tell us perception here has probably topped for a while. We never ended up having a good-sized position here, so we took what was left of our small profit last week. SOLD

Flutter Entertainment (FLUT)—FLUT isn’t soaring to the heavens, but we’re OK with its bottom-building process so far as shares have been attacking round-number resistance near 250—if they decisively fail there, we could let our remaining position go, but we think a move above that level could usher in a nice rally. On the Q1 call, the top brass said they’re not seeing any signs of maturation among U.S. states that FanDuel operates in; the U.S. market saw 11% growth in active bettors for FanDuel, the firm remained the clear leader (48% sportsbook share) in the field, and despite some negative outcomes in Q1, Flutter expects its U.S. business to see 28% revenue and 123% EBITDA growth this year. Stepping back, gaming stocks have historically seen some big corrections before the long-term uptrend continues, and we think that could happen with FLUT, especially if (when?) there’s more clarity on the betting exchange (like Kalshi) regulations. If you’ve held through the past couple of months with us, we advise sitting tight. HOLD

GE Aerospace (GE)—Nobody is going to claim that GE Aerospace is some young, dynamic leader that will double in a month, but we think the stock has a chance to trend nicely for a few reasons. First is the fact that the aerospace business is in a steady expansion phase, and since these phases often last for years, there should be a very long runway of growth ahead. Second, of course, GE itself is going to get a huge share of that increased industry business, mostly for its commercial jet engines (three of four commercial flights use engines made by GE), which bring in not just revenue now but massive sales down the road—in Q1, while jet engine sales were off 6% due to lumpiness, the steadier service side of the business saw sales up 17%, while commercial service orders rose 31% and the backlog totaled a mind-boggling $140 billion! That should push sales, earnings and free cash flow nicely higher for many years, which is good in and of itself, and should also result in higher shareholder returns (so far, there’s a token dividend yielding 0.7% while the share count is down nearly 2% over the past year). And finally there’s the chart, which saw GE make no net progress for about a year before the recent upleg. GE could easily wobble a bit near-term (so could the entire market), but there’s no question big investors have been buying. We started a half-sized stake last week and quickly averaged up on Monday. BUY

Halozyme (HALO)—Sometimes the unexpected happens in the market, and that was certainly the case with Halozyme this week—the Q1 report was spectacular and the conference call saw management talk about its confidence regarding everything from tariffs to patents and royalties. There was certainly every indication that business was accelerating and big investors were behind it … but a downgrade this week on supposedly bearish Medicare pricing guidance caused the stock not just to skid, but to disintegrate, plunging to multi-month lows on enormous volume. For its part, management said it thinks the move is a huge overreaction, and even an analyst or two has said they think the Medicare guidance could be a nothingburger—but given the action, there’s no question perception has been damaged, with a big uncertainty now hanging over the stock. If you want to hold a tiny position to see if HALO can come back somewhat, we wouldn’t argue with it, but one of our core rules when something this out-of-the-blue happens is to make sure what is an obviously bad situation doesn’t get much worse and do real damage to the portfolio. Thankfully, we had only a half-sized position, and we quickly cut bait this week, swallowing the loss and moving on to greener pastures. SOLD

Palantir (PLTR)—PLTR returned to its prior peaks well before most growth stocks, and while shares did wobble after earnings last week, they’ve quickly rallied back, bursting to fresh peaks the past couple of days. The most impressive thing about the quarterly report continued to be the tsunami of business from U.S. clients that can’t get enough of the firm’s AI platforms—both commercial (up 71%) and government (up 45%) sales boomed, while commercial deals booked lifted 183% (!), bringing the remaining deal value to $2.32 billion, up 127%. There’s no question that PLTR has had a big run in the past year, but the snapback from the lows of the correction is clearly a powerful sign, and the fact that business here is still accelerating (sales up 39% overall despite sluggishness overseas) should keep big investors interested. For the moment, we’re going to stick with our Hold rating simply because the stock really isn’t close to a lower-risk entry, though we’re hoping to go back to Buy if we see a normal rest in the days ahead. HOLD

Penumbra (PEN)—A month ago, medical and biotech names looked like future leaders, but for various reasons (tariffs, earnings reports, regulation fears, etc.), the group has turned weak, which is probably one reason PEN couldn’t get above round-number resistance of 300 and, in the past two days, has started to fall off. As we wrote in our special bulletin today, the chart isn’t a disaster and if PEN (and the sector) rights itself, we could revisit it down the road. Of course, there’s nothing wrong with the business—earnings easily topped expectations, driving estimates higher (low 30% earnings growth expected this year and next), and the report was well received. But with the market strengthening, we’re looking to get into names that are doing the same, and so we decided to cut bait with PEN, take the small loss and move into a stronger situation. SOLD

ProShares S&P 500 Fund (SSO)—While growth leadership has been slow to develop during the rally thus far, the top-down evidence has turned increasingly bullish, with many longer-term studies pointing to the quick market meltdown being over and—looking some months out—a possibly big and extended rally. After we see big declines like in March-April followed by some all-clear signs, we often turn to a leveraged long index fund like SSO, which moves twice the S&P 500 (on a percentage basis) on a daily basis. (Heads up: You may get a form e-letter from your brokerage house telling you the risks of investing in something like SSO; that’s a regulatory requirement because it’s leveraged, but the fund is liquid and acts like it “should” over time.) Of course, after the recent straight-up move, we could see some near-term wobbles, which is why we started with a half-sized position—but we think the risk/reward is reasonable here, with a mental stop in the 78 area (which would likely coincide with the recent Tides buy signal being reversed) for now. Hang on if you own some, and if not, we’re fine starting a position here or on dips of a couple of points. BUY A HALF

Rubrik (RBRK)—We’ve been watching RBRK for months, first during a rally phase near year-end (when we were already loaded up with winners), and then through a very wild period during the market’s downturn, when shares hacked between 50 and 80 (round numbers) a couple of times—but now the stock has come all the way back to new highs. We like the fact that cybersecurity stocks are strongest growth group in the market right now, but this is much more than a sector play: Rubrik looks like one of the fresh leaders in the cyber resilience theme, which includes protections but also focuses on data recovery; simply put, firms are seeing more (and more costly) cyberattacks despite spending more and more on prevention, so a company like Rubrik can minimize the downtime of having data get hacked, which effectively slashes the costs of such events. While earnings are still deep in the red, free cash flow has turned positive, and revenue (and subscription revenue in particular) has seen growth accelerate during the past couple of quarters. To be fair, the valuation is up there and earnings are still coming (June 5, three weeks from now), but we think Rubrik is likely to see business soar for a long time as its best-in-class resilience solution grabs more and bigger clients. The stock has certainly had a big recent move, but we like the persistency and this week’s move to new highs. We started a half-sized position (5% of the overall account today), but given the volatility here, will use a loose initial loss limit in the upper 60s. BUY A HALF

Take Two Interactive (TTWO)—TTWO hit turbulence earlier this month when it unexpectedly delayed the release of Grand Theft Auto VI (to May next year), but the damage was reasonable and shares bounced back well, never trading below their 50-day line (or closing below their 25-day line). That resilience was likely partially due to the fact that the top brass is still expecting record bookings in both fiscal 2026 (which just started in April) and 2027, as there’s more to this story than just Grand Theft Auto. Even so, the big event is happening tonight, when the firm will release quarterly results and (just as important) surely field some questions about business and new game sales in the quarterly conference call. It’s been a tedious earnings season thus far for resilient names, so we’ll see how it goes—a drop toward 200 would be iffy, but if shares can get through the report unscathed, we continue to think they can do well going forward as institutions discount what should be a step function increase in the bottom line for many quarters to come. We’ll stay at Buy a Half, but will update you if we have any changes in the days ahead. BUY A HALF

Toast (TOST)—Timing is important when dealing with individual stocks, and after three years of declines, bottom building and general futzing around, we think TOST is finally ready for a sustained run. Of course, the underlying fundamental story—its platform is custom-built for the gigantic restaurant industry, not just payments but for all sort of activities—has remained strong, and now the firm is branching out a bit, making headway internationally, with enterprises (it scored Applebee’s as a client in Q1, the biggest deal in company history) and food and beverage retail outfits. All in, Toast serves 140,000 locations now (just 10% of what it sees as its current addressable market), but thinks it will have 10,000 locations in these newer areas by year-end. Growth here has been rapid and reliable, and now the bottom line is kicking into gear, too—in Q1, total revenues were up 24%, but annualized recurring revenue boomed 31%, total locations served lifted 25% and EBITDA boomed 133%, with more growth like that on the way. Shares looked like they were getting going in November, but that rally was snuffed out and TOST eventually caved in with the market. But the Q1 report changed perception, with shares quickly ratcheting back to new highs. Like everything else, near-term wobbles are possible, but we’re OK starting a position here or on dips of a couple of points. BUY A HALF

Uber (UBER)—We owned UBER during its run from November 2023 to February 2024, but frankly, we thought it was set to go a lot higher than it did—the company had morphed into a steady-growth, free-cash-flow machine, and it even released multi-year projections for its bottom line to mushroom as the ride sharing and delivery businesses both thrived. However, stocks move on investor perception, and fears that Tesla’s Robotaxi (autonomous vehicles) would rapidly take business caused UBER to top out … and gyrate sideways in a big range for a full year. But business never wavered (Q1 currency-neutral revenue was up 18% while EBITDA boomed 35%), the firm continued to invest in and made its own partnership with autonomous rides (Waymo in particular) and news that Bill Ackman had built a big stake ($2.3 billion worth) helped start to re-attract investors, with UBER holding support during the worst of the market decline and with shares racing to new highs this week. Near-term, of course, that move could lead to some shaking and baking, but having made no progress for a year, we’re thinking the stock is likely starting a new advance. We bought a half-sized stake earlier this week and will look to average up if it remains strong. BUY A HALF

Watch List

• Axon Enterprise (AXON 728): AXON’s story remains top notch, and after a very bad-looking break in the heat of the market downturn, shares steadied themselves and have rapidly returned to new highs. See more below.
• CoreWeave (CRWV 66): CRWV looks like a new leader in the AI infrastructure space, with growth that’s hard to fathom and a massive backlog as well. See more below.
• GE Vernova (GEV 427): GEV could use a bit of a rest, but there’s no doubt the firm is one of the favorite institutional ways to play the power and electricity boom, with steady sales, earnings and free cash flow growth expeted for many years to come.
• Insulet (PODD 322): PODD gapped up nicely after its quarterly report easily surpassed expectations, with the Omnipod 5 insulin pump rapidly gaining share even among Type 2 diabetics (it’s the only pump approved for that segment). Our main hesitation here is the action among the medical group, which has been a sinkhole lately.
• Mosaic (MOS 35): Mosaic’s quarterly report was mixed, but the stock has taken flight, tagging its highest levels since early 2024. We’d prefer to see some other names in the group act well (a sign of a sector move), but we’re still leaning toward the view that business is entering a new up-cycle after three years of dry times.
• ServiceTitan (TTAN 125): TTAN is a bit wild and wooly, but it’s also resilient, having hit new highs in mid-April and holding near that peak today. We like the unique cloud software story (platform for various trades businesses), though we’d prefer more sponsorship. Earnings are due June 5.

Other Stocks of Interest

Axon Enterprise (AXON 728)—We rode AXON to great gains last year, but like a lot of names that had huge runs, we figured the stock’s big breakdown in February (we had already sold out of it) meant it had likely hit a peak for many months, if not longer. But instead, the stock held up relatively well (never cracked its 200-day line, unlike 80%-plus of all stocks) and it’s ratcheted back to new highs relatively quickly—a great sign of strength. The underlying story here hasn’t changed, and the firm’s newer AI-enabled offerings look like they’ll be huge contributors: Axon is the hands-down leader in supplying advanced weapons (like its Taser electrical weapons) and technology to law enforcement agencies, with body and dashboard cameras for officers, software that stores, manages and edits all video (resulting in higher conviction rates; more video is uploaded on Axon’s platform every month than YouTube), cloud dispatch and response offerings, and much more. Even better are the aforementioned AI products: DraftOne can form a basic police report just from body cam audio and video (still needs to be touched up by the officer, but it’s a huge time saver), and after just a few months it’s up to 30,000 users, the firm’s fastest software-related launch ever. And Axon recently announced Assistant, which is integrated into a body cam and provides real-time translation services and voice-enabled policy answers right in the field. (It also announced a deal with Ring to integrate its offerings into that firm’s camera doorbells, giving the user the option to share it with police via Axon’s systems if need be.) Importantly, just about everything Axon sells these days is via subscription, which means growth has been rapid and reliable and estimate-beating: In Q1, sales rose 31%, annualized recurring revenue was up 34% and EBITDA lifted 42%, while future contracted revenue came in 41% higher than a year ago, all of which led the top brass to hike estimates. AXON gapped up nicely on the report and followed through to new highs this week. Near-term wobbles are possible, but it looks like investor perception of the firm’s future has further to rise.

CoreWeave (CRWV 66)—With the market rally of the past month, many AI-related stocks have perked up, but most are still buried on their charts after 50%-plus declines—but CoreWeave is a newly public outfit (March 28) that’s very liquid (trades $250 million-plus per day) that has a big AI story, and growth to match. CoreWeave’s claim to fame is its cloud platform that’s been built from the ground up for AI, able to manage all of the infrastructure at massive scale to deliver best-in-class results, including faster performance and more uptime thanks to its own software—effectively cutting the time it takes to train AI models, sometimes dramatically so. (In June 2023, it completed an advanced industry test in 11 minutes, 29 times better than the next competitor; we’d guess the gap has closed since then, but it goes to show the power of CoreWeave’s offering.) The platform is backed up by partnerships with leading chipmakers for GPUs (including Nvidia, which invested in the firm when it was private; the company gets priority access to Nvidia’s offerings) and long-term deals for power consumption for its 30-plus data centers. Many huge players are clients, and they often ink multi-year deals; Microsoft is by far the biggest, making up 60% of revenues (more on that in a second), while OpenAI recently inked an $11.9 billion contract with CoreWeave, and names like IBM and Meta are also clients. With all that said, there are risks here, including the Microsoft dependence (the concentration is supposed to ease this year, but that firm will still be a huge piece of the pie), as well as a mountain of debt it’s taken on to expand quickly. Even so, the growth here has been almost unreal, with revenues rising from $200 million or so in 2023 to $1.9 billion last year (!), and the Q1 report this week revealed another round of massive growth, with revenues of $982 million (up 460%) and a revenue backlog (the firm’s term meaning money the firm thinks is coming its way via commitments) of a whopping $25.9 billion; while interest expeses are huge, we will say cash flow here is nicely in the black. As such a new stock, CRWV is a hot potato, but shares got hit for a few weeks after coming public, but has U-turned in recent weeks, moving past its post-IPO peaks. We’ll be watching to see if the stock can settle down and etch a proper entry point.

iShares Bitcoin Trust (IBIT 59)—We know ourselves pretty well, so we don’t think we’ll ever be Bitcoin or cryptocurrency fanatics—however, investing in cutting edge companies over many decades has taught us to also keep an open mind over time, as many financial inventions often start out as niche and speculative only to grow up to be a big part of society. That’s our general view of Bitcoin, which is the hands-down biggest play in crypto, and it continues to gain acceptance from a larger and larger array of companies as payment (you can buy Starbucks gift cards in Bitcoin to use at the stores; AT&T customers can pay bills using the currency, too) and which, due to its scarcity (there are a maximum of 21 million Bitcoins that will eventually be available), is gaining in popularity among investors of all sizes who are looking for alternatives to currencies that are affected by inflation and money printing. The reason we’re mentioning it now, though is that Bitcoin tends to be a “risk on” security, and given some of the positives emerging in the market, it’s a good bet it will head higher. Indeed, when looking at a chart of the iShares Bitcoin Trust—which actually owns the coins themselves and tracks bitcoin extremely closely—we’re impressed with the reasonable correction (30% from high to low), the repeated support at the 40-week line (better than 80%-plus of stocks during the market’s implosion), the many weeks of tightness at the lows (five weeks in a row closed at nearly the same level), and of course the latest run back toward its old highs. Will we ever put something like IBIT in the portfolio? Most likely not, as the focus is really on leading growth stocks, ideally fresh names with revolutionary new products—but we’re also students of the market, and if we are entering a new bullish phase for the market following the tariff-induced plunge, we think the odds are very good that Bitcoin can have another big push higher.

Leadership Can Be Slow Starting—But Should Kick into Gear Soon

While we obviously keep an eye on lots of things, we’d say that 80%-plus of our market timing system is based on the trends of the major indexes—namely, our Cabot Trend Lines and Cabot Tides—as well as the action of leading (or potentially leading) growth stocks. Most of the time these swim together and reinforce the other’s signals; for instance, many leading stocks might break intermediate-term support just as the Cabot Tides flashes a sell signal.

Sometimes, though, they can be out of gear a bit, and that often happens near either end of a market cycle—near a top, you’ll often see many leaders acting sloppy (changing character) for the worse, which is exactly what happened in the December-February period of this year, before the market cascaded. The opposite, though, can occur after a market low, particularly after a sudden decline: You’ll often see the major indexes kick into gear first, while beaten-down names rally initially … only to see true growth leadership get in gear a bit later on.

That’s been the case for the first month or so of this rally phase. It wasn’t hard to find honest-to-goodness growth stocks that were resisting the market’s crash in fine fashion, but after the market got going, we’ve actually seen a bunch of those take hits, and in some cases, fall apart. TG Therapeutics (TGTX) had fresh leader written all over it, but the stock has dropped 28% in a couple of weeks from its highs; Life Time Fitness (LTM) reported an excellent quarter only to see huge-volume selling come in after an initial earnings pop; while a name like Spotify (SPOT; not shown) quickly returned to its highs by late April only to mostly hack around since, even as the indexes have rallied. There are numerous other examples, too, including Penumbra (PEN), which we let go of today.

However, one thing we’ve noticed ever since we came up with our Cabot Tides two decades ago is that, when we do see this sort of dichotomy between the indexes and high relative strength stocks (those near their peaks) early in a new uptrend, it will often resolve itself within a week or two of the Tides actually turning positive. Translation: The initial off-the-bottom rally is often led by beaten-down names, but once the rally gains a foothold (intermediate-term trend turns up for the market and for growth stocks), more names start to let loose on the upside. While our history with it isn’t as long, we’ve also seen the same rough pattern in regards to our Aggression Index, which has turned up on an intermediate-term basis (see below).

Happily, we’re starting to see that over the past week in some names—we started positions in Uber (UBER) and Toast (TOST) after their earnings gaps (and follow-through action), while watch list name Insulet (PODD) also gapped and cybersecurity titles like Rubrik (RBRK—added to the portfolio today) and Zscaler (ZS) have stretched to new highs.

Our point in writing all of this is that the lack of resilient stocks moving higher during the past few weeks of the rally isn’t ideal—but it’s also not very unusual. And now that the Tides and Aggression Indexes are positive, we’re starting to see a bit of a character change, with a few more true-blue growth names kicking into gear. We’ll be wanting to see more of that among individual stocks and growth measures (like the IBD 50 Fund) in the days and weeks ahead as a sign the rally is accelerating—which would have us extending our line.

More Thrust-Type Action

As we wrote in the last issue, when the market began to get off its knees late last month, it did so with some very rare shows of strength—one being the Three Day Thrust, and another being the Zweig Breadth Thrust, both of which show decent results in the near-term but almost always lead to great gains six to 12 months down the road.

And this week we saw another—sort of. The indicator itself was invented by analyst Jeff deGraff, and it occurs when 55% of the S&P 500 stocks hit a new 20-day high, which triggered on Monday. Frankly, such an occurence isn’t that rare, and while the results going forward were solid, there were also a decent number of iffy signals.

However, it turns out that when this deGraff signal occurs within a month of a Zweig signal, like it did this time, the results are both rare (only seven other times in the past 45 years) and very bullish—the market was never lower two, three, six or 12 months later, with average gains of 16% six months later and 26% a year later.

Of course, there are never any guarantees, and we’d like to see our Cabot Trend Lines return to bullish territory, but these rare shows of strength certainly up the odds that a sustained upmove is underway.

Cabot Market Timing Indicators

The top-down evidence has improved nicely since the last issue, with our Cabot Tides and Two-Second Indicator now positive, as is our Aggression Index, all good intermediate-term signs. We’re still waiting on the Cabot Trend Lines, and among individual stocks, leadership has been a bit slow on the uptake (though it’s improved this week), but there’s no question things are headed in the right direction.

Cabot Trend Lines – Bearish
Our Cabot Trend Lines are still negative, but the next six trading days will be key: At this point, both the S&P 500 (by around 1.5%) and Nasdaq (by a little less than 3%) have reclaimed their 35-week lines, and now they need to remain above it both this Friday and next. If so, the sell signal would fall by the wayside and confirm many of the other big-picture positives (like the Three Day Thrust, etc.). As always, we don’t anticipate things, but the next week will be telling.

Cabot Tides – Bullish
Our Cabot Tides turned positive last Friday, when all of the indexes we track (including the S&P 400 Midcap, daily chart shown) were above their lower (25-day) moving averages, and those moving averages themselves began to rise—and, of course, the indexes have perked up since then. Near-term, there could easily be some retrenchment, but the market has plenty of daylight (down to the rising 25-day line) to correct if it wants to. Bottom line, the intermediate-term trend has turned up.

Two-Second Indicator – Positive
Our Two-Second Indicator isn’t exactly showing extreme strength (sub-20 new lows day after day) as is often seen after a major low—but the good isn’t the enemy of the perfect, with the indicator’s string of sub-40 readings (17 of the past 18 session) enough to flip the signal to positive, telling us the broad market has returned to health after a massive selling storm.

The next Cabot Growth Investor issue will be published on May 29, 2025.

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