Cabot Growth Investor Issue: October 30, 2025

Lots of Crosscurrents

Usually, the market will be the most “in gear”—that is, just about all stocks are headed in the same direction—toward the end of a good-sized decline and then right afterwards, when the market takes off in a fresh bull trend. In fact, many high-quality timing indicators have been built around that fact to signify when the market is deeply oversold (huge amounts of new lows, few stocks above moving averages, etc.) and, on the flip side, when it’s kicking off a new advance (like some of the Blastoff Indicators we track that flashed earlier this year).

However, as an intermediate-term advance gets longer in the tooth, you will often see more and more crosscurrents, with many investors rowing in different directions. That’s certainly the case now: After the U.S.-China trade shakeout earlier this month, the big-cap indexes have rallied nicely, and very encouragingly, we have seen some fresh breakouts emerge among growth stocks for the first time in at least a few weeks.

On the flip side, much of the market looks iffy—our Two-Second Indicator has flared up again (two straight triple-digit readings!), and many broader indexes we track haven’t been able to make any progress for many weeks while they test key support. In fact, even just looking at big caps, the S&P 500 equal weight (symbol RSP) is showing exactly that, mucking mostly sideways for two-plus months as it toys with its 50-day line (see below).

What does it mean? First, to us, the evidence above is more descriptive than predictive—telling us that a tricky environment for growth stocks is still in place, and now we’re seeing more crosscurrents in the rest of the market. And that in turn tells you the risk of something tedious (a correction? a big rotation?) is elevated, which should be respected.

Yet at the same time, there are also plenty of names acting just fine, some new leaders have emerged (or re-emerged), and the market continues to have a bright big-picture outlook (see more on that later in this issue).

All told, then, we’re going with the flow—picking our spots carefully (partially due to the environment, and partially because many stocks we own and are watching are reporting earnings in the days ahead) but aiming to get out of sluggish names while re-positioning in stocks that look like they just kicked off new uptrends.

What to Do Now

In the Model Portfolio, we took small profits in GE Vernova (GEV) and MP Materials (MP) last week after the stocks broke down; today on a special bulletin we did the same with Oracle (ORCL), which also tripped our stop, and tonight we’re placing Alnylam (ALNY) on Hold. However, we also did some buying, filling out our position in CrowdStrike (CRWD) and starting a new half-sized position in Vertiv (VRT), two names that have just recently lifted to new highs. After all of that, we’ll still be holding around 37% in cash.

CURRENT RECOMMENDATIONS

As mentioned above, the crosscurrents in the market are real, with some names looking great and some breakouts coming on earnings—but others are hitting potholes with a few breaking down. We’ve seen much the same in the Model Portfolio, with some names holding up well during the early-month selling and wild crosscurrents, while others have succumbed to sellers and cracked support.

We’re still being selective on the buy side given everything that’s out there (including, of course, a spate of earnings reports still to come), but we’re not holed up in our cellar with the market hanging in there—instead, we’re re-jiggering things a bit, dumping names that lose support while trying to reinvest in fresher, stronger names that are (ideally) early in new runs.

With the various moves the past two weeks (selling GEV, MP and ORCL; adding more to CRWD and starting a new position in VRT), we’re about 37% in cash. We won’t hesitate to make more moves (buy or sell) going ahead as we aim to ride what’s working and avoid what isn’t.

Alnylam Pharmaceuticals (ALNY)—Alnylam reported third-quarter results last night and they were excellent: Product revenues of $851 million lifted 103% from a year ago, led by TTR revenues (up 135%), with Amvuttra revenue (mostly due to the new ATTR-CM indication) doubling from the prior quarter. Meanwhile, the bottom soared to around $2.90 per share, crushing estimates of $1.75, and the top brass once again hiked estimates going forward. Despite that, the stock was whacked today after the firm said the AG of Massachusetts is seeking documents surrounding “government price reporting” for a few of its drugs, including fee arrangements with distributors ... raising fears of some possible price controls or what-not, which could possibly affect results. Do we think this inquiry will be a big deal in terms of the business? Our gut says no, but as usual, we’ll let the stock tell the story—if all is well, ALNY should generally find support soon and get going on the upside, especially given the sterling sales and booming earnings, but if not, big investors will likely continue to pare back. We’ll go to Hold here to respect the action and we’ll stay flexible and see what comes next, with a mental stop in the 410 to 415 area. HOLD

AppLovin (APP)—Our timing with the APP purchase earlier this month couldn’t have been worse, with the short seller attacks (and leaked reports, also likely fed by short sellers) starting soon after our initial entry. But patience is a virtue in the market, and after two dips to the 550 level (and the 50-day line this month), buyers made at last a temporary stand. The quarterly report is due next Wednesday, with analysts looking for sales of $1.33 billion and earnings of $2.37 per share (up 90%), though investors will surely want to know (a) any official response to the accusations and, more important, (b) how the advertising engine’s soft launch in e-commerce is going and what affect it will have on business going forward. We continue to play this one by the book—a nice reaction to earnings could lead to a resumption of the rally (and an opportunity to fill out our position), but a drop back to 550 or slightly below would be a red flag. Right here, just sit tight. HOLD

Arista Networks (ANET)—ANET has been riding the bucking bronco since early August, with three sharp dips (the first on normal profit taking, the second after its Analyst Day and the third on fears of Nvidia taking networking share) since then—but all found support close to where they “should” and now ANET is back attacking new high ground, which is encouraging. Like most every stock, earnings (due November 4) will be significant: Analysts are looking for sales and earnings growth of 25% and 19%, respectively, but management’s discussion of its competitive positioning (especially vs. Nvidia) and the firm’s future book of business (deferred revenue was $4.1 billion in June, up $1 billion from just three months before) will be closely watched. If you wanted to nibble ahead of the report given the stock’s resilience, we won’t argue with it, but we went to Hold after the latest plunge, and with earnings around the corner, we’ll stay there right now. HOLD

CrowdStrike (CRWD)—Most have likely forgotten, but cybersecurity stocks were the top growth area in the market coming out of the February-April plunge, and many had solid runs into June—but since then, the group has gone through a multi-month correction and consolidation. Now, though, a few are perking up, and CRWD looks like the leader, bolstered by management’s view of accelerating bookings, revenue and free cash flow through 2026 and possibly beyond. The chart isn’t perfect (the relative performance line, not shown below, is shy of its old high), but after a few rejections near its prior high, CRWD has moved to new highs. With earnings not out for another month or so, we went ahead on a special bulletin this morning, filling out our position by adding another 5% stake; we’ll use a mental stop in the 470 area (a bit under the 10-week line) on the combined position. BUY ANOTHER HALF

GE Aerospace (GE)—GE Aerospace will never be confused for the latest hot AI stock, but the long-term growth story here continues to crank ahead with across-the-board strength in Q3: Commercial engine equipment (up 22%) and services (up 22%) as well as defense systems (up 24%) all saw solid upside, all while service-related orders for the key commercial segment lifted a big 32%. Sales, earnings and free cash flow all beat estimates as well, leading the top brass to hike their outlook. Of course, shares have already had a good, extended run (like the overall market), so some good news was clearly discounted, but GE has stretched a bit higher, moving above round-number resistance at 300 in recent days. We could restore our Buy rating if we see a good setup, but right here we’ll simply hang on, especially as the RP line (not shown in the chart) has flattened out a bit. HOLD

GE Vernova (GEV)—GEV began to break down two weeks ago and then showed more weakness after earnings, briefly reaching multi-month lows before a modest bounce. While the numbers are solid and business will remain good for a while, there’s been some concern that (a) the wind business continues to lag and is affecting results, and (b) even in the strong gas turbine area, capacity is so restrained that growth will be hard to come by. Stepping back, we wonder if the stock can etch a “re-set” base in the weeks and months ahead (like we wrote about in the last issue) and then embark on another run—if so we could take another swing at it. But we have to deal with what’s in front of us, and the fact is GEV stopped going up nearly three months ago, formed a double stop and has seen big-volume selling from that point, which is one of our sell rules. We got out with a tiny profit last week. SOLD

Life360 (LIF)—LIF’s pullback was definitely tedious and weaker than we would have expected, but the longer-term trend never came close to cracking,and shares have lifted decently (though, interestingly, every day down and then back up has seen below-average volume). The firm’s move into pet tracking and recovery is underway, with the launch of its Pet GPS device (costs $50, or just $4 and no activation fees if you sign up for a subscription), which not only allows for location sharing but also for alerts if a pet moves outside a designated area; management thinks this is a surprisingly big market and we agree, as it should make Life 360 even “stickier” for those already signed up. Back to the stock, we’re OK giving it room, but the recent lows should hold on any forthcoming gyrations, while earnings (November 11) will obviously be key. If you own some, hang on. HOLD

MP Materials (MP)—At some point MP will likely have another run just given the government backstop that’s in place—but right now, there’s no doubt the sellers are in control, as the stock’s quick spike during the U.S.-China trade spat has given way to a 37% decline (partially on fears that a deal could see China flood the market with rare earths for a time, lowering prices). We’re not saying MP is going to zero, of course, and it’s sure to be news-driven—but after popping to new highs, the breakout failed and we weren’t going to let a solid profit turn into a loss. We got out with a tiny profit last week in the mid 70s. SOLD

Oracle (ORCL)—We decided to pull the plug on ORCL today via a special bulletin, as the stock’s post-Investor Day funk has only gotten worse, with shares cracking the 50-day line. The trade was frustrating as the story has essentially played out as we thought—the firm’s remaining performance obligations have lifted from $138 billion to north of $500 billion just in the past four months while forecasting its cloud infrastructure business will be nearly three times the size of the entire current company within five years, all while addressing the some of the margin worries at its Investor Day. The odds favored shares finding support and rounding out a launching pad—but instead the stock has been unable to find buyers and, today, touched levels that were first seen in late-July. We never did average up on the stock after its big earnings pop last month, so we were able to salvage a small profit on the trade. More importantly, we think the money will be put to better use in stronger situations big investors believe in. SOLD

ProShares S&P 500 Fund (SSO)—We’re not going to lie: After a nearly seven-month advance, the multiple gaps up to new highs in the S&P 500 in recent days, even as the number of new lows spikes on the NYSE and sentiment is elevated (fewest bearish advisers in Investors Intelligence since 2018!), isn’t the best near-term look; another pullback (or maybe sharp rotation) could be in the offing. That said, as we write later in this issue, partly because of the recent surge, the market continues to show unusual strength, whether looking at its big gains during the “unfavorable” six-month period (ending tomorrow) or many of the other studies we’ve relayed. As we wrote when the market hit a pothole, if we do sniff some abnormal action, we could take partial profits in SSO given our outsized position, with the idea of riding the rest through a correction (to higher prices down the road). So that’s a potential plan—but as always, we go with what’s in front of us, and so far, the S&P 500 (and SSO) remain perched near their highs despite some questionable pieces of secondary evidence. Right here, we’ll stay on Buy, though we’ll let you know if we have any changes going ahead. BUY

Vertiv Holding (VRT): Vertiv was one of the first AI infrastructure stocks to get moving way back in 2023 as it’s a direct play on the data center building boom, offering various power products, racks and enclosures along with monitoring and maintenance services—and, importantly, cooling technologies, which are needed to keep those data centers at proper temperatures to ensure peak performance. As we wrote about in the last issue, VRT essentially went through the wringer for a while (not much net progress from April 2024 to August 2025), wearing or scaring out many investors. But now it’s re-emerged on the upside—and stretched higher after a great Q3 report that featured not just booming growth (sales up 29%, earnings up 63%) but a big increase in orders (backlog up 30% from a year ago; it booked about 40% more orders than it could fill). Shares are a bit extended here, so we will start with a half-sized position (5% of the portfolio) and use a loose leash under 160 to start. BUY A HALF

Watch List

• Advanced Micro Devices (AMD 255): AMD has continued to act well along with most AI chip names, lifting to new highs. Earnings are due November 4, and a mild shakeout could be buyable.
• Axsome Therapeutics (AXSM 133): Axsome is a rapidly growing drugmaker with some solid products already on the market and a couple more likely next year. See more below.
• Cameco (CCJ 105): CCJ had trouble getting going for the past few months, but a game-changing supply deal with the U.S. government has brought a big breakout. To be fair, it’s a bit similar to MP (which didn’t work out), but there’s a better underlying story and numbers here.
• Ciena (CIEN 189): CIEN has completely ignored the recent market wobbles, scoring new highs this week. The firm appears to be one of the key players in scale-across networking. We’re still eyeing a potential entry if the stock has a sharp shakeout for a couple of weeks
• Cloudflare (NET 222): NET has a great setup ahead of earnings tonight—analysts are looking for sales up 27% and earnings up 15%, and a positive outlook and reaction would be very enticing.
• CoreWeave (CRWV 131): CRWV is a rapidly growing “neocloud” operator with a massive book of business and enormous potential. After a post-IPO boom and bust, the stock has set up decently ahead of earnings. See more below.
• Snowflake (SNOW 271): SNOW has emerged to new highs on sub-par volume, though we like that the relative performance line has also joined the party. If it can hold up in this area, we might take another swing at it as the story and numbers remain excellent.

Other Stocks of Interest

Wayfair (W 102)—A couple of weeks ago we wrote up Carvana (CVNA), a business that was a hit to millions of people, but whose stock suffered due to huge losses and costs—though once management started making the right moves, shares took off on the upside on a huge, long-term run. We think Wayfair is attractive for similar reasons: It’s one of the biggest home goods and furnishing players out there, playing in a huge (north of $500 billion in the U.S. and U.K. annually) and segmented market, offering everything from economy to luxury goods to appeal to a wide variety of people (21.2 million active customers) thanks to its selection and convenience (including quick shipping and a cheap membership that gives you 5% off everything and special perks). The firm has even started to branch into the brick-and-mortar area, with 10 stores open and more on the way. Still, the story here isn’t really about Wayfair’s offerings—as mentioned above, it’s always done a good business, with around $12 billion in revenue annually the past few years—but about translating those sales to the bottom line, with earnings sinking deeply into the red after the Covid buying boom subsided. But Wayfair’s top brass has righted the ship, keeping sales ticking higher (usually in the low- to upper-single-digit range) and gross margin healthy (around 30% of revenue), while slicing technology, operations, general and administration expenses (down about 25% over three years). The result: A bottom line that’s surged into the black and the highest EBITDA margins (at 6.7%) in Q3 in the firm’s history, outside of the pandemic boom—and the top brass thinks it can get that figure to 10% over time. To be fair, this isn’t a true growth story at this point, but the size of the company is so large that continued progress on the cost front (while still growing modestly) should lead to a bottom-line boom; analysts see earnings lifting to $2.35 this year and $2.86 next after a breakeven-ish year in 2024. After a huge, persistent run off the lows, W did shake out earlier this month, but the lift to new highs on earnings this week is obviously a bullish sign.

Axsome Therapeutics (AXSM 133)—Axsome is a name we started to follow just as the market was going over the falls this year, but as opposed to the market, the stock stayed down after its springtime dip. But after months of base-building, the buyers are starting to flex ahead of earnings next week, and the growth and the story are as good as ever. As opposed to many biotechs, Axsome isn’t just a one-drug outfit: Auvelity (for major depressive disorder) is the big draw now, with sales up 84% in Q2, and management thinks peak sales could be $2 billion or so, about four times what it brings in today. Then there’s Sunosi for sleep apnea (sales up 40% last quarter) and Symbravo (acute migraines) that just hit the market; each likely has peak sales potential near $400 million over time. Then there are two drugs that should be submitted to the FDA for approval over the next couple of months—one (AXS-12, targeting narcolepsy) looks like a $500 million opportunity, but the bigger one (AXS-05, for Alzheimer’s agitation) should have potential into the $1.5 billion range or more, and Axsome even has another in Phase III trials (for ADHD and other indications) that it thinks can be another $1 billion seller. As for the here and now, sales growth is rapid (up 72% and 66% the past two quarters), with analysts looking for a 57% gain when Q3 is reported next Monday (November 3); the bottom line is still in the red, but that should change some time next year as business continues to ramp (sales should continue to grow rapidly for years to come). As mentioned above, the stock has spent months etching a big launching pad—it’s been consolidating since late February—but has certainly acted better the past few months, with shares moving up toward their prior highs. A bullish outlook from management next week (including possibly some color on the AXS-05 timeline) and a positive reaction would be great to see.

CoreWeave (CRWV 131)— Newly public stocks are usually wild and woolly and will often feature a post-IPO droop at some point, which is exactly what’s been seen with CoreWeave since its IPO in March. Still, we’ve continued to keep an eye on it given the out-of-this-world growth here, and now the stock is setting up ahead of earnings on November 10. The details of the story here are a bit of an ice cream headache with all the technology involved, but the big idea is easier to understand: CoreWeave has built 33 data centers (29 in the U.S.) specifically for the AI age, stuffed them with Nvidia GPUs and proprietary software, allowing big clients (Microsoft currently makes up more than half of revenue, but there are other big customers as well) to essentially rent computing power for AI model training, inference and more. The Nvidia tie-up is a big part of the story—Nvidia owns something like 5% of CoreWeave and usually gives it access to the latest and greatest releases before others; Nvidia actually just inked a $6.3 billion deal with CoreWeave, too, committing to rent any unused capacity from the firm through 2032! That’s obviously a major backstop as the company builds out its infrastructure in the years ahead, though CoreWeave is growing like a weed right now—in Q2, revenues more than tripled to $1.2 billion, while its remaining performance obligations (money under contract owed to it in the future) lifted 86% to a whopping $30.1 billion. Earnings are in the red given the huge capital expenditures going on here ($2.9 billion in Q2 alone), and that is the main worry—but other profit metrics (EBITDA came in north of $750 million, up threefold from a year ago) show progress is being made. It’s certainly possible CRWV will need more time to builds its launching pad given the huge valuation ($66 billion market cap), but sponsorship is small but growing (258 funds owned shares in September, up from 115 six months ago) and we like the setup here—after booming and then busting earlier this year, CRWV has hacked around for the past three months with 150 being a ceiling. A gap up could ignite the stock’s next run.

Still Seeing Unusual Strength in the Market

When you first dive into market history and lore, one of the first things hear about is seasonality. A lot of times that can be short-term-oriented, like how the market acts around options expiration each month, or near holidays (both usually bullish), but one of the more popular studies going back decades concerns slicing each year into favorable and unfavorable periods.

It turns out that, historically, the vast majority of gains in the market happen in the six months from the start of November to the end of April. Indeed, since 1950, the Dow Industrials (not including dividends) have risen an average of 7.4% during the “favorable” six-month periods. Not too shabby.

Meanwhile, the “unfavorable” six-month period (start of May through October) produces very little net gains and contains the meat of almost all of the humongous declines that have occurred over decades—during the same time period, the Dow has advanced a mere 0.8% per year during the unfavorable time … a massive difference when you’re talking about 75 years of data. (Hat tip to Jeffrey Hirsch and the Stock Trader’s Almanac 2025 for the data; FYI, the book is a neat stocking stuffer if you’re looking to gift something to a stock market lover.)

To be honest, we’ve never been huge fans of this sort of seasonality as there’s too much variability in the year-to-year results; it’s much better to just stay in gear with the market’s trends. However, one thing that we do like to look for is when the unusual happens—specifically, when the market actually posts big gains during the unfavorable six-month period.

It turns out that hasn’t happened very often: Since 1950, the Dow has posted 10%-plus gains just nine times from May 1 to October 31—and this year will be the 10^th barring some sort of crash tomorrow. And it turns out such unusually strong upside during the unfavorable period has led to excellent gains during the ensuing favorable six-month period—an average additional rally of 11% in the following six months!

Even more impressive is that this year is likely to see the Dow up 15%-plus during the unfavorable period—that’s only happened four prior times, with an average gain in the following six months of 14%.

A somewhat similar study was just posted by Ryan Detrick of Carson Group. Amazingly, this is just the third time since 1950 that each of the six months during the unfavorable period registered gains for the S&P 500. While three instances isn’t something to put all your confidence in, it’s not a coincidence that the market posted solid gains in November-December each time, with an average additional gain of 6% by year-end.

All of this gets back to something that we’ve written about a lot this year—in the market, it’s the unusual action that will often give you insight into what might come in the future. Back in April and May, that included some Blastoff indicators that told us the market hadn’t just bottomed but was likely headed much higher. Since then, the persistent advance (lack of any “real” corrections) and historic gains (up 30% in six months, etc.) in the major indexes have pointed to good things, and the action we wrote about above continues that trend.

Obviously, that says nothing about what may happen in the short-term; the market has headed straight up of late with iffy breadth (Tuesday saw the worst S&P 500 breadth on an up day in history!), which is a good reason to keep your feet on the ground.

Even so, the strength over the summer and fall and other unusually strong readings tell us the odds continue to favor this bull market rolling ahead in the months ahead.

Treasury Rates Still Toying with Key Levels

Just over a month ago we wrote on this page about how Treasury rates across time frames were testing key support, and we’re mentioning it again because … they’re still testing those levels after bouncing around for a few weeks. Shown here are the two- and five-year note yields—the two-year is still battling with 3.5% low area, while the five-year is testing the same level.

We continue to watch this dynamic, especially after this week’s Fed rate cut—a decisive break lower in rates should be a positive and could be what the broad market needs to snap out of its stagnant phase … though a big upside reversal could have the opposite effect. We’ll be watching.

Cabot Market Timing Indicators

There are plenty of crosscurrents out there, with the broad market being iffy and the big-cap indexes stretched to the upside, though the intermediate-term trend is still up and we have seen some new breakouts during earnings season. We’re still leaning bullish but are being selective and rotating out of broken names and into stronger, fresher titles, all while keeping a chunk of cash on the sideline.

Cabot Trend Lines – Bullish
Our Cabot Trend Lines don’t give many signals, but that’s the point—studies have shown that this indicator is positive for about 90% of bull trends, so while simple, the continued green light here goes along with the other big-picture good vibes. As of this morning, the indexes (S&P by 12%, Nasdaq by 18%) stand well above their respective 35-week lines, keeping the longer-term trend up.

Cabot Tides – Bullish
As has been the case for a while now, our Cabot Tides are still positive, but they bear watching. While the big-cap indexes look great and have ramped higher of late, not much else has—the other three indexes we track (including the NYSE Composite, shown here) are either at or slightly above (by 1% or so) their lower (50-day) moving averages. Right here, the intermediate-term trend is still positive, but we’re staying flexible in case the sellers make a stand.

Two-Second Indicator – Negative
The Two-Second Indicator did improve during the market’s recent rally, but while the readings dried up for six days, they’ve come on again this week—and in a big way, with the readings in the triple digits each of the past two sessions. That’s not necessarily the end of the world, but it does point to a lot of selling pressure out there in the broad market, which isn’t ideal given that the big-cap indexes are near new high ground.

The next Cabot Growth Investor issue will be published on November 13, 2025.

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