June 18, 2025

NOTE: We’re publishing this update a day early as our offices (along with the overall market) will be closed tomorrow for Juneteenth.

WHAT TO DO NOW: Continue to lean bullish but stand pat for now. Overall, the market is handling the Middle East uncertainties well, with the major indexes and most stocks holding up well and most of the intermediate-term evidence in good shape. Still, with most stocks and indexes in holding patterns, we’ll follow along tonight—holding our 28% cash position and our current positions as we wait to see if more stocks can eventually lift out of their recent tight ranges.

Current Market Environment

The market was choppy today as investors digested the Fed’s non-move today as well as the ongoing news and rumors from the Middle East. As of 3 pm, the S&P 500 and Nasdaq were essentially flat.

Given the Middle East situation on the ground—bombings and rocket attacks on both Israel and Iran each night—as well as the ever-increasing rhetoric and uncertainty (about U.S. involvement, which would almost surely incite more attacks), the market has been handling itself well—the big-cap indexes are still north of their 25-day lines, and most high-relative-strength stocks have also taken the news flow in stride, with the occasional wobble but very little abnormal selling seen to this point.

When it comes to our indicators, they remain in good shape—our Cabot Trend Lines and Cabot Tides are both positive, as is our Aggression Index (ratio of the Nasdaq to the defensive consumer staples fund), which has actually ticked higher of late and remains above its 25-day line. To be fair, our Two-Second Indicator is worth monitoring as it’s taken on some water (three straight days of plus-40 new lows coming into today), though the readings aren’t outrageous (50 to 60) to this point.

All told, we view the resilience as a good thing, though not surprisingly, we still haven’t seen the broadening of leadership we’ve been hoping for—new highs remain tame, and of the names hitting virgin turf, there aren’t a ton of liquid growth stocks. Today, for example, we ran a screen for liquid stocks over $12 per share that are within 2.5% of their highs—there were just 36 that had sales growth in the latest quarter of 15%, and of those, 12 were commodities, banks or defensive healthcare.

That doesn’t completely preclude us from doing a little more buying if we see the right setup, but we’d like to see more breakouts before truly cannonballing into the pool. All told, having steadily bought for the past few weeks, we’ll sit tight today and remain flexible—if the market does sag, we could prune a weak name or two, but obviously, we’re aiming to put more money to work if we see more stocks lift from their recent ranges. We have no changes tonight.

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Axon Enterprise (AXON) has been stunted by round-number resistance near 800, but like most everything of late, the selling has been tame since then, with shares still north of their 25-day line. A deeper dip to the 700 area could be possible if the market gets hairy, but the path of least resistance is clearly up, and growth trends should remain outstanding given the firm’s spate of new products. We’ll stay on Buy. BUY

GE Aerospace (GE) looks like it had a successful week at the Paris Air Show, with it and a 50-50 joint venture booking a whopping $55 billion or so orders for jet engines, services and other offerings from a slew of clients. That said, GE and some aerospace stocks haven’t bounced much, with the focus still on the investigation of the cause of the tragic Air India crash, which is ongoing and obviously could have impacts (regulatory or otherwise). We could go to Hold if GE sells off much more, but at this point, shares have had one selling week after nine weeks up in a row. Thus, we’ll stay on Buy but would like to see some upside relatively soon. BUY

Palantir (PLTR) continues to look fine, moving to new price (and, this time, relative performance) peaks this week. To be fair, there hasn’t been much power behind the move, and we’ve written before about how shares are clearly not in the early innings of their advance (having gotten going back in August and had a massive run), though there’s no doubt the trend is up. If you own some, it’s an easy call—continue to hold your shares. As for new buying, we continue to go back and forth: We’re not in the business of arguing with a stock at new highs, but we also don’t see any compelling entry point or upside power, so we’ll just stick with what we’ve been saying—officially we’ll remain on Hold, though if you don’t own any and want to start a small position, we’re not going to argue. HOLD

Our strongest conviction right now involves the overall market, which has a great multi-month setup, with the action in May and early June showing rare strength and likely portending higher prices down the road. Of course, that doesn’t mean we can’t see more of a near-term shakeout if the Middle East situation gets worse (or another round of trade tensions pop up), but the odds strongly favor higher prices for the major indexes and, hence, the ProShares Ultra S&P 500 Fund (SSO). We averaged up a bit last week (adding another 3% position), which makes SSO our largest position, though we do have a mental stop in the low 80s in case things go awry. Hang on if you own some, and if not, we’re OK buying some SSO here or (preferably) on dips of a couple of points. BUY

Rubrik (RBRK) has been up and down over the past week as it attempts to stabilize after the post-earnings and post-dilutive offering selloff earlier this month. We continue to think that, given the strength in both RBRK and the overall cybersecurity sector after the market low, it would be unusual for the stock to up and die so soon after getting going; thus, we’re willing to give our half-sized stake more rope, possibly down to the 50-day line (now at 80 and rising). If you already own a small position, we advise hanging on, and if not, we’re OK buying some here—but only if you’re willing to cut bait should RBRK unravel from here. BUY A HALF

Snowflake (SNOW) remains in a tight range, which is fine by us—coming after a big run, that’s usually a sign of accumulation. Of course, we’re not complacent, and if SNOW gets hit in a big way (likely alongside the market), we’ll adjust—but at this point, the buyers are in control, and the stock looks ready to hit more multi-month highs going ahead. The firm teamed up with a division from Interpublic Group to build AI-powered marketing data infrastructure and sell it in dozens of countries. BUY

Take-Two Interactive (TTWO) has been a pleasant surprise, gathering up some momentum and actually kissing new high ground today by a few dimes. If this were a roaring bull market, we might go back to Buy here or even average up—but it’s not that kind of environment, and with TTWO’s relative performance line lagging some, we’ll simply hold on to what we have for now. Bigger picture, we do think the stock has a good shot at getting going as big investors look ahead to boom times (from GTA VI and others), but we want to see a bit more evidence of that before restoring our buy rating. HOLD

Toast (TOST) is now five weeks into a tight (10% from high to low) range, which follows two weeks of big-volume buying after the Q1 report. We’re optimistic due to the fundamentals (including what should finally be a huge upmove in the bottom line going ahead), though the payment sector is under pressure due to stablecoins (a type of crypto tied to the U.S. dollar/Treasury bills), which some fear could take share away from traditional payments. We don’t think that’s a huge deal for a firm like Toast, and the playbook from here is simple: A decisive breakout north of the 45 to 46 range on good volume would likely kick off a sustained advance, while a breakdown to 39 or so would lower the odds TOST is actually a leader. We’ve been patient here, holding a half-sized stake for a while, and will follow the stock’s lead from here. If you’re not yet in, we do think a small buy here is a solid risk-reward, with a mental stop in the 38 to 39 range. BUY A HALF

Uber (UBER) is on the edge for us, getting hit again today on news that Waymo applied to test its cars out in New York City. Shares are down to their 50-day line, and with general support in the 80 to 82 area (right around here)—clearly, our thought that the perception of the firm was changing for the better (leaving behind the autonomous driving fears and re-focusing on the huge sales and free cash flow growth) have been off so far. We still think there’s a chance this last month of tedious action will pave the way for higher prices, and with shares at support and with a small position (we never averaged up so have just a half-sized stake), we’ll hold tonight—but UBER should basically hold up around here or else we’ll swallow the small-ish loss and move on. HOLD

Watch List

Amer Sports (AS): AS has essentially been chopping sideways since its huge earnings gap on May 20 as the 25-day line has caught up. We like the story here, though it is fair to say the group (retail) isn’t exactly “in gear” quite yet.

CoreWeave (CRWV): CRWV remains in a steep uptrend, though after a little hesitation earlier this month, we do think the next dip could prove buyable, assuming the market is acting OK. We’ll keep watching it.

Dutch Bros (BROS): BROS is one of many stocks that’s still setting up after the big decline, recovery and recent tightness seen in the first half of 2025. It’s not a leader here, but after a month of choppiness, a powerful rally should be buyable. The cookie-cutter story remains as good as ever.

GE Vernova (GEV): GEV is now 11 sessions into a nice rest period south of round-number resistance near 500. It could easily rest a bit longer, but shares look like the institutional way to play the power/electricity boom, with various big-selling offerings and a huge backlog.

Guardant Health (GH): GH is back probing new high ground as perception grows that its Reveal and (especially) Shield tests can be very big. The medical group is still a headwind.

Life360 (LIF): LIF’s only blemish to us is that it remains relatively thinly traded (right around $50 million per day of volume), but other than that, we like the story, numbers and chart, with the stock’s recent ups and downs allowing the 25-day line to catch up.

Seagate Technology (STX): STX remains in a steep uptrend as investors discount huge demand by data center operators for its regular and (especially) its HAMR hard disk drives. Some sort of shakeout would be tempting.

That’s it for now. You’ll receive your next issue of Cabot Growth Investor next Thursday, June 26. As always, we’ll send a Special Bulletin should we have any changes before then.

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