WHAT TO DO NOW: Continue to lean bullish, but pick your spots. Our intermediate-term indicators remain bullish, and the market’s consolidation so far has been just fine—but, as has been the case, leadership remains good-not-great, with many names acting well but also plenty of news-driven wobbles and some selling on strength, too. All told, we’re content to add as names emerge and averaging up if they start well. Tonight, we’ll fill out our position in Snowflake (SNOW), adding another half-sized stake, but we’ll hold 31% or so in cash and see how things go from here.
Current Market Environment
The market reversed today after a good start, leaving the indexes down on the day. At the close, the S&P 500 was off 0.5% and the Nasdaq had lost 0.8%.
The market is now about three weeks into a good-looking rest period (for most indexes, anyway)—in fact, we’re impressed with the relatively tight, quiet trading seen in the indexes following the big comeback after the lows in early April. Most important, our key intermediate-term indicators—our Cabot Tides, Two-Second Indicator and Aggression Index—all remain positive, while our longer-term Cabot Trend Lines could join the party at the end of this week barring a big downturn. All of that is obviously to the good, especially given the negative turn in the news (U.S. debt downgrade, Russia-Ukraine tensions, renewed U.S.-China trade uncertainty) of late.
The fly in the ointment continues to be among potential leadership—there are still relatively few institutional-quality names hitting new highs out there, and we’re also seeing a decent amount of selling on strength, with more than a few titles popping to (or close to) new high ground and then fading.
To be fair, we do see a lot of stocks setting up nicely to go higher (often trading tightly alongside the major indexes of late), and they could certainly do so if the market stages a decisive rally going forward. But we don’t want to anticipate it happening—it’s possible the market shakes out somewhat here and needs more time to consolidate, especially if the headlines worsen.
All told, there’s certainly more good than bad out there when looking at the evidence, so we continue to lean bullish—but we’re content to buy in steps, putting money to work as names emerge but not forcing things, either. Tonight, that means averaging up on recent purchase Snowflake (SNOW), filling out our stake by purchasing another half-sized (5% of the account) position. That will leave us with around 31% in cash, which we hope to continue to deploy as fresh leaders get moving.
Model Portfolio
Axon Enterprise (AXON) looks good, pushing to new highs the past two days on modest volume. There’s been nothing new from the firm on the news front, but we think investor perception continues to rise due to the firm’s newer offerings (including AI products), which are not only off to good starts but also entice more customer commitments to the broader platform, boosting recurring revenue. Near-term dips are certainly possible, but we averaged up last week and think the future is bright as long as the market continues higher. BUY
GE Aerospace (GE) isn’t getting all the headlines, but the stock looks great, shaking off a valuation-driven analyst downgrade (those usually don’t affect strong stocks early in their runs for long) last week. It’s possible the 250 area (round number resistance) stunts the stock for a bit given the recent run; the 25-day line is down around 230 (and rising quickly), so shares could easily pull back and be in fine shape. Still, we’ll stay on Buy, though you might consider keeping it smaller than normal and/or aiming for dips. BUY
Palantir (PLTR) has been hit hard the past couple of days after reports surfaced that its advanced AI systems (bought by the government) might allow some “big brother” tracking by Uncle Sam—there’s no evidence of that actually happening (the CEO denies this completely), but reportedly some in Congress are beginning to grumble about it, which in theory could affect its ability to get government contracts … though whether it does or not is anyone’s guess. As usual, we’ll take our cues from the stock itself: On one hand, PLTR wasn’t able to follow through to the upside recently and the relative performance (RP) line has been flat-ish since early May, which are reasons we’ve kept the stock on Hold. That said, shares are still in good overall shape, having just tested new high ground a couple of days ago and still in a general uptrend. A big selloff into the mid-100s could be bad news (possible big double top after a huge run in the past nine months), but right here, we advise holding on and seeing if this proves to be a final shakeout before a new move, or the start of something ominous. HOLD
ProShares Ultra S&P 500 Fund (SSO) has nosed out to new recovery highs by a hair this week, similar to the S&P 500. Our thoughts here haven’t changed—while the near-term might see some retrenchment, the big-picture setup here (panic selling, bearish sentiment, Three Day Thrust, tight consolidation, positive intermediate-term indicators) is very encouraging, and if our Cabot Trend Lines turn bullish at week’s end, it will be another feather in the bulls’ cap. (To be fair, the Trend Lines aren’t meant as a precise timing tool, but as a background measure of the market’s health, they’re hard to beat.) A big selloff that drives SSO down to 80 or so could have us trimming or selling completely—such a move would likely coincide with a new Tides sell signal, and we’re not sure we’d want to own a leveraged long fund in that case. But we see the odds favoring the market being early in a fresh uptrend after a big wipeout, which should bode well for SSO. Sit tight if you own some, and if not, we’re OK starting a position here or on dips of a couple of points. BUY
Rubrik (RBRK) continues to act great, and cybersecurity stocks as a whole look good—though big peer CrowdStrike (CRWD) did get dented (not a breakdown) after its report. More important, Rubrik’s own report is due tonight: Analysts see sales up 39% and a loss of 32 cents per share, though the outlook and free cash flow will be key as well. Given the stock’s big run and round number resistance at the century mark, a post-earnings whack could be normal, as shares have plenty of daylight above their moving averages (25-day line is down near 86). All in all, if the stock can essentially hang in there, we’d like to average up, but we’ll have to see what RBRK looks like after the report. For now, we’ll stick with a Buy a Half rating but will have updates (good or bad) if need be after the report. BUY A HALF
Snowflake (SNOW) should be the top player in what some analysts are seeing as a multi-year investment cycle in the “data layer” of enterprise’s IT infrastructure, an area that’s always been in demand but should be even more vital as the AI era dawns. The stock did hesitate yesterday as reports surfaced that a hacker penetrated Snowflake’s platform and accessed an AT&T workspace (leaking millions of social security numbers, emails, addresses and more)—but there’s some doubt about that, or whether this is regurgitation from an event already known from early 2024. Either way, the stock hasn’t reacted much to the news and remains in good shape. As we’ve been doing during the current buying spree, we started with a half-sized stake last week and we’re off to a decent start, so we’ll fill out our position here (buying another half-sized stake, or 5% of the portfolio), using a mental stop for the entire position in the 180 area. BUY ANOTHER HALF
Take-Two Interactive (TTWO) is likely getting close to make-or-break time—shares have tightened up nicely above the 50-day line following three tough selling waves (GTA delay, earnings and then a share offering), and given the resilience seen during and right after the market downturn, the action is fine so far. But there’s not too much more leeway to give—a strong rally from here could ignite a sustained advance as big investors discount a huge coming year (north of $9 of earnings next fiscal year), but a drop much below the 50-day line (now near 220) taking the stock off the potential leader list. With a just a small position, we advise giving TTWO a chance, though we’d like to see some upside power arrive sooner rather than later. HOLD
Toast (TOST) has been a bit tedious of late, losing some ground since its big gap and follow through, which isn’t great, but the stock has remained north of its earnings gap (near 40) and its 25-day line has just now caught up to the stock. The Q1 report went a long way to change perception, with both the core small/mid-sized restaurant business doing well while newer (and often larger) signups among international and enterprise clients (Applebee’s was its largest ever deal) ramp. If shares sink below 40, we’ll throw up a tight mental stop—but right here, we think the story, numbers and chart continue to favor upside ahead. Hang on if you’re in, and if not, we’re OK starting a position here. BUY A HALF
Uber (UBER) has continued to lag due to the aftereffects of the upcoming Robotaxi launch in Austin, which is impacting investor perception despite Uber’s progress in that area. (Given the size of its user base, management believes its app can be a go-to place for customers to hail various ride-sharing services down the road, including autonomous offerings from others.) It’s obviously not idea, but at this point, the action isn’t abnormal—UBER has “only” fallen back to test the top of its year-long base—and once this news-driven selling is over, we still think the odds favor higher prices over time as the focus gradually returns to the sales, EBITDA and free cash flow growth that’s likely to continue to many years. If we had a huge position or a bigger loss we might trim, but with a half-sized stake, we’ll continue to sit tight and give the bulls a chance to re-engage. HOLD
Watch List
Amer Sports (AS): It’s not changing the world, but a couple of Amer’s outdoor gear and equipment brands are booming, especially in Asia, which should result in steady sales and big earnings growth for many quarters to come. The recent leap to new highs (on record volume for the stock; it IPO’d in early 2024) was very powerful.
Coreweave (CRWV): CRWV took it on the chin today, and after a big run, it could need some time to rest. But we continue to think the stock is near the start of its overall run, not the end, so we’re watching for some sort of lower-risk entry.
Dutch Bros (BROS): BROS popped above some resistance today on good volume—it’s still working on a big launching pad. A bit more strength could have us starting a position.
GE Vernova (GEV): GEV is definitely a liquid leader—the trick is finding an entry point, as the stock is extended here and bumping up against round number resistance near 500. A shakeout of some sort should prove buyable.
Insulet (PODD): PODD remains nice and tight, though the overall medical group is the big hangup here. Even so, a bit of retrenchment would be tempting, especially if a couple of peers perk up.
Life 360 (LIF): It’s a bit thinner than we’d prefer, but LIF has a great story and the stock remains very resilient even after a convertible note (dilutive) offering this week.
That’s it for now. You’ll receive your next issue of Cabot Growth Investor next Thursday, June 12. As always, we’ll send a Special Bulletin should we have any changes before then.
Model Portfolio
| Stock | No. of Shares | Price Bought | Date Bought | Price on 6/5/25 | Profit | Rating |
| Axon Enterprise (AXON) | 403 | 732 | 5/23/25 | 789 | 8% | Buy |
| GE Aerospace (GE) | 1,362 | 216 | 5/8/25 | 252 | 16% | Buy |
| Palantir (PLTR) | 1,904 | 32 | 8/16/24 | 120 | 274% | Hold |
| ProShares Ultra S&P 500 (SSO) | 3,362 | 88 | 5/13/25 | 90 | 2% | Buy |
| Rubrik (RBRK) | 1,728 | 85 | 5/15/25 | 98 | 16% | Buy a Half |
| Snowflake (SNOW) | 727 | 203 | 5/30/25 | 210 | 3% | Buy Another Half |
| Take Two Interactive (TTWO) | 658 | 224 | 4/25/25 | 231 | 3% | Hold |
| Toast (TOST) | 3,304 | 44 | 5/13/25 | 43 | -3% | Buy a Half |
| Uber (UBER) | 1,672 | 88 | 5/13/25 | 85 | -3% | Hold |
| CASH | $1,072,128 | 36% |
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