WHAT TO DO NOW: The market continues to hang in there, but growth stocks have been far trickier, with many pulling back sharply, others testing support and a few breaking down. Still, it’s mostly mixed, with some names perking up, so we’re staying flexible, especially as earnings season plows ahead. This week we sold two names that cracked—MP Materials (MP) and GE Vernova (GEV)—which leaves us with 43% in cash. We’ll stand pat tonight, though we could redeploy some of the money into stronger names if growth stocks continue to stabilize.
Current Market Environment
The market is bouncing decently today and, in a change from recent days, growth stocks are bouncing nicely. Around 2:40 EST, the S&P 500 is up 0.7% and Nasdaq is up 1.0%.
The overall market continues to handle itself fairly well—while our Cabot Tides don’t have much breathing room, they remain positive, as does our Aggression Index. In both cases, there hasn’t been any progress for four to six weeks for most indexes or the Aggression Index, but so far, the consolidation has been normal and hasn’t broken any intermediate-term support. Encouragingly, we’ve also seen improvement from our Two-Second Indicator—we’d like to see a bit more, but the broad market could give an all-clear next week.
Growth stocks have been much trickier, though—many have been rangebound for months, and recently we’ve seen even stronger ones (including many high-fliers) pull in, with a few breakdowns, too. That’s had us paring back a bit as names have cracked.
That said, most growth stocks continue to gyrate up and down (holding support but unable to break out on the upside) for now. We continue to think earnings season will tell the tale—a rash of breakdowns would obviously be bearish and likely lead to some market-wide issues, but we’re also not having trouble filling our watch list with titles that have etched nice launching pads and could lift off if their numbers are pleasing.
In the past few days, we’ve sold our positions in both MP Materials (MP) and GE Vernova (GEV) as both broke down (see more below). Tonight we’re going to hold our 43% cash position as we do want to see more of how earnings season goes—but despite some recent hiccups, we like the look of a couple names on the watch list and could redeploy some capital soon. Stay tuned.
Model Portfolio
Alnylam Pharmaceuticals (ALNY) tried to get going in recent days, but shares have fallen right back into their base, which is the norm out there. Next week’s (October 30) Q3 report will be vital, likely pushing the stock out of its range one way or the other. At this point, a drop into the 410 area would be iffy, but ideally, we see a leap north of 500 (and a healthy market), which would likely have us averaging up. For now, we’ll stick with our half-sized stake and see what comes. BUY A HALF
AppLovin (APP) tested support near 550 (both round-number and the 50-day line) this week after yet another short report (which piled on the prior news leak that the SEC was sniffing around the firm’s data collection practices)—so far the stock has held up, though the bounce has been minor to this point. One analyst recently hiked its price target, saying early checks on the expansion into e-commerce look great (taking market share). We’re going to give APP every chance to hold up; if it does, we still think the stock can have a big run from here as the “new” factor of the expansion into e-commerce advertising could be massive. That said, we’re just playing it by the book—we’ll stay on Hold with a stop near our loss limit in the 545 area. Earnings are out November 5. HOLD
Arista Networks (ANET) looked to be getting going earlier this month before news that Nvidia’s networking standard landed a couple of big deals sent shares southward. But now ANET is rebounding nicely, handling itself well through the recent growth stock wobbles and pushing back above 150, albeit on low volume. Earnings (November 4) will probably have the final say, but we’re encouraged by the snapback from what was likely superficial bad news. We went to Hold to respect the prior dip, so we’ll stay there tonight and see how it goes from here. HOLD
CrowdStrike (CRWD) is another name that’s held up well during the recent growth stock potholes—and today it tested new high ground, with another cybersecurity peer (Zscaler) close behind. Earnings here aren’t out until late November or early December, so we’d likely aim to average up if the stock (and group) can really get going. For now, though, we’ll stand pat—hold on if you own some, and if not, we’re OK starting a position here or on dips. BUY A HALF
GE Aerospace’s (GE) fundamental story continues to plow ahead, with estimate-topping adjusted revenue (up 26%), earnings (up 44%) and free cash flow (up 30%), which, along with strong orders (up 32% on the service side) led the top brass to hike 2025 outlook across the board ($6.10 per share of earnings, up from prior outlook of $5.70; free cash flow $7.2 billion vs. $6.75 billion). Shares have been all over the place since the report, gapping up, then reversing and falling sharply into yesterday … before reversing back higher, leaving them about where they started. A big break from here would be concerning, but the overall uptrend here is intact. HOLD
GE Vernova (GEV) has been stalling out for months and, last week, was rejected on big volume after testing its summertime highs … a yellow flag. Then came the Q3 report yesterday morning, which definitely had its good points (gas turbine engines sold out for years; $6 billion sequential increase in the backlog; orders up a huge 55% from a year ago) but did have some uncertainties too (Vernova might not be able to scale production despite its backlog; management left 2025 guidance the same despite beating its numbers in Q3)—which led to a crack of support yesterday, causing us to sell. Now, we would say that GEV has bounced back well since yesterday’s lows—and if by some chance that was a big shakeout, we could re-enter the stock as the longer-term picture here is still bright. That said, as it stands right now, GEV has lots of overhead (potential selling) above here, which is likely to make progress difficult. If you still own some and want to give it a chance, that’s fine, but we sold and are looking for greener pastures. SOLD
Life360 (LIF) still has a positive longer-term trend, though it did see a whiff of abnormal action—a pullback was due after its big run in recent months, of course, but the straight-down action below the 50-day line without any hint of a bounce shows some weakness. Shares have stabilized for now, so we’re not panicking, but we do have the stock on a tight leash. On the news front, the company did just release its pet tracker, which the top brass thinks can be a good-sized market. Earnings are due November 11, and we’re aiming to hold into that—but we want LIF to continue finding support in the days ahead. HOLD
MP Materials (MP) was sold earlier this week when its breakout attempt failed badly, and it also tripped one of our sell tools (don’t let a decent profit turn into a loss). Obviously, the stock is news driven, and another news report or rumor could bring in some buying, but if institutions were eager to grab shares, it’s doubtful MP would have given up all the prior pop and then some. Of course, the underlying, government-backed story is still there, and we still think shares could get moving down the road—but it’s clear that big investors today want out. SOLD
Over the past two months, Oracle (ORCL) has sagged as investors have gone through a litany of worries, the biggest being customer concentration (OpenAI inked a $300 billion deal with Oracle) and future margins and earnings on their cloud business; indeed, Oracle’s long-term outlook released last week actually saw a slightly below-estimate earnings figure for the next couple of years as it builds out its infrastructure. Still, at heart we’re optimistic as the numbers here are ridiculous: Oracle now has a long-term backlog in its cloud infrastructure business of more than half a trillion dollars (!), having booked another $65 billion worth of deals since early September, and the long-term margins for the business are likely in the 35% range—the top brass is looking for earnings of $21 per share by 2030 (vs. $6.82 this year). Of course, the company is not the stock, and the recent retreat after testing resistance was a yellow flag; much more weakness (below the 50-day line) could have us selling. But right here we’re still holding on, looking for buying pressures to kick into gear following today’s bounce. HOLD
The S&P 500 has had another stick save, with the October 10 selling wave (as U.S.-China trade tensions reignited) dipping right to the 50-day line before the latest push back toward the old highs. That’s kept our Cabot Tides in the black and has kept ProShares Ultra S&P 500 Fund (SSO) in an uptrend. If there is another selling wave in the days ahead that leads to a Tides sell signal, we’re thinking about trimming our large-ish position (selling one-quarter to one-third), but we’ll see if that happens, and if so, what the world looks like then. Right now, we’re sticking with our Buy rating as the uptrend continues. BUY
Watch List
Advanced Micro Devices (AMD): AMD has dipped a bit this week but remains in fine shape. After playing second fiddle for the past couple of years, we think investor perception may be changing as the firm’s new AI chip inks more big deals.
Ciena (CIEN): CIEN is finally weakening a bit, and obviously if the market falls apart, all bets are off—but we’re thinking the stock’s first meaningful dip (it broke out in early September) should be buyable as the scale-across networking boom gets underway.
Cloudflare (NET): If you step back, NET has done nothing abnormal after its monstrous move through July. It’s now spent two and a half months doing very little, so the earnings reaction (October 30) will be key.
Lumentum (LITE): LITE is another new-age networker whose optical components are in big demand thanks to the AI buildout. Shares have etched a normal five-week sideways stretch after a big run; the 50-day line is approaching, which should offer a good test. Earnings are due November 4.
Snowflake (SNOW): Software names mostly remain stuck in the mud, but if (when?) that changes, we think Snowflake can be a liquid leader—there’s competition for sure, but the firm is the lead dog in the AI data cloud race, with demand from big clients almost surely to soar as the AI era accelerates.
Vertiv Holdings (VRT): VRT’s Q3 report was excellent (sales up 29%, earnings up 63%, both topping estimates), with orders up a whopping 60% and the backlog growing. Shares hesitated on the news yesterday as growth stocks got hit but snapped back nicely today.
That’s it for now. You’ll receive your next issue of Cabot Growth Investor next Thursday, October 30. As always, we’ll send a Special Bulletin should we have any changes before then.
Model Portfolio
| Stock | No. of Shares | Portfolio Weightings | Price Bought | Date Bought | Price on 10/23/25 | Profit | Rating |
| Alnylam Pharmaceuticals (ALNY) | 340 | 5% | 470 | 9/12/25 | 464 | -1% | Buy a Half |
| AppLovin (APP) | 235 | 4% | 684 | 10/3/25 | 588 | -14% | Hold |
| Arista Networks (ANET) | 1,757 | 8% | 139 | 8/9/25 | 154 | 11% | Hold |
| CrowdStrike (CRWD) | 320 | 5% | 501 | 9/19/25 | 518 | 3% | Buy a Half |
| GE Aerospace (GE) | 912 | 8% | 216 | 5/8/25 | 306 | 42% | Hold |
| GE Vernova (GEV) | 446 | 9% | 553 | 6/27/25 | 596 | 8% | Sold |
| Life 360 (LIF) | 2,089 | 7% | 74 | 7/18/25 | 91 | 23% | Hold |
| MP Materials (MP) | 2,174 | 5% | 73 | 8/29/25 | 69 | -4% | Sold |
| Oracle (ORCL) | 631 | 6% | 248 | 7/29/25 | 283 | 14% | Hold |
| ProShares Ultra S&P 500 (SSO) | 4,342 | 16% | 88 | 5/13/25 | 114 | 29% | Buy |
| CASH | $1,362,563 | 43% |
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