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Current Market Outlook


With the market beginning a long-overdue correction that has the potential to bring high-flying stocks down to earth, one very human temptation is to defer new buying until risk seems to be past. But if you always think that way, you’ll never invest. Instead, we recommend keeping it simple. Recognize that the market’s main trend today is clearly up, and focus on identifying strong stocks with logical entry points. The candidates for today’s Top Ten included many semiconductor stocks, medical technology stocks, basic chemical stocks, financial services stocks and REITs, and you’ll find the best of those, along with other attractive stocks.

Our Top Pick is NetEase (NTES), which gapped up to new highs on its earnings report in mid-February and has since pulled back to support at the low end of its recent range. (Note: Don’t let the high share price dissuade you; simply buy fewer shares.)

Stock Name	Price	Buy Range	Loss Limit
Bluebird Bio (BLUE)	0.00	80-85	73-74.5
Century Aluminum Co. (CENX)	17.24	13.5-15	12-12.5
Conduent (CNDT)	0.00	15-16	13.5-14
Copa Holdings (CPA)	0.00	101-105	96-97
NetEase, Inc. (NTES)	0.00	280-290	260-265
Pacira Biosiences (PCRX)	54.85	48-51	44-45
STMicroelectronics (STM)	30.09	13.5-14.5	12.5-13
Symantec Corporation (SYMC)	0.00	27-29	25-26
TAL Education (TAL)	50.49	85-91	80-81
United Rentals, Inc. (URI)	0.00	125-130	114-115

The broad market remains strong, and all Cabot’s market timing indicators are currently positive, so I remain optimistic that we’ll see higher prices in the month ahead and I continue to recommend that you remain heavily invested. However, it’s worth noting that the market is increasingly ripe for a pullback, and that a few of our super-strong stocks (LK and SPCE and TSLA) are also ripe for major pullbacks. In other words the market looks a bit overheated here.

Thus this week’s recommendation is a lower-risk, high-yielding chemical stock with very little downside potential. I think it will balance those higher-risk stocks nicely. Lastly, the addition of this stock means we have to sell one, and the victim this week is TopBuild (BLD).



Details in the issue.

The latest issue of Cabot Marijuana Investor is now available, with my current advice on the fifteen stocks in the portfolio.

While coronavirus fears infect the broad market, the good news is that marijuana stocks seem to have an immunity, mainly because they already had their correction last year. Many stocks in the sector are looking better, and I’m now recommending averaging up in three stocks already in the portfolio.



These changes will reduce the portfolio’s cash level to roughly 12%, so we will be well positioned to benefit from the sector’s resumption of its big uptrend.



Full details in the issue.

Current Market Outlook


The market hit a little turbulence early last week on renewed trade worries but bounced back nicely, with the major indexes finishing flat (S&P 500 and Nasdaq) to up (small- and mid-cap) on the week. Short-term, though, we wouldn’t be surprised to see some further ups and downs as the market and many stocks/sectors consolidate their two-month runs; we still favor buying pullbacks rather than breakouts at this time. The good news is that we continue to think current pullbacks and consolidations are leading to some good-looking entry points in a variety of leading stocks. All in all, we remain bullish, though it’s still best to be a bit choosier on the buy side at the moment, while giving some stocks that you own breathing room to consolidate if they’ve enjoyed a good run.

This week’s list has many leaders that are retreating toward support or are otherwise showing solid setups. Our Top Pick is Seattle Genetics (SGEN), which looks like a leader in the biotech field, and the stock is now pulling back for the first time after a big run.

Stock Name	Price	Buy Range	Loss Limit
Amedisys (AMED)	174.06	161-164	146-148
The Walt Disney Company (DIS)	144.76	144-147	136-138
DocuSign (DOCU)	107.98	72-75	64-66
GSX Techedu (GSX)	97.59	18-19	15.5-16
Incyte Corporation (INCY)	76.98	92-95	84-86
Qorvo (QRVO)	129.47	105-109	94-96
Seattle Genetics (SGEN)	150.85	112-115	103-105
Splunk (SPLK)	207.67	145-150	132-135
TransDigm (TDG)	599.41	550-565	515-525
Tesla, Inc. (TSLA)	818.87	333-353	303-308

As we head into 2020, emerging markets are at the top of the Cabot Global Stocks Explorer menu after developing a nice uptrend in the fourth quarter of 2019. In addition, they are cheap - trading at a substantial discount to U.S. markets on a valuation basis. Today’s new idea is at the sweet spot of several powerful trends in China and has delivered steady and substantial profits to shareholders over the past five years.

Spot charter rates have begun to boom and most expect the good times to continue for many quarters if not longer—while Q3 results were still sour, this company’s stock moves on perception of the future, and it’s pretty much established now that 2020 will be a banner year (analysts see earnings of $3.61 per share!).

Current Market Outlook


As the year winds to a close, nothing has changed with the market’s overall stance—big picture, it’s a bull market, and numerous factors tell us that the uptrend has farther to go; the odds favor higher prices when looking months down the road. Shorter-term, though, there are also many signs that tell us risk is elevated—that doesn’t necessarily mean a huge correction is on tap, but we think it’s safe to say that the next few weeks are likely to be more challenging than the past few weeks, with potholes, rotation and news-driven moves possible. As we’ve been writing, that’s no reason to bail out, but being discerning on the buy side (good entry points, starting small, etc.) and booking some partial profits makes sense.

Our last list of 2019 is a broad mix of strong stocks, including turnarounds, recent breakouts and fresh setups. Our Top Pick is Crocs (CROX), which is benefiting from some rotation into retail titles and a string of solid quarterly reports.

Stock Name	Price	Buy Range	Loss Limit
Bed Bath & Beyond (BBBY)	0.00	16-17	14.3-14.9
Cardlytics (CDLX)	0.00	58-61	51-52.5
Carvana (CVNA)	82.90	91-94	83-85
Crocs (CROX)	0.00	39-41	35.5-36.5
Floor & Décor (FND)	68.03	49-51	45.5-46.5
GSX Techedu (GSX)	97.59	19.5-20.5	17-18
Luckin Coffee (LK)	0.00	34-36.5	30-31.5
Paycom Software (PAYC)	0.00	257-267	237-241
Sea Limited (SE)	132.86	38-39.5	34-35
United Rentals, Inc. (URI)	0.00	163-167	150-152

There is a brand new industry just coming of age.

New industries only come along once in a while and they almost always present an array of investments that will be superstars of tomorrow. We dream of going back in time and buying Microsoft (MSFT) or Starbucks (SBUX) or Netflix (NFLX) when they were new, upstart companies. But we might get another bite of a similar apple in 2020.

We enter 2020 in a tricky situation. It is very late in the recovery and bull market and the market is near an all time high. While the bull market is likely to last a while longer, this still isn’t a great place to be in general. However, while the overall market is expensive there are rare pockets of great value.

In this issue I highlight a shipping stock that has remained profitable and paid dividends every single quarter through an industry depression. That company is yielding a massive 9.6%. And industry conditions are improving. It may be 2020 in the overall market, but I found a place where it’s 2009 again.

The latest issue of Cabot Marijuana Investor is now available, with my current advice on the fourteen stocks in the portfolio.

The cannabis sector remains in a correction, but the new year brings the promise of a great rebound, and I want you to be in the stocks that will benefit most, so, while there hasn’t been much news over the past week, I do include full updates on each stock in the portfolio so you can best decide which stocks fit your own portfolio.

Also, the portfolio remains 25% in cash, waiting for the sector’s main trend to turn up.

Full details in the issue.

Current Market Outlook


The market finally hesitated a bit last week, and going through our weekend research, we did spot more leading names that had pulled back during the past five to 10 trading days. But as has been the case since the early-October lows, that weakness was tame (most dips were calm and controlled), with today’s burst of buying pushing many back up. (Encouragingly, even the lagging small-cap indexes are now trying to break out of multi-month ranges.) There’s still some shorter-term yellow flags, so we wouldn’t throw caution to the wind here (don’t forget to take some partial profits!), especially if you’ve put a bunch of money to work in recent weeks. But the fact that most stocks and indexes haven’t been able to retreat much despite those yellow flags is yet another stone in the bullish wall. We remain bullish.

This week’s list includes a broad mix of names, from old winners coming back to life to new names perking up to recently strong performers that have eased to good entry points. Our Top Pick is Axon Enterprise (AAXN), which has come back to life after a year-long rest. Start small and go from there.

Stock Name	Price	Buy Range	Loss Limit
Alnylam Pharmaceuticals (ALNY)	143.58	107-113	97-99.5
AAXN (AAXN)	87.11	72-75	66-64
Kansas City Southern (KSU)	176.54	149-153	138-141
Leggett & Platt, Incorporated (LEG)	49.79	51.5-53	47-48
Lithia Motors Inc. (LAD)	146.30	160-165	145-148
Luckin Coffee (LK)	0.00	28-30	24.5-25.5
Novocure (NVCR)	0.00	88-91	80-82
Palo Alto Networks (PANW)	236.92	241-246	225-228
Synnex Corp. (SNX)	129.70	119-123	110-112
Target (TGT)	124.77	122-125	112-114

This stock has always had a great story—the company looks like one of the best cookie-cutter stories in construction-related retail, operating large (75,000 square feet on average) warehouse-style locations that specialize in hard flooring (tile, wood, stone, laminate and the like).

All Explorer positions except Grupo Televisa (TV) advanced this past week and the emerging markets timer (EEM) is positive in an uptrend and above both its 20-day and 50-day moving averages.

Today’s recommendation is a company showing some relative strength that offers a nice blend of emerging growth and Western management. It’s a business with a diversified portfolio of fuel distribution, sugar production, ethanol and electricity, rail transportation and warehousing as well as the distribution of natural gas.

Big data is big and growing bigger. The market is forecast to reach $103 billion by 2022, with every person generating 1.7 megabytes of data every second, with internet users as a whole expected to generate some 2.5 quintillion bytes of data each day.

This month’s Issue of Cabot Small-Cap Confidential features a newly public company that’s trying to do what seems impossible – make the healthcare system work better.

It’s essentially a big data software company for this highly complex market. But it has a services and consulting segment too that’s central to the growth story because so many clients need help getting organized before they can even implement a software system.

Revenue growth tops 30%. And the story remains relatively unknown. All the details are inside the December Issue of Cabot Small-Cap Confidential.