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Current Market Outlook


For the first time in two months, last week saw some sellers stepping up to the plate, taking profits in leading names despite some good earnings reports. And today we saw very strong selling across the board, with leaders falling sharply across the board, including many that dipped toward support. In the short-term, given the prolonged run off the bottom, more consolidation is likely, so we’re fine taking a profit (or partial profit) here or there. Intermediate-term, though, we’re still optimistic—while some of the action looks iffy, very few (if any) leading stocks or indexes have broken down at this point, and these type of sharp, scary pullbacks (assuming they find support at logical levels) aren’t unusual during bull moves. We’re knocking our Market Monitor down a notch, thinking the near-term will be more challenging, but remain overall bullish.

This week’s list has a bunch of strong names that have recently emerged, so they shouldn’t have as much pent-up selling pressures. Our Top Pick is MercadoLibre (MELI), where business is reaccelerating and the stock just came out of a big consolidation.

Stock Name	Price	Buy Range	Loss Limit
Acacia Communications (ACIA)	51.83	53-56	47.5-49.5
CoStar Group (CSGP)	589.55	450-470	420-430
Cronos Group (CRON)	17.62	20-22	16.5-1705
DocuSign (DOCU)	107.98	52-54	46-47.5
Etsy (ETSY)	112.97	66.5-69.5	60-62
Euronet Worldwide (EEFT)	142.83	130-134	119-122
MercadoLibre, Inc. (MELI)	980.83	445-465	400-415
Novocure (NVCR)	0.00	50-53	45.5-47
Universal Display (OLED)	187.54	143-148	128-131
Zscaler (ZS)	126.22	55-58	49.5-51.5

The market remains in an uptrend, and many of our leading stocks have been hitting new highs, even though the major indexes haven’t—yet. Thus I continue to recommend that you be heavily invested in a diversified portfolio of stocks—growth, value, dividend-paying and more. Someday, it will become appropriate to be more cautious, but that time is not now.
Today’s stock is a young technology stock with great growth prospects as it supplies its customers with the tools needed to secure digital operations of all types and sizes. It’s an aggressive, high-risk investment, but the trend is strongly up.
As for the current portfolio, six of our stocks have hit new highs in recent days, so we’re making great progress. The only changes this week are two downgrades from Buy to Hold. Details inside.

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

The gains so far this year, in both the sector and the portfolio, have been absolutely spectacular, but they won’t continue. Already I detect signs of a rolling correction and there’s the possibility that short-term, it could get worse. So in this issue, I have some sell recommendations, for investors who are working to develop maximum gains.

For longer-term, more patient investors, however, doing nothing is fine. The long-term prospects for both the industry and the sector remain bright.

Today’s opportunity is a cloud software stock that’s recovered nicely from its December lows and is moving back up near its 2018 high.
The company is growing quickly, mainly because of an acquisition-led growth strategy. Evidence is building that organic growth is starting to kick in too now that the company has acquired enough solutions to start bundling them into product suites.
This M&A growth strategy is a slightly different one than pursued by the other cloud software vendors in our portfolio. I think it’s compelling. And if I’m right that organic growth will be steadier moving forward, we should see shares perform very well in 2019 and beyond.

Current Market Outlook


After nine strong up weeks, the past two have seen most of the market hesitate (at first) and then pull back (the S&P 500 fell all five days last week), resulting in a few stocks hitting potholes along the way. In the short-term, we think some further consolidation could easily come, shaking out some weak hands. But bigger picture, the recent action looks normal to us—none of the major indexes and very few leading stocks cracked any meaningful intermediate-term support, and today’s sharp rally is a good sign that buyers are still lurking. Be sure to watch your stops and loss limits, and it’s a good idea to be discerning on the buy side, focusing on strong stocks that have pulled back to solid entry points. Market-wise, though, we remain bullish and are keeping our Market Monitor at a level 7.

This week’s list has stocks from all corners of the market, which we see as an encouraging sign. Our Top Pick is RingCentral (RNG), a leader in a new cloud communications field with a stock that’s acting great.

Stock Name	Price	Buy Range	Loss Limit
Carvana (CVNA)	82.90	48-51	41.5-43.5
EPAM Systems (EPAM)	188.24	155-160	142-145
Keysight Technologies, Inc. (KEYS)	97.20	81-85	73.5-75.5
Lending Tree (TREE)	411.51	307-322	278-288
Omnicell (OMCL)	81.03	80-84	73-75
Planet Fitness (PLNT)	0.00	62-64	57-58
Rapid7 (RPD)	63.52	45-47.5	40-41.5
RingCentral (RNG)	238.73	100-105	91-94
Sea Limited (SE)	132.86	22-24	18-19.5
Tandem Diabetes (TNDM)	74.77	61-65	52-55

If you own small or regional Western U.S. energy stocks, make sure to read my comments in the introduction about some pending legislation in Colorado that does not bode well for in-state energy production. I’m sorry to say that the legislation is likely to rapidly move through the legislature, because the minority political party does not have enough votes to block it, and the Governor is likely to sign it. For stock investors, forewarned is forearmed.

Emerging markets (EEM) stay in a confirmed uptrend with the support of generally upbeat earnings. Investors have piled about $86 billion into emerging-market stocks and bonds this year, more than in the last nine months of 2018 combined.

We have some earnings updates and a new recommendation that actually delivers the strong e-commerce growth—a leading consumer theme of emerging markets.

Some areas of the market have wobbled in recent days, and even the major indexes have stalled out a bit—but none of this looks unusual to me after such a strong 10-week run prior to this. With the trends pointed up and the vast majority of stocks in uptrends, we remain overall bullish, though we’re also keeping a close eye on all our stocks and jettisoning any where the potential has faded (we have two sells tonight).

And in their place, of course, we’re adding higher potential names. Tonight’s Stock of the Week is helping to revolutionize the advertising industry, and the stock has taken a brief rest after a powerful earnings-induced breakout nearly two weeks ago.

All Cabot’s market timing indicators have now flashed green lights, so I continue to recommend that you work to get more invested.
With today’s recommendation, we return to the U.S. with a medical technology stock that addresses a mass market and is growing fast—though it’s not booking profits yet.

Current Market Outlook


The lagging action of the broad market finally caught up with the major indexes last Friday, with everything taking a big hit and, more important, small- and mid-cap indexes falling below their 50-day lines. Right now, most of the evidence remains positive, so we remain mostly bullish. But it’s fair to say our antennae are up and the next few days will be important—the intermediate-term trend is basically on the fence (another bad day could turn it down) and many leading stocks have been running for many weeks and are extended to the upside. Bottom line, we’re sticking with our current stance, but be sure to honor your stops and loss limits, take partial profits where available and, on the buy side, be discerning and aim to buy on weakness.
The good news is we’re seeing a decent amount of strong stocks that hit new highs recently and are pulling back normally. This week’s list is full of them, and our Top Pick is iRobot (IRBT), a stock with a solid growth story and a good-looking setup on the chart.

Stock Name	Price	Buy Range	Loss Limit
Forescout (FSCT)	41.92	41.5-43	37-38
Huazhu Group (HTHT)	30.89	38-40	34-35.5
Invitae (NVTA)	32.06	22.5-24.5	19-20
iRobot (IRBT)	103.17	118-122	107-110
ProPetro (PUMP)	23.30	20.5-21.5	18.2-18.9
Shopify (SHOP)	585.00	194-200	178-182
Sleep Number (SNBR)	35.80	45-47	41-42.5
StoneCo (STNE)	27.54	37-39.5	31.5-33
Wheaton Precious Metals (WPM)	34.43	23.5-24.5	21.5-22
Wix.com (WIX)	302.53	116-120	107-110

The market has slowed down just a touch in recent days, with the major indexes hesitating near some resistance. But the trends remain strongly up (our Cabot Trend Lines has joined the bull camp) and individual stocks are acting well, including many reacting well to earnings. Of course, pullbacks are definitely possible, so now’s not a time to jump in with both feet. But we continue to be bullish and to put money steadily to work.
In tonight’s issue, we discuss all our stocks, and take a peek at one of the market’s leading themes, which looks like it could go far as the bull market picks up speed.

Current Market Outlook


Last week made it nine weeks in a row for most major indexes, and also brought another bullish “blastoff” signal (90% of NYSE stocks rose above their 50-day line), which portends nicely higher prices three to nine months down the road. As for the question on everyone’s mind (when will we get a pullback?), there is a growing chance of a short-term dip, partially due to lots of good news hitting the wires (such as today’s tariff delay). That said, pinpointing short-term moves is a tough game and rarely helps you make good money over time—the key is sticking with the major trend (up) and focusing on leading stocks and proper setups. Overall, we remain open to anything, but just going with the evidence, you should be mostly bullish.

This week’s list has a mix of stocks and sectors, from retail to medical to Internet. A bunch of the names look good, but for our Top Pick, we’ll go with Trade Desk (TTD), which looks like a real leading glamour stock. Try to buy on dips.

Stock Name	Price	Buy Range	Loss Limit
Avalara (AVLR)	102.00	48.5-52	43-45
Boot Barn (BOOT)	43.24	26-28	23-24.5
Dine Brands (DIN)	93.05	95-100	87-90
Invitae (NVTA)	32.06	18-19	16-16.5
iRhythm Technologies (IRTC)	51.15	92-96	83.5-86
Match (MTCH)	0.00	54-57	49-51
SS&C Technologies Holdings, Inc. (SSNC)	63.56	58.5-60	53.5-54.5
Trade Desk (TTD)	468.02	190-200	163-169
Wayfair (W)	167.03	150-155	133-136
Yeti Holdings (YETI)	42.80	22.5-24	20-21

With today’s recommendation, I leave the U.S. to return to the fast-growing giant that China has become, with a company that will join Tesla in the fast-growing electric car industry. It’s a low-priced stock, so it’s not for everyone, but it does have enormous growth potential.