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Rate hikes typically come when the market is trending up, and investors tend to expect these trends to continue—so they do, for a while. So whether the Fed hikes rates this month, next month or months later, don’t be afraid. Remember that the first rate hike, on average, comes in an environment that is beneficial to investors, and thus you should make the most of it.

Current Market Outlook


First and foremost, with the virus now affecting most everyone, all of us here at Cabot are hoping you stay safe (and if you’re home with your kids, sane!). As for the market, there’s not much to say except the obvious: We remain in a very steep selloff, with bounces limited to a couple of hours, though we’re seeing such crazy extremes (price and sentiment) that a near-term low is possible at any time. Our advice really hasn’t changed despite the once-in-a-lifetime action of the past couple of weeks: You should remain cautious, holding plenty of cash and keeping any new buying on the small side. Eventually, there will be huge opportunities, but we need to see the market and potential leading stocks find support before thinking a workable low could be in.

In the meantime, we’re mostly focused on eying stocks that are showing some resilience—if something can hold up in this disaster, it’s definitely worth at least keeping a close eye on. Our Top Pick is Masimo (MASI), which could be a port in the virus storm.

Stock Name	Price	Buy Range	Loss Limit
Acceleron Pharma (XLRN)	75.11	71-75	64-66
Apple (AAPL)	248.94	238-248	217-223
Bilibili (BILI)	28.71	23.5-25	21-21.5
DocuSign (DOCU)	107.98	70-74	63-65
Equinix, Inc. (EQIX)	547.73	538-550	505-510
FTI Consulting (FCN)	120.09	112-116	103-105
Inphi (IPHI)	120.16	62.5-66	56.5-58.5
Masimo (MASI)	159.56	172-177	157-160
Repligen (RGEN)	91.34	83-86	75-77
TAL Education (TAL)	50.49	47-50	42-43.5

Current Market Outlook


There were some intra-week ups and downs, but overall, not much changed with the evidence last week—the major indexes mostly closed down 0.5% to 1.5%, which keeps the broad market in an uptrend but also means growth stocks and the Nasdaq are still in corrections and consolidations. With many names now five to seven weeks into new launching pads, we’re looking for definitive signs that the buyers are coming back for growth stocks—and indeed, we have seen some encouraging action during the past two sessions—but it’s too soon to conclude the environment is changing. Thus, we’re sticking with the same stance: Some small buys of strong stocks on pullbacks is fine, but we’d stay relatively close to shore until the bulls prove that the buying pressures are spreading and more solid entry points emerge.

This week’s list has something for everyone, whether you’re looking for different sectors or setups. Our Top Pick is LGI Homes (LGIH), which has reemerged on the upside and could be leading a new group move in the homebuilders.

Stock Name	Price	Buy Range	Loss Limit
Aclaris Therapeutics (ACRS)	28	25.5-27.5	21-22
Alcoa (AA)	30	29-31	25.5-26.5
Cimarex Energy (XEC)	60	56-58.5	51-52.5
IAC/InterActiveCorp (IAC)	248	237-250	214-220
Jack in the Box (JACK)	115	111-115	100-102
LGI Homes (LGIH)	142	138-143	123-126
Spirit AeroSystems (SPR)	48	46-49	41.5-43
Steel Dynamics (STLD)	47	44.5-47	40.5-41.5
TripAdvisor (TRIP)	54	51-54	45-47
Williams-Sonoma (WSM)	180	167-173	148-152

Complacency is creeping back into the market, but we remain vigilant as the earnings season cranks up into full gear. That said, the broad backdrop is still in good shape as evidenced by some of our favorite indicators. We’ve also done some pruning recently (mostly among laggards) as the market’s multi-month run is becoming a bit extended. But we still see opportunities, especially in areas investors have overlooked. All told, near-term wobbles are possible, but we remain bullish as the odds favor the new uptrend bringing us higher over time. We’ll keep our Market Monitor at a level 7, but we’ll stay nimble as earnings come in.

This week’s list contains some formerly out-of-favor stocks that are now in much better shape as industry trends improve. Our Top Pick is an engineering firm that shows all the classic signs of being under strong institutional accumulation. We’re OK using dips to enter.

Updates on four of our stocks—all rated Strong Buy.

Following the huge lift-off in February, a pullback was likely, and the Ukraine-related tensions have been the excuse for persistent selling (especially among growth stocks) during the past couple of weeks. At this point, we think it’s fair to say the situation is on the fence—many leading stocks are down to key support, so if all’s well, the major indexes and individual names should find support soon. If they don’t, it’s likely that the market is in for a deeper consolidation; if they do (today was a decent start), then this news-driven pullback could be near an end. We’ll be watching.

In the meantime, this week’s list has many new names, including many that have just began their major advances within the past few months. Our Top Pick is Freescale Semiconductor (FSL), part of the strong chip group and a stock that is pulling back for the first time since an ultra-powerful breakout.

Stock Name	Price	Buy Range	Loss Limit
XPO Logistics (XPO)	0.00	30-31.5	28-28.5
Tesla, Inc. (TSLA)	818.87	220-235	190-200
TripAdvisor (TRIP)	55.14	100-105	91-92
Salix Pharmaceuticals (SLXP)	0.00	108-112	97-99
Palo Alto Networks (PANW)	236.92	74-77	68-69
Ligand Pharmaceuticals (LGND)	267.14	75-77	64-66
GT Advanced Technologies (GTAT)	0.00	16-17	13-14
Freescale Semiconductor (FSL)	0.00	21-22.5	19-19.5
Diamondback Energy (FANG)	0.00	62-64	56-57
AngloGold Ashanti (AU)	20.45	18-19	16-17

Financial stocks, as a group, are undervalued, with strong expected earnings growth, bullish price charts and prospects of upward earnings revisions as interest rates rise. Today’s Portfolio Changes: BigLots (BIG) moves to a Hold, and D.R. Horton (DHI) increased its dividend.

After a three-week rally, stocks hit resistance at logical levels, with the indexes backing off … though they still remain nicely above their January lows. It’s possible we’re starting a re-test phase, with the major indexes and many stocks set to attack their January lows. But, really, we’re less concerned with gaming out the daily action than with sticking to the overall evidence—until proven otherwise, the trends of the major indexes, of growth-oriented funds and of most stocks is pointed down, so we advise remaining generally defensive and patient as we allow more stocks to build bottoms and form legitimate setups.



That doesn’t mean, however, that the wheat isn’t starting to separate from the chaff among individual stocks. This week’s list has a bunch of stocks that have shown some great-volume accumulation during the past two or three weeks, though our Top Pick is a solid long-term setup ahead of earnings.

Should you buy, sell or hold amid this coronavirus crash? Here are a few investment strategies that have helped me through many volatile markets.

We are in the late stages of a recovery and bull market. The economy is still strong and the bull market could continue for a while. But the escalation of trade frictions with China is disrupting the situation.
Since the trade war escalated a month ago, the market has fallen every week since. And things might get worse before they get better. The trade war takes a small toll on the economy but it hurts the global economy much more. A faltering global economy would come back and bite us, and perhaps draw the next recession closer.
With no catalyst in sight to fix the current situation and a recession looming somewhere in the not-too-distant future, it makes sense to play defense. Defensive dividend paying stocks are the stars of the market now and may continue to be for a long while.
In this issue I highlight one of the very best defensive dividend stocks on the market. It has rock solid earnings in any environment and the stock should perform well in just about any market.

It’s something of a running joke online, but can you actually make the case that Representative Pelosi and the man behind the GameStop saga are two of the greatest traders in history?