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This week’s recommendation is a special situation—a transport stock that, thanks mostly to a game changing acquisition, is poised for major earnings growth. And the stock is holding up well after a recent earnings pop.

Today’s stock is from one of the hottest sectors of the market, China, and it’s got a big growth story—as well as the beginnings of a move to expand outside of China. As for our current stocks, in general all is well, not least because of the market’s recent rebound. In fact, we’ve got several stocks hitting new highs!

Emerging market stocks have followed the lead of the major U.S. indexes by executing a V-shaped bounce from their January/February slump and most of our stocks are in good shape. We’re keeping an eye on Chinese New Year as an economic force and on the battle between Alibaba and Tencent/JD.com for leadership in the Chinese online retail race. And we have a high-flying Chinese biopharmaceutical company to fit into the portfolio.

Emerging market stocks corrected sharply along with U.S. stocks today, dropping back to December levels and closing decisively below the MSCI EM ETF’s 25- and 50-day moving averages. We didn’t really need that kind of technical signal to tell us that all growth stocks were falling off the end of the dock, but it’s good to get a formal notice.

Current Market Outlook


After a 10-day, 11% plunge for the major indexes, the market has stabilized for the time being. When looking at the evidence, we see that the longer-term trend is still up, but there’s no doubt the intermediate-term trend is down, the broad market is unhealthy and many stocks have cracked. A bounce could easily get underway at any time, but until the intermediate-term trend turns up (indexes back above their 50-day lines and some stocks acting better), you should play some defense by holding cash, cutting back on new buying and, if you own some broken stocks, using any market rebound to pare back. On the flip side, we still advise holding your resilient stocks—if they’ve held up so far, they have a good chance of doing well whenever the correction finishes up.

What’s interesting is that, despite the market carnage, we saw a ton of positive earnings surprises last week—which is a good way to spot potential leaders down the road. Our Top Pick is Grubhub (GRUB), which has the look of an emerging blue chip.

Stock Name	Price	Buy Range	Loss Limit
Array Biopharma (ARRY)	46.35	16-17	14-14.5
BeiGene (BGNE)	170.20	116-124	103-107
Century Aluminum Co. (CENX)	17.24	20.5-22	18.5-19.5
Fortinet Inc. (FTNT)	137.53	45.5-47	43-44
GrubHub (GRUB)	140.03	81-86	72-75
New Relic (NEWR)	103.70	61-63	56-58
Snap Inc. (SNAP)	16.68	17-19	15-15.5
Twitter (TWTR)	40.37	29.5-32	26.5-28
W.W. Grainger, Inc. (GWW)	311.99	253-270	225-230
Wayfair (W)	167.03	88-92	81-83

If you bought a basket of my 10 Best Marijuana Stocks when the report was originally published in August, you’re off to a great start. Since that report was written, the average of the 10 stocks is up 32%, with the best stock up 131% and the worst down just 4%. Read on for more details.

Today’s bargain is a little-known stock in the fast-growing industry of marijuana farming, production and distribution, which recently was selling at a discount of more than 50% from its recent high. It’s rebounded a bit since then, but is trading calmly, and I think this is a decent entry point.

Current Market Outlook


We can’t complain about the market’s action recently—the major indexes have (at the very least) held the strong gains of the past couple of weeks, with the strongest among them (like the Nasdaq) pushing higher. And many individual stocks (especially growth stocks) look vibrant, which is a plus. That said, we can’t conclude that the bulls are back in control, as most major indexes are still hovering around their 50-day lines, and in the broad market, the number of stocks hitting new highs (even on the strong Nasdaq) remains very low. We’re close to an all-clear signal, and think it’s fine for you to hold your strong stocks and do a little buying here or there. But right now, we’re keeping our Market Monitor at neutral until we see confirmation of an uptrend.

This week’s list has a ton of good stories and charts, with growth stocks well represented. It’s hard to pick just one, but we’ll go with Red Hat (RHT), which looks like a big-cap leader of the leading software group.

Stock Name	Price	Buy Range	Loss Limit
Arch Coal (ARCH)	82.27	95-99	87-89
GoDaddy (GDDY)	0.00	58-61	53-55
MuleSoft (MULE)	0.00	28.5-30.5	26-27.5
Netflix, Inc. (NFLX)	423.92	280-290	255-260
Planet Fitness (PLNT)	0.00	34-36.5	31-32.5
Red Hat (RHT)	0.00	142-148	130-134
TAL Education (TAL)	50.49	35-37	32-33
Twilio (TWLO)	183.39	31.5-33.5	28-29.5
Vale S.A. (VALE)	15.40	13.7-14.5	12.6-13
Zendesk (ZEN)	82.19	40.5-42.5	36.5-38

Over the past few weeks, the market has given us a bunch of presents—and now the market is trying to take some of our presents away. But this should come as no surprise. The only “surprise” is what excuse the media finds to pin the blame on, whether it’s China or Russia or Italy or interest rates or Trump or simply an economy that’s too good to last.
I’ll leave the finger-pointing to someone else. Instead, I’ll keep picking high-potential stocks and managing the portfolio to maximize gain and minimize risk.

Last week I downgraded four stocks to Hold, and this week I recommend selling two—one for a fat profit and one for a quick loss. Still, because I keep adding a new stock every week, that leaves nineteen stocks in the portfolio, and most of them are acting very well!

As to this week’s recommendation, it’s a real wild card, a recent Chinese IPO that has been spun off from one of the big Chinese leaders. Risk-averse investors might want to give it a pass, or at least wait until there’s an established uptrend, but if you can handle the risk, buying down here might work out really well!

Current Market Outlook


The market had a relatively quiet week, with the major indexes slipping a fraction of a percent on light volume and most leading stocks marking time after solid advances the prior two weeks. So far, this action is totally acceptable, but the key will be what happens from here—a couple of large, high-volume selloffs would put a serious dent in the rally, but upside follow through in the indexes and many leading growth stocks would go a long way toward confirming that the January-May market correction is over. For now, we advise sticking with a “lean bullish” mentality; we’re OK doing some buying, but also picking your spots and holding some cash as we look for follow through. Our Market Monitor remains unchanged.

This week’s list has a ton of strong stocks in a variety of growth-oriented sectors. Our Top Pick is LPL Financial (LPLA), a mid-sized Bull Market stock that is acting very well and recently crushed earnings expectations.

Stock Name	Price	Buy Range	Loss Limit
51job, Inc. (JOBS)	0.00	99-103	92-94
Baozun (BZUN)	44.24	51-53	46.5-47.5
Carvana (CVNA)	82.90	25.5-27.5	23-24.5
Illumina Inc. (ILMN)	289.74	260-270	244-249
Ligand Pharmaceuticals (LGND)	267.14	181-188	169-172
LPL Financial Holdings (LPLA)	85.22	69-72	63-65
Penn National Gaming (PENN)	45.38	33.5-35	30.5-31.5
SolarEdge Technologies Inc. (SEDG)	124.37	64-67	58-60
Supernus Pharmaceuticals (SUPN)	52.50	53-56	48-49.5
WildHorse Resource (WRD)	0.00	25-27	21.5-22.5

The intermediate-term trend in emerging market stocks remains down, and we continue to advise a substantial degree of caution. At the same time, the fact that the indexes (both emerging markets and domestic) have been able to hold above their February lows means there’s a chance that a renewed advance can begin at any time. But we won’t predict; we’ll just follow the market’s lead, while keeping you apprised of the action in the highest potential emerging markets stocks we can find. Today we add another name to the watch list; it’s an old friend that just hit a new high a couple of days ago.