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Following yesterday’s after-hours preliminary Q4 earnings results, we are selling Beta Bionics (BBNX) today.

Shares of new addition FTAI Infrastructure (FIP) are trading down modestly today but outperforming the market after delivering Q2 results at the crack of dawn this morning (not after the bell yesterday, as they were supposed to).

Housing sector stocks—including homebuilders, raw materials, and appliances—look stronger right now than any other major industry group. Their charts are bullish, with many of them showing signs of near-term upside breakouts. In that light, I’m expecting good things from Boise Cascade (BCC), D.R. Horton (DHI), Vulcan Materials (VMC) and Whirlpool (WHR) this month.

2015 is almost over, thank the Lord! The stock market lacked momentum, trading sideways virtually the entire year.

Today’s recommendation is a fast-growing mass market stock that has the leading market share in the online food ordering business. The stock has been trading sideways for five weeks and I think it’s ready for a breakout.

Stocks keep rolling into spring on the heels of an excellent first quarter. Can the next three months match the previous three (or five)? Probably not. But bull markets don’t normally die of old age, and there are plenty of reasons to believe stocks will be higher by the end of Q2. With that in mind, today we add another beneficiary of artificial intelligence, though a company that’s not entirely dependent on AI. Instead, it’s one that’s found new life thanks in part to AI – similar to Microsoft (MSFT) when we added it to the portfolio a year ago. It’s been in Carl Delfeld’s Cabot Explorer portfolio for months, and today we welcome it to Stock of the Week.

NOTE: We’re publishing this update a day early as our offices (along with the overall market) will be closed tomorrow for Juneteenth.

WHAT TO DO NOW: Continue to lean bullish but stand pat for now. Overall, the market is handling the Middle East uncertainties well, with the major indexes and most stocks holding up well and most of the intermediate-term evidence in good shape. Still, with most stocks and indexes in holding patterns, we’ll follow along tonight—holding our 28% cash position and our current positions as we wait to see if more stocks can eventually lift out of their recent tight ranges.

WHAT TO DO NOW: The top-down, market-wide evidence remains in good shape, and encouragingly, growth stocks have revved up decently over the past week, though the action remains heavily concentrated in AI infrastructure-type names. There are still lots of crosscurrents and many names are hitting the occasional pothole, though, so picking your stocks and spots remains vital. In the Model Portfolio we’re making one new buy—a half-sized stake in Alnylam Pharmaceuticals (ALNY)—while placing MP Materials (MP) on Hold. We could have some other moves in the next few days (including averaging up on names in the portfolio), but tonight we’ll buy ALNY and go from there. Our cash position will be around 43%.

The rotation into the year’s underperformers that started last week has continued, while taking on some aspects of a generic risk-on trade. Financial stocks have outperformed all others since our last update, and tech stocks are up again this week. Materials and industrials also continue to do well.

All is well with the market so far this year. The S&P is up 6.7% in less than two months. It’s a continuation of the 23% rally that started at the end of October and a more than 40% rise from the bear market low in late 2022.

But recent news may jeopardize the current market dynamic. January CPI was higher than expected and indicated that the current problematic inflation isn’t dead yet. Sure, it’s way down from the 9.1% peak in mid-2022 to 3.1%, but it has been rising for several months and is still well above the Fed’s 2% target.

It’s time for all investors to obsess about the Fed again. The Central Bank has its March meeting this week and Wall Street is on pins and needles waiting to hear what they might vaguely insinuate.

The COVID-19 problem, as it pertains to the U.S. stock markets, is compounded by the fact that the S&P 500 index had risen about 12% since October.

Stocks have exceeded expectations so far this year. The S&P has rallied 20% from the October bottom and is up over 9% YTD. But there is a plethora of issues in the way of a further rally.

Even if we get past this debt ceiling issue without consequence, there’s inflation and the Fed. There’s also an increasing possibility of a recession later this year or early next year. The market rarely performs well ahead of a recession. A bear market rally should be about out of gas. And it’s difficult to see how stocks can soar into the next bull market until there is more clarity on these issues.

It still makes sense at this point to only buy the defensive stocks that are below the targeted price as well as sell covered calls for income when a stock gets near the top of the recent range.

In this issue, I highlight a covered call in a solid defensive stock that has recently rallied near the high point of the recent range. It’s a terrific way to get a high level of current income at a time when the market isn’t giving much else.

The iShares EM Fund (EEM) has popped back above its 50-day line, which is a plus, but the Emerging Markets Timer remains basically neutral, having made no net progress over the past two months.

The market’s evidence has clearly worsened the past two weeks and, really, there hasn’t been any money made in growth stocks since late September, when more names began to flash abnormal action and crack. We’ve mostly been selling in recent weeks, building up a big cash position of 56%, and tonight we’re hanging on to that as our Cabot Tides is on the fence, Two-Second Indicator is negative and many stocks are headed south. To be fair, the indexes are hanging in there and we still have many stocks we like (we write about some liquid biopsy stocks and other potential leaders in tonight’s issue), so we’re staying flexible--but right now it’s prudent to hold our cash and see how this selling wave plays out.