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So much for the market rebound. Or is this a classic double bottom before the real rally begins after Wednesday’s “Liberation Day” full of Trump’s latest round of mysterious tariffs finally passes and Wall Street breathes a collective sigh of relief? I’m betting the clouds part sooner rather than later, as investor pessimism has reached levels not seen since the October 2022 bear market bottom. So today, despite saying goodbye to a few more underperforming positions, I’m betting on the upside of growth, adding a mid-cap software stock recently recommended by Tyler Laundon to his Cabot Early Opportunities readers.

Details inside.

Strong earnings results, Fed rate cuts, and easing trade tensions with China. It’s no wonder stocks are stretching to new all-time highs! Of course, it’s been a bit topsy-turvy getting there these last few weeks. But Wall Street is ultimately a sucker for a strong economy, and that’s essentially what we have until further notice. And in strong economies, it makes sense to invest in financials. So today, we add one of the biggest-name U.S. banks – a stock that made the cut in last week’s Cabot Top Ten Trader issue.

Details inside.

After a sluggish start to the year, stocks have broken to new highs, with not even diminished expectations of Fed rate cuts able to slow them. Is it the next leg up in this still-nascent bull market? Perhaps. But in case there’s some earnings season turbulence ahead, today we add a low-risk value stock that’s been a favorite of Cabot Value Investor Chief Analyst Bruce Kaser for quite some time.

Details inside.

Underperforming “loser stocks” are an inevitable part of investing, but they can still provide value to your portfolio, especially at year’s end.

The market rotation continues to be the main story out there this week, though rumblings of a potential strike on Iran, an update from the January FOMC meeting, and a slew of earnings reports and economic data releases have been giving investors plenty to think about.

In terms of the rotation, the equal‑weight S&P 500 ETF (RSP) is up 5.5% so far this year, illustrating that leadership is broadening beyond the narrow group of mega‑cap stocks that drove much of last year’s performance.

Year to date, the S&P 600 SmallCap Index is up 8.3% and the S&P 400 Mid‑Cap Index is up 7.9%. Both are comfortably outperforming the S&P 500, which is up just 0.1%, and the Nasdaq, which is down 2.1%.

United stock is getting pummeled for how it treated a passenger on an overbooked flight. In a few weeks, UAL could be the perfect buy-low opportunity.

WHAT TO DO NOW: It’s been a typically volatile January, with this week’s huge convulsions among AI stocks the latest crosscurrent to deal with. Overall, the top-down evidence is mostly neutral at this point, and leading stocks are in a similar boat as last week—improving, but without much decisive buying so far. To be fair, we’d like to put some money to work and could do so soon (next day or two) if we get the right setup, but tonight we’ll stand pat and look for signs big investors are getting involved. In the Model Portfolio, we cut our loss in Marvell (MRVL) on a special bulletin Monday, though most of our stocks are acting well and tonight we’re placing On Holding (ONON) back on Buy as it looks to be resuming its overall uptrend. Our cash position is right around 50%.

*Note: Your next issue of Cabot Top Ten Trader will arrive next Tuesday, September 2, due to the market holiday next Monday, September 1, in observance of Labor Day.

Ever since early July, the market has seen more and more bouts of rotation, and in the past two weeks, that action has accelerated, with more and more growth stocks getting hit while expectations for a Fed rate cut next month have goosed the broad market. So where do we stand overall? From a top-down perspective, the evidence has improved, but there’s also a lot of crosscurrents and leadership is in transition, which keeps things tricky. We’ll stick with our Market Monitor at a level 7 and see how things look after the coming long weekend.

This week’s list has a bunch of names from different groups, including many smaller titles, which goes hand in hand with what we’re seeing in the market. Our Top Pick had five (!) fakeouts in the past six months, this recent breakout look for real. Aim for modest dips and use a looser stop.

Supply chain headaches introduced most of us to the importance of retail technology. With the sector slated to continue growing here are a few retail tech stocks and sectors to watch.

After a couple of good weeks, some pullback was half-expected—and, when looking at the big-cap indexes, nothing out of the ordinary has been seen. That said, digging deeper, we saw a good amount of selling in resilient stocks, another round of selling in the broad market all while defensive names found buyers. To this point, the potential leaders that took on water are still holding onto intermediate-term support, so we’re not advising any major change in stance. That said, the next couple of weeks will be key (for good or bad), especially as earnings season gets started. We’ll leave our Market Monitor at a level 5 today.

This week’s list has an interesting mix of names, including more than a few turnaround-type actors that remain under accumulation. Our Top Pick is a former winner that offers a mix of growth and defensiveness in this environment.

After a heady run, further short-term wobbles are possible, even likely, as the market and many stocks digest their May/June gains and as fear levels rise with interest rates. That said, to this point the consolidation in the major indexes and leading stocks has been completely acceptable, with very little abnormal action. If we start to see some names crack meaningful support, we’ll knock our Market Monitor down a notch or two, but today we’ll keep it at a level 8, as the odds continue to favor this being a normal rest period that will give way to higher prices.

This week’s list has a handful of names that have recently got going despite the market’s shenanigans. Our Top Pick this week is from a beaten-down group that’s come to life, possibly signaling the start of a group move.

The potential for an accelerated timetable for the Fed to raise interest rates and the ongoing Russia-Ukraine situation led to volatility this week. As always, other events and news also moved stocks. In particular, Sea (SE), after bouncing back the previous two weeks, was off sharply on Monday following reports that India has banned its popular mobile hit “Free Fire”. The stock has since recovered half of this pullback to close Wednesday trading at 141.

Sell Harman (Har) due to buyout offer from Samsung, plus other portfolio updates.

Not all insider activity is created equal, which is why I recommend following these three basic rules to identify stocks with insider buying and the potential to outperform.

Oil prices have rebounded nicely from historic lows. As energy stocks rise, these three oil ETFs are an efficient way to play the rally.