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Bailout, bailout, bailout ... it’s all bailout all the time these days, with every news organization (financial or otherwise) reporting rumors and innuendos from every politician regarding the government’s bailout package. Of course, the plan hit the fan in the House of Representatives on Monday afternoon, though the Senate passed it last night. The House is expected to vote again by Friday.

WHAT TO DO NOW: Remain cautious. The selling is spreading out now, so much so that our Cabot Tides have flipped to a sell signal as the number of new lows picks up. The odds still favor this being a correction, not a massive new downtrend, but most stocks (and especially growth stocks) remain under the gun. Tonight, we’re forced to sell our small remaining position in Shift4 (FOUR), which we gave every chance to hold up but has decisive broken down. We’ll also place ProShares S&P 500 Fund (SSO) on Hold given the Tides signal, though we’re holding onto what we own. All told, our cash position will be around 55%.

Last week was a good one for the bulls, not because the indexes finished in the green but because after three poor weeks, the broad market finally found some support, with breadth improving and the number of stocks hitting new lows drying up. We wouldn’t say the broad market is completely out of the woods; another few days of positive action would be necessary to conclude that. But, overall, we’re optimistic—the intermediate- and longer-term trends are pointed up, most stocks outside of commodity sectors remain in good shape, and we’re even seeing some rotation into more growth-oriented groups, which is usually a good sign. We’ll keep our Market Monitor at a level 7 right now as we wait to see further confirmation from the broad market.

This week’s list is chock full of strong stocks with solid growth stories from a variety of industries. We’ll keep it simple with our Top Pick this week, going with Adobe Systems (ADBE), a liquid growth leader that just reported a strong quarter.

Stock Name	Price	Buy Range	Loss Limit
Adient (ADNT)	0.00	70-73	64-65
Adobe Inc. (ADBE)	315.23	123-127	116-119
Axalta Coating (AXTA)	0.00	31-32.5	28-29
Broadcom Limited (AVGO)	266.26	215-223	200-205
Children’s Place (PLCE)	0.00	114-117	105-107
Glaukos Corp. (GKOS)	67.84	46-48.5	41.5-43
KB Home (KBH)	36.05	18.5-19.5	17-17.5
Micron Technology, Inc. (MU)	43.31	25-26	23-23.5
Olin Corp. (OLN)	0.00	31-33	29-30
Veeva Systems (VEEV)	180.23	47-50	44-46

Current Market Outlook


The third week of September brought another bout of sharp rotation, with leading growth stocks trading lower while other areas of the market firmed up. To this point, the action has been acceptable given the big runs in so many stocks during the summer, but some indexes and many stocks are approaching key levels—if the buyers show up here, all could be well, and we wouldn’t be shocked to see another leg up develop. But if not, the odds that a deeper and longer retreat among leading stocks will increase. Today, we’ll keep our Market Monitor at a 7 (out of 10), and it’s good to see some new leaders emerge. But the next few days will likely be important for the intermediate-term outlook.

This week’s list is still heavy on growth ideas (though some are turnaround-type plays), but our Top Pick is Rowan Drilling (RDC), which is showing great strength by lifting out of a big bottoming area.

Stock Name	Price	Buy Range	Loss Limit
Aaron’s (AAN)	74.35	51.5-53.5	46-47.5
Atlassian (TEAM)	182.16	88-92	79-81
CF Industries (CF)	45.23	51-53	46-47
Dave & Buster’s (PLAY)	57.01	61-63	55-56.5
Omnicell (OMCL)	81.03	67-70	62-63.5
Pacira Biosiences (PCRX)	54.85	48.5-51	42.5-44
Paylocity (PCTY)	97.34	77.5-81	70-72
Rowan Drilling (RDC)	15.52	17.7-18.7	15.8-16.4
Wingstop (WING)	121.52	64-66	58-59
Yelp (YELP)	41.30	47-50	43-45

Current Market Outlook


It’s been six weeks since the market bottomed, and the evidence since then has steadily improved—whether it was the blast off from the lows (2-to-1 Blastoff Indicator), the lack of any sustained selling since, the amazing upside breadth or the increasing number of setups and breakouts among growth stocks, it’s all been going the bulls’ way. Of course, now that the market has basically marched ahead for six weeks, things could easily get trickier; even some intermediate-term measures (84% of NYSE stocks above their 50-day lines) are stretched. That’s no reason to worry (longer-term, such power is probably a good sign), but we’d be looking to buy mostly on dips, though we’re still interested in the occasional earnings breakout, too. And, as things head higher, don’t forget to book some partial profits along the way. We’re bumping up our Market Monitor another notch tonight.
This week’s list is another diverse set of stocks that are acting well. Our Top Pick is Entegris (ENTG), where an upcoming merger (and a uptick in the chip group) has investors piling in.

Stock Name	Price	Buy Range	Loss Limit
Boeing (BA)	432.22	382-395	347-352
Cree, Inc. (CREE)	67.96	48-50.5	44-45
CyberArk (CYBR)	111.74	83.5-86.5	75.5-77.5
Elastic (ESTC)	86.17	84-87	76-78
Entegris (ENTG)	48.08	32-34	28.5-29.5
ServiceNow (NOW)	341.86	218-226	199-203
Smartsheet (SMAR)	44.12	30-32	26.5-28
Spirit Airlines (SAVE)	57.03	60-63	55-56.5
Woodward (WWD)	111.91	87-90	80-82
Zscaler (ZS)	126.22	47-49.5	42.5-43.5

Growth stocks are red hot! In this month’s Issue of Cabot Early Opportunities, I sift through all my ideas to feature a compelling mix of five stocks that still look to have significant upside potential over the coming months. Several of these names should represent new ways for investors to participate in long-term growth trends.

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.

This small-cap stock has been a favorite of mine for years and remains a deeply undervalued pure play on private equity growth.

There’s been a jump in volatility among individual stocks and some sectors (gold, oil, retail investor favorites, etc.), but at an index level, things continue to be pretty smooth. The S&P 600 SmallCap Index is trading higher than it was a week ago.

Environmental, social and governance investing sounds good on paper, but is that really what you’ll be getting when you buy an ESG fund?

Readers who took my advice to buy Tesla in 2011 are sitting on a 960% profit. If you missed out, now is another good time to buy TSLA stock.

Options education is one of my main goals for Cabot Options Trader subscribers. And here are three important lessons I’ve been telling people lately.

Inflation is hot and the Fed just began raising rates. It is expected to hike ten more times by the end of next year.

While yield curve inversion and recession risk is out there, many banks are flush with cash. And consumers are in great shape. As rates go steadily higher, bank stocks are poised to significantly grow earnings.



The most aggressive way to play this is with a bank that’s leveraged to short-term rates. That’s the strategy we’ll take today with a pure-play digital currency bank.



Enjoy!