Search

It was a fairly quiet week in terms of the leading indexes’ performance as the S&P 500 fell marginally, the Dow mostly finished the week unchanged, and the Nasdaq fell by 0.4%.

After a very difficult September during which the S&P 600 SmallCap Index fell back to the May lows, things have finally stabilized in small-cap land over the last two weeks.

Energy stocks have been one of the main contributors lately, as have consumer staples and discretionary stocks. These guys have helped offset weakness in small-cap healthcare and tech.

The S&P 600 Small Cap Index has drifted a little lower this week but made a nice move over the last month as interest rates declined. The S&P 600 iShares ETF (IJR) is up 7% over the last five weeks.

The chart inside shows how clear the inverse relationship between the IJR (green line) and the 10-year yield (blue line) is.

The big macro news this week is that the U.S. economy is doing well and there’s no really clear reason for the Fed to cut interest rates. Trade deals continue to be announced, and the U.S. should be bringing in a good deal more money due to tariffs than it has in the recent past.

Real GDP was just announced to have risen 3%, thanks to capex on hardware and software to build out data centers. Results from Microsoft (MSFT) and Meta (META) confirmed this trend.

We’re about to head into a crucial time of the year for small-cap stocks. That’s because the Q3 earnings season will fire up toward the end of October and run into early November.

This earnings season will let us know how small caps fared over the summer months and also give us a glimpse into how they’re expected to do in Q4 and the beginning of 2026.

Small caps have been outperforming large caps since the beginning of August.

CEO Special Bulletin: Position Updates

Adherence to a system or strategy is one of the best predictors of investing success, but before you can find the right system, you need to know what kind of investor you are.

The market enjoyed a little bounce yesterday but is still working to find a level of support from which to mount an eventual recovery. This is a process, not an event. Nobody knows if we have reached that level yet.

We’ve been through these types of volatile markets many times in the past. While the drivers of the volatility are often different, one of the consistencies is that it is best to exercise patience and let new leaders show themselves. They always do.

In this case, the main drivers of the current market correction are Trump’s tariffs/trade war and massive disruptions in the federal government.

There are 7 artificial intelligence (AI) ETFs available to investors. Let’s look at all 7 and find the best AI ETF for investors of all stripes.

We include our comments on earnings from Macy’s (M) and Kohl’s (KSS). Duluth Holdings (DLTH) will report on August 31.

Earlier this week, due to circumstances beyond our control, we suspended our rating on shares of Kopin Corporation (KOPN). This means that the shares have no rating: They are not a Buy, Sell, Hold or any other rating, but are in essence unrated. We apologize for this unusual situation.

Last week, our issue was titled “Decision Time,” and after the Federal Reserve’s disappointing report, the market made the decision to go down with force—not only have the major indexes broken their intermediate-term trend lines, but tons of stocks have been nailed as the selling pressures intensify. Yes, there are still many decent-looking names out there, but the market is the elephant in the room at this point; it’s best to hold plenty of cash and do little new buying until stocks find their footing.

The good news from a stock picker’s standpoint is that it’s easiest to spot strength in a weak market; if a stock is holding up well in this environment, it deserves some extra attention. This week’s list has many stocks that fill that bill; our favorite is Infoblox (BLOX), a young, rapidly-growing networking firm. Just be sure to keep any positions small if you decide to buy.

Stock Name	Price	Buy Range	Loss Limit
Yelp (YELP)	41.30	28-30	26-27
The ExOne Company (XONE)	0.00	48-50	42-43
Tesla, Inc. (TSLA)	818.87	93-103	85-88
SodaStream (SODA)	142.91	65-69	60-61
Charles Schwab (SCHW)	0.00	19.5-20.5	18-18.5
RH Inc. (RH)	252.93	67-71	60-62
Colfax (CFX)	0.00	48-50	46-47
Infoblox Inc. (BLOX)	0.00	27-28	23-24
ANGI Homeservices Inc. (ANGI)	14.81	25-26	23-24
ACADIA Pharmaceuticals (ACAD)	47.84	16-17.5	13.5-14

The calendar has flipped, but nothing has changed with the evidence during the past couple of weeks—the intermediate-term trend, which was stubbornly up for a while, has given way, joining the long-term trend on the downside, all while growth stocks underperform. Most indexes and sectors are doing more chopping than plunging, and it’s important to remain open to anything—but, simply put, the onus clearly remains on the bulls to step up. Our Market Monitor remains at a level 4.

Our first list of the New Year casts a wide net, and our Top Pick is a powerful turnaround play that also provides exposure to the improving non-U.S. area of the market.

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.

Since we’re in the midst of a sudden stock market correction, I decided to feature three stocks today that seem to offer the best opportunities while their prices are temporarily low.

Be brave! If you saved up portfolio cash with which to buy low at moments like this, now is the time to buy something! You don’t have to spend it all in one day, of course.

If you are new at buying low during stock market corrections, and you’re feeling excited and scared and tentative and unconfident, send me an email. You’re going to be okay, and I’d love to hear about your experience. Learning to buy low is an important step toward increasing your future stock portfolio success.

Today’s recommendation is a software and infrastructure company specializing in communications. It just reported Wednesday night, and results were better than expected, which is great for two reasons.
First, the latest numbers support my thesis that this company has what it takes to grow over the long haul.
And second, we don’t need to stress about the company reporting right after we buy in! We have the latest data. And it looks good.
All the details are inside this month’s Issue.

Tyler Laundon, Chief Analyst of Cabot Small-Cap Stocks and Cabot Early Opportunities speaks about Software Stocks.

Among the topics he covers:
* A look at current software stock valuations
* Software in context: Trends over the last 25 years
* Software today: More options than ever
* Software stock opportunities for 2021

Tim Lutts, CEO of Cabot Wealth Network, talk about current conditions in this (hopefully) post-corona crash market and shares high-potential growth stocks.

Thank you for subscribing to the Cabot Turnaround Letter. We hope you enjoy reading the February 2023 issue.

While many initial public offerings (IPOs) have a quick price “pop” on their debut, most are speculative companies whose share performance is more accurately described as “pop and drop.” Our search for enduring post-IPO companies whose shares trade at attractive prices turned up four promising ideas.

We also take a look at our research process using an approaching opportunity in shares of Fidelity National Information Services (FIS).

Our feature recommendation this month is a European company that investors are avoiding due to its conglomerate structure and potentially large legal liabilities related to a disastrous acquisition several years ago. But shares of Bayer AG (BAYRY) trade at an excessive discount to the likely liabilities, while the core business is stable and resilient. Shareholders are beginning to press for major changes to unlock the company’s value.

Second quarter earnings season is winding down. It was quite a quarter! We’re impressed that so many companies have aggressively reduced their operating costs in the recently completed quarter.