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I’m adding a 31-year dividend payer to the Safe Income Tier, and cover all our stocks that have reported earnings so far. You’ll also find some important information on REITs at the end of the issue which you should find valuable if you bought last month’s High Yield Tier addition.

Current Market Outlook


Today was a welcome day for leading growth stocks, with many bouncing nicely after nearly two weeks of sliding steadily (despite the Dow’s advance during that time). Overall, the situation remains mostly bullish, but tricky—the major indexes are in uptrends and many stocks are in good shape, but we’ve also seen quite a few breakdowns among Top Ten stocks during the past couple of weeks, while many stocks moving to new highs have quickly found selling pressure. All told, we’ll leave our Market Monitor in bullish territory because the majority of evidence remains on the positive side of the ledger, but we’ll be watching to see if today’s strength in leading stocks continues or the choppy conditions return.

This week’s Top Ten has a bunch of impressive charts (including some multi-year breakouts) from a variety of industries. Our Top Pick is GrubHub (GRUB), whose story has improved and whose stock has exploded out of a two and a half year consolidation. Try to buy on weakness.

Stock Name	Price	Buy Range	Loss Limit
Aaron’s (AAN)	74.35	44-46	41-42
Ameriprise Financial, Inc. (AMP)	0.00	142-147	131-134
Arista Networks (ANET)	0.00	165-173	152-156
Baidu (BIDU)	0.00	222-229	203-207
Baozun (BZUN)	44.24	30.5-32.5	28-29
GrubHub (GRUB)	140.03	50-53	45-47
Lumber Liquidators Holdings, Inc. (LL)	0.00	33.5-36	29.5-31
Rockwell Collins (COL)	0.00	119-122	108-112
Spirit AeroSystems (SPR)	92.54	69-72	62-65
WTW (WTW)	100.47	39-42	35-36.5

In tonight’s Cabot Growth Investor, we review all our stocks and highlight some names we’re watching, including one that’s set up very well ahead of earnings. We also dive into some details about how we run our ship—we’ve gotten a few questions about this lately, and we think this will clear up any questions you may have.

We have two new additions to the portfolios in today’s issue, one of our stocks has changed its name, and one stock is now rated Sell.

In tonight’s issue, we write about what we’re seeing in the market’s recent rotation as well as another batch of studies that portend higher prices for the market down the road. We also dive into all our recommendations and present some of our favorite ideas for the next market upleg.

Chinese stocks have bounced higher this week, giving the Cabot Emerging Markets Timer a much stronger buy signal. Coming after a stretch of flat trading dating back to mid-May, this newly strengthened signal is great news, and we have a Chinese internet stock to recommend that should benefit greatly from the support.

This month’s selection is a small company in the health care space given the strength in this group of stocks. The company has a very specific focus on products to treat peripheral nerve injuries, and it’s growing revenue north of 50% annually.

Today’s featured stocks include a bank and its CCAR results, a retailer and its prognosis in the wake of the Amazon-Whole Foods merger, and a new addition to the Growth & Income Portfolio.

While the Cabot Emerging Markets Timer remains technically positive, there’s no doubt that all EM stocks, including many of our own holdings, have been under pressure in recent weeks. We’re taking steps today to lower our exposure by trimming a couple of stocks, but we also have a strong Korean stock to add to the portfolio.

In addition to a detailed explanation of the market’s moves and our portfolio’s holdings, we write about the puzzling failure of the average investor to take part in the equity rally and how to handle stocks around their Initial public offerings.

Current Market Outlook


Last week’s rally was very encouraging. Some major indexes and a handful of leading growth stocks hit new highs, and many others set up well. Coming after a six-week consolidation, it’s enough to put some sidelined cash to work, and we’re bumping our Market Monitor up a notch in response. That said, be sure to keep your feet on the ground and pick your spots, as the rally has come on extremely light volume (not the end of the world, but it does show a lack of conviction), the Nasdaq is still shy of new highs, and earnings season, which is now underway, is sure to have a big impact on individual stocks into early August.

This week’s list has a broad array of stocks from various sectors that attracted buyers as soon as the pressure came off the market. Our Top Pick is Western Digital (WDC), which lifted to new highs on good volume last week and has already preannounced solid results.

Stock Name	Price	Buy Range	Loss Limit
Applied Optoelectronics (AAOI)	0.00	79-83	73-75
CoStar Group (CSGP)	589.55	265-271	245-248
Dana Holding (DAN)	0.00	22.5-23.5	21-21.5
E*Trade Financial (ETFC)	0.00	37.5-40	35-36
Facebook, Inc. (FB)	0.00	156-160	147-151
IPG Photonics (IPGP)	0.00	148-153	137-140
Kite Pharma (KITE)	0.00	99-104	87-90
New Relic (NEWR)	103.70	45.5-47.5	41.5-43
Ryanair DAC (RYAAY)	0.00	111-1151	102-104
Western Digital Corporation (WDC)	0.00	92-95	84-86

Current Market Outlook


On an intermediate-term basis, the overall market remains stuck in the middle—many areas are still looking ragged, and most major indexes are hanging around their 50-day moving averages. Our screens this weekend did reveal a number of solid five- to six-week setups among growth stocks, as well as lots of solid action in other areas that have recently come to life. If the market gets going from here, there should be plenty of stocks to jump on. We’re not opposed to buying small amounts of a couple of these potential leaders today, but until we see more than just a day or two of rallying, you should play things carefully. We have our Market Monitor at a level 6 (out of 10), and will simply let the market tell us (through its own action) whether the next big move is up or down.

In the meantime, we’re laser-focused on stocks that have either just blasted out of bases or uptrending stocks that have resisted the Nasdaq’s wobbles since early June. Our Top Pick is Medidata Solutions (MDSO), which remains in good shape after lifting from a two-year base in April. Keep positions small.

Stock Name	Price	Buy Range	Loss Limit
Alibaba (BABA)	254.81	138-144	125-130
Align Technology (ALGN)	316.20	145-150	135-137
American Airlines Group Inc. (AAL)	0.00	51-53	46-47.5
Exact Sciences (EXAS)	116.91	35-37	31.5-32.5
First Republic Bank (FRC)	0.00	100.5-103.5	96-96.5
Medidata Solutions (MDSO)	0.00	77-80	71-72
Puma Biotech (PBYI)	0.00	82.5-87	74-76
RingCentral (RNG)	238.73	35.5-37.5	33-34
Tesoro (TSO)	0.00	92-95	87-88
WellCare Health Plans, Inc. (WCG)	271.83	177-181	166-168

This week’s featured stock is a fast-growing Chinese stock that dominates its mass-market business segment. Conservative investors will probably want to give it a pass, but risk-takers can jump on board. It has great growth potential!

Today’s recommendation is a doozy. It may go to the moon, or it may fall flat on its face, but it’s got a good story, and I think we’ve got a decent entry point here.