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The White House has recently published an Executive Order intended to permit alternative asset investment, including real estate, commodities and private equity, in retirement accounts and 401(k)s. This month, let’s take a closer look at private equity. We’ll explore how it works, how it performs relative to public investments you’re no doubt already familiar with, how you can add private equity exposure right now, and, most importantly, whether you should.

The stock market has perked up considerably since the Liberation Day turmoil in early April, igniting shares of stocks across the market cap spectrum.

We look under the hood of five names that span the risk spectrum this month, including a couple of old names that might be familiar and a new one that’s been hard to ignore.

The market keeps improving but is not necessarily back to 2021 or even June and July 2023 levels just yet, as many individual stocks are stuck in neutral. Fortunately, that’s not the case in the Stock of the Week portfolio, as eight of our holdings are hitting either 52-week or all-time highs! Today, we try and strike while the iron is hot – or at least warming – by adding a familiar growth stock that was a market darling during Covid, had a very rough 2022, but has now gotten the attention of Mike Cintolo in Cabot Top Ten Trader after a major gap up at the end of October.

Details inside.

There are no rating changes in today’s update.

It’s not 1999 out there, but the Model Portfolio has been doing OK despite the choppy, challenging, crosscurrent-filled market of late, partially thanks to an interesting dynamic—while the top-down evidence really hasn’t changed much in recent weeks (if anything, it’s probably worsened a bit, especially when it comes to growth funds and our Aggression Index), we are definitely seeing more individual stocks perk up, both within AI and in cyclical areas.

We do have two or three moves we’re close to making—while we’re not eager to be heavily invested given the evidence, we have a lot of cash and are likely to put some to work soon. But, tonight, we’ll stand pat and see if opportunities arise in the next few days—while also seeing if the Nasdaq’s test of its recent low holds. Bottom line, stand pat here, but we’ll be in touch with any changes in the days ahead.

The market had a great, bullish setup a couple of weeks ago, but that rally has fallen flat, which is a red flag. Our Cabot Tides and Two-Second Indicator remain negative, and we’re now seeing the selling spread even to resilient growth stocks.

Cabot’s intermediate-term market timing indicator has swung back to the positive side, lending a bit of ammunition to the bulls, but a look at the bigger picture reveals that the market remains in the sideways trading pattern that has defined it since the market’s initial selloff at the start of February.

Between bad brokers and online scams, it can feel like there’s always someone coming for your money. But these tips (and red flags to look out for) can help you protect what’s yours.

In the December Issue of Cabot Early Opportunities we try to capitalize on the pullback in stocks with the addition of disruptive players in the electric vehicle (EV) and metaverse arenas as well as an up-and-coming apparel/footwear company. We also take a swing at a dinosaur that may finally start to become relevant again following the spin-out of a dying business segment.

The bull market is alive and well, though frothiness and investor exuberance are reminders that you shouldn’t leave your brain at the door. Always remember to manage your risk.

Speaking of risk, today’s recommendation is more speculative than most of our recommendations, so if you invest, start small. The sector it’s working in is hot, the story is interesting, and the stock’s chart is solidly positive, without being overextended, so I’m intrigued.



As for our current holdings, I’m selling one stock that achieved its target (good) and one that continues to decline and is now our biggest loser (bad).



Details inside.

The market’s correction is about a month old, and so far it’s been fairly garden variety, with some potholes but not much big-picture abnormal action. And, this week, we’re seeing a very encouraging bounce, with most indexes recouping half of their decline in just two days and some growth stocks already testing new high ground. We’re not out of the woods yet, but we’re holding what we own (some of which act great) and fine-tuning our watch list should the trend turn back up.

November through most of January was relatively smooth, but we’ve seen more cracks over the past month—especially this week, as growth stocks have come under severe pressure. To be fair, our trend following indicators are still positive, so we’re not selling wholesale, but we’re not letting stocks get away from us on the downside, either.

Earlier this week, we cut bait on CrowdStrike, and tonight, we’re letting to of NovoCure, taking small profits in each. Our cash position will now be around 40%, and as always, we’ll remain flexible going forward, prepared to either put money to work (if this is another short-term shakeout) or raise more cash (if a “real” correction unfolds.)

Big picture, this year’s growth stock correction still looks normal, and encouragingly, we are now seeing some names bounce decently after the destruction of the prior two weeks. However, just going with the evidence, there’s still a lot of work to do, with few stocks in position to breakout and little in the way of upside power.

There will be another sustained rally (or two) down the road, but right now, we’re mostly biding our time, holding a lot of cash and fine tuning our watch list for whenever the buyers retake control.



In tonight’s issue, we dive into some precedent analysis that gives us confident in the big-picture point of view, and also highlight three new-ish additions to our watch list. In the Model Portfolio, we’re standing pat, but we could nibble if things continue to stabilize in the days ahead.

In the July Issue of Cabot Early Opportunities, we take a quick look at earnings expectations for each of our positions. And we dig into five opportunities spanning AI, HVAC services, retail, real estate and quantum computing.

This may just be our most diverse group of stocks ever.

Enjoy!

The first half of the year is in the books, and it was a doozy, but we’re glad we’ve been able to sidestep a good chunk of the historic damage. Now the focus is on what’s next, and it’s important to respect the evidence today (we’re remaining highly defensive) but also stay flexible; we have seen some relative strength in some growth areas and we’re open to whatever comes. In the near-term, we’d like to put a little of our giant cash hoard (89%!) to work, but want to see the market stabilize a bit more first.

The market has a split tape right now -- on one hand, the broad market is very weak, led lower by the horrid financial sector, but on the other hand, many growth indexes and individual stocks are hanging in there ... with some actually stretching higher. We’re certainly not going to ignore our market timing indicators (Cabot Tides and Two-Second Indicator are negative), but it’s hard to ignore the action in growth, either, especially after last year’s bear and lots of bottoming action. Thus, tonight, we’re adding two half-sized stakes in potential new leaders, but also holding a bit more than half the portfolio in cash.

Elsewhere in the issue, we write about the action of interest rates (likely longer-term positive) and the resilience of growth stocks, along with a full watch list and some new enticing ideas. All in all, we remain flexible, but are still mostly cautious given the evidence.

September has been tricky and tedious for growth stocks, with lots of volatility and some high-volume selloffs. It’s fair to say the evidence has worsened a bit, and we’ve placed a couple of stocks on hold and raised some mental stops.

That said, the majority of evidence is still bullish, very few growth stocks have actually broken down and the market’s trends are still positive. Net-net, then, we’re still mostly bullish, but are keeping our eyes open should things change.

In tonight’s issue, we introduce our new Real Money Index, which is replacing the Two-Second Indicator on page 8; we think it will help us lean against the wind in many circumstances. (We’ll still be following the Two-Second Indicator in house.) And we also take a deep dive into all of our stocks, letting you know what we’re thinking as many have consolidated of late.

The market and growth stocks have had a couple of wobbles so far in September, and given the heady run from leading stocks in August, some further shakeouts are possible. If the selling pressure intensifies enough to turn our Cabot Tides negative, we’ll trim our sails, but right now, the trends of the major indexes and the vast majority of leading stocks are pointed up, so we remain positive.

Current Market Outlook


Stocks had another great week, with the major indexes posting solid gains, many potential leaders approaching new highs and market breadth being so positive that it flashed a rare “blastoff” green light. Thus, our confidence is growing that the worst has passed—though that doesn’t mean the market doesn’t face many weeks of bottom building, either. Long story short, the evidence has improved, though it’s worth remembering that the intermediate-term trend of the indexes and most stocks remains down. All in all, we’re OK extending your line a bit, doing some new buying in high-potential stocks, but we’re also still keeping a good chunk of cash on the sideline and waiting for more strength to develop (maybe after a retrenchment) before turning bullish. Our Market Monitor moves to a level 5 this week.

As for the list, today is another batch of good-looking stocks from a variety of sectors, albeit with a heavier emphasis on medical. Our Top Pick is old favorite Dexcom (DXCM)—start small and build if the recent strength continues.

Stock Name	Price	Buy Range	Loss Limit
Array Biopharma (ARRY)	46.35	16.5-17.5	15-15.5
Cree, Inc. (CREE)	67.96	44.5-46.5	41-42
Dexcom (DXCM)	421.36	137-144	122-126
Everbridge (EVBG)	107.90	53-56	49-50.5
Five Below (FIVE)	134.58	112-117	100-103
Ionis Pharmaceuticals (IONS)	73.34	55.5-57.5	51-52
Keysight Technologies, Inc. (KEYS)	97.20	64-66.5	58.5-60.5
LGI Homes (LGIH)	86.04	54-57	49-51
Tandem Diabetes (TNDM)	74.77	39.5-42.5	33.5-35.5
Vertex Pharmaceuticals (VRTX)	230.36	180-187	165-169

Today’s Cabot Small-Cap Confidential candidate runs an online marketplace for a different type of market where over $120 billion is spent each year. The trend is strong, and it’s still early days. All the details are inside the June Issue of Cabot Small-Cap Confidential.