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As of yesterday, the market’s intermediate-term trend is now negative, so certain defensive measures are now appropriate. These might include lowering your overall risk profile by holding cash when possible, taking profits when stocks are extended, and being less tolerant of poor behavior.

Energy stocks have been by far the best-performing market sector over the last couple of years. They went from worst to first in dramatic fashion. And the good times may be just beginning.

The industry has had very low capital spending and expansion in recent years. Crude oil inventories have fallen below the five-year average and are likely headed far lower. OPEC has pledged dramatic production cuts to push prices higher. There is also a high degree of geopolitical risk. In fact, Goldman Sachs analysts are forecasting oil prices to get back to $95 per barrel before the end of this year.

The fundamentals are in place for prices to average a lot higher than they are now over the next few years. And that will lift stock prices. Stocks are also cheap, have among the best dividend yields on the market, and tend to perform well during times of inflation.

This issue highlights one of the highest-growth energy companies on the market. It has the ability to grow production by double digits for many years to come and at very low cost.

Stocks hit another pothole this week after President Trump re-escalated tariff rhetoric against China last Friday, which genuinely spooked the market for the first time in months. He has since walked back some of those comments, and the market is rebounding in an encouraging way today. But the U.S.-China trade war is definitely back in the news, so today we aim to steer clear of it by adding a new position in something that’s a little outside our normal sandbox: a foreign currency. More specifically, it’s a fund that offers exposure to a well-known European currency, and it’s up more than 12% year to date – with more potential upside ahead. The fund was recently recommended by Carl Delfeld to his Cabot Explorer audience.

Details inside.

Last week brought some renewed chop and crosscurrents, with broader indexes finding some sellers and a few stocks hitting potholes before or after earnings. Moreover, we’re seeing indications that complacency has made a quick comeback, and with many good-looking stocks set to report earnings over the next two weeks, some near-term selling wouldn’t surprise us. Even so, all of this looks normal in the context of where the market has come from: The prior three weeks were excellent, the intermediate-term trend is pointed up and the vast majority of stocks are acting well. Could we see another change in character, with the market falling back into its spin-cycle ways of 2021? It’s always possible, but we go with the weight of the evidence, which today remains mostly positive. We’ll leave our Market Monitor at a level 7 today.

This week’s list is another well-rounded one, with some recent earnings winners and stocks from a variety of industries. Our Top Pick is Enphase Energy (ENPH), which appears to be getting going from a deep base after earnings. We prefer entering on a bit of weakness if possible.

Stock Name	Price	Buy Range	Loss Limit
Albemarle Corporation (ALB)	256	247-257	220-225
Bonanza Creek Energy (BCEI)	56	52-55	46-48
Coinbase (COIN)	331	305-320	267-277
Dexcom (DXCM)	627	605-630	535-545
Enphase Energy (ENPH)	240	220-232	190-196
J.B. Hunt (JBHT)	196	191-197	178-181
Medpace (MEDP)	226	212-222	192-196
Marvell Technology Group (MRVL)	69	66-68.5	60-61.5
SLAB (SLAB)	193	182-192	160-165
WOLF (WOLF)	131	123-129	101-105

The vast majority of our work is based on the trends of the major indexes and the action of leading stocks, and on those two fronts, things look very good; we’ve even seen the broad market perk up after a tough stretch, too, which helps the cause. About the only thing to worry about here is that ... there’s not much to worry about, and that many leading stocks are showing some near-term exhaustion patterns. Big picture, we’re moving our Market Monitor back to a level 8, but you should still keep your feet on the ground, looking for decent entry points in strong stocks.

This week’s list has a lot of stocks that not only have excellent overall charts but have either consolidated calmly for the past few weeks—or have shown outstanding buying volume in recent days. Our Top Pick is one of the latter, gapping up to new highs last week on earnings.

Starting a month ago, we began to see some leaders chop around, then we saw more short-term froth appear followed by Nvidia’s monstrous reversal last Friday. We’re not making any grand declarations here, but overall, most of the “extended” leaders are being tested, with more than a few wobbling and zeroing in on intermediate-term support and a few already cracking. Now, with that said, most of the other evidence remains fine, whether it’s for the overall market or for “fresher” leadership names, which continue to act well. We’re leaving our Market Monitor at a level 7, but how things play out over the next few sessions will be key.

This week’s list mostly lives outside the tech arena, with many names that have recently taken off and some that are pulling into areas of support. Our Top Pick is blasted off in late January, enjoyed a big run and is now shaking out normally.

All in all, the evidence remains unchanged: The major indexes are positive but not exactly powerful, with resistance (such as near 500 on QQQ) still capping many measures, but leadership remains intact, with strong stocks refusing to give much ground and fresh breakouts from the past month acting well. Of course, earnings season is still ongoing, and you can never rule out the market’s key leadership being dented or some abnormal action appearing. But you can always find something that could go wrong in the market—right now, the buyers are in control. We’ll keep our Market Monitor at a level 8.

This week’s list is very broad, with everything from industrials to real estate to true-blue growth stories. Our Top Pick is a pure cyclical name that just busted out of a long-term consolidation on giant volume.

How to Make Money in the Age of U.S.-China Rivalry + 3 Global Stocks to Buy Now from Carl Delfeld, Chief Analyst of Cabot Global Stocks Explorer, Carl talked about global stocks in this political climate. PLUS Carl shares 3 of his global picks!

Current Market Outlook


After three weeks of rotation, where cyclical stocks took the reins and growth stocks rested (and some broad selling pressure showed up June 11-12), the reverse occurred last week, with the leaders again ramping up and cyclical stocks sagging. Still, while the endless rotation isn’t ideal, it hasn’t changed the big picture—most of the evidence remains bullish, so we’re still optimistic the path of least resistance is higher. That said, it’s important to keep your feet on the ground, too; looking for solid entry points and not hesitating to book some partial profits on the way up are still good ideas, as some selling pressure or another bout of rotation isn’t out of the question. We’re leaving our Market Monitor at a level 8.

This week’s list has a bit of a secondary feel to it, but many are showing solid setups; ideally some of these will be the next wave of names big investors focus on. Our Top Pick is Restoration Hardware (RH), which has a strong story and is resting nicely after a very strong run.

Stock Name	Price	Buy Range	Loss Limit
Big Lots (BIG)	43.12	32.5-35	27.5-28.5
Immunomedics (IMMU)	34.23	32.5-35	28-29
LGI Homes (LGIH)	86.04	84-87	74-75.5
MercadoLibre, Inc. (MELI)	980.83	910-940	810-830
Mersana Therapeutics (MRSN)	22.28	20-22	16-17.5
Nuance Communications, Inc. (NUAN)	25.35	23.5-25	21-22
PagSeguro Digital (PAGS)	35.09	33.5-35.5	29-30
RH Inc. (RH)	252.93	240-255	210-217
Teradyne (TER)	82.83	78-81	69-71
Yeti Holdings (YETI)	42.80	36-38	31.5-33

After a very strong first few weeks of the year, stocks have begun the much-called-for pullback, which sets up a “good” test for the nascent uptrend—if the sellers swarm, that would be a sign the bulls aren’t yet ready to take control, but for the first time in a while, the burden of proof is on the bears as the majority of evidence is positive. If something changes, we’ll pare back, but to this point we like what we see. Our Market Monitor now stands at a level 7.

This week’s list has something for everyone, including a few more earnings winners as more firms report. Our Top Pick is a software name that has a long-lasting growth story and a chart with a big bottom—and a big breakout last week. Aim for weakness if you want in.

Current Market Outlook


It was a relatively quiet, but bullish, pre-holiday week, with the major indexes acting well and many stocks resting nicely. That said, there was still rotation evident, with growth stocks finally easing a bit while money sloshed into some other areas, before that situation reversed today. Overall, not much has changed with our thoughts—we’re generally encouraged, and actually think further pullbacks in growth titles could provide some tempting entry points (the Nasdaq is pretty extended short term), though there remains plenty of tricky and narrow action (just over half of all stocks are even above their 50-day lines and there are lots of potholes on a daily basis), so picking your stocks and buy points is important. We’ll keep our Market Monitor at a level 7.

This week’s list has a nice collection of stocks from different sectors and themes that have all shown some good-volume accumulation of late. Our Top Pick is Carvana (CVNA), which is near the top of a six-month launching pad.

Stock Name	Price	Buy Range	Loss Limit
Asana Inc. (ASAN)	69	61-65	52-54
BioCryst Pharmaceuticals (BCRX)	16	15.6-16.4	13.4-13.8
Carvana (CVNA)	316	300-310	270-275
Diamondback Energy (FANG)	91	88-92	80-82
International Game Technology (IGT)	23	22.5-24	19.5-20.5
Ford Motor Co. (F)	15	14.2-14.7	12.6-12.9
Roku, Inc. (ROKU)	435	420-440	370-380
Snap Inc. (SNAP)	69	67.5-69.5	60-61
Tempur Sealy (TPX)	41	39.5-41	35.5-36.5
Urban Outfitters (URBN)	40	38.5-40	35-36

Current Market Outlook


With the major indices in record territory and the leading growth stocks showing strength, it’s hard to be anything less than bullish right now. Even at these elevated levels, the market has provided us with a few attractive entry points recently. But with earnings season well underway and sentiment still elevated, the potential for near-term volatility has increased. Thus, it’s imperative not to throw caution to the wind in this news-sensitive environment. Given the weight of evidence, being selective when buying is the preferred tactic. The dominant intermediate-term trend is clearly up, though, so you don’t want to be too defensive. We’ll keep our Market Monitor at 7 and see how things go from here.

This week’s list has a nice mix of stocks across several industries benefiting from different trends. Our Top Pick this week is CarParts.com (PRTS), which recently had a high-volume breakout from a huge basing pattern.

Stock Name	Price	Buy Range	Loss Limit
Agilent Technologies (A)	128	127-129	121.5-123
Analog Devices (ADI)	160	156-161	149-151
CarParts.com (PRTS)	21	19.5-22	17-18
Chegg (CHGG)	112	105-111.5	97-100
eXp World Holdings (EXPI)	80	74-79	62-65
Freeport-McMoRan Inc. (FCX)	33	31-33	27.5-28
Johnson Controls International plc (JCI)	53	52-54	49-50
Pinterest (PINS)	89	85.5-88	76-78
Square, Inc. (SQ)	276	263-273	240-250
Twitter (TWTR)	74	68-72	63-66

January has lived up to its billing so far, with lots of ups and downs among individual stocks and sectors based on a variety of news, rumors and, starting today, some Q4 pre-announcements linked to upcoming conference presentations. Even so, while the action is hectic, the underlying evidence is the same as it has been for the past few weeks: The intermediate-term trend of the major indexes is positive, not powerful, while for individual stocks and sectors, many are acting well, but it depends where you look. If we see a shift in the evidence, we’ll shift our stance, but until then, we’re leaving our Market Monitor at a level 7.

This week’s list is a potpourri of ideas from a variety of different areas that have come into favor this year. Our Top Pick is a solid growth story in the strong aerospace/defense area with big earnings coming. Shares boomed out of a base last week—try to enter on weakness.

The rotation into the year’s underperformers that started last week has continued, while taking on some aspects of a generic risk-on trade. Financial stocks have outperformed all others since our last update, and tech stocks are up again this week. Materials and industrials also continue to do well.

The S&P 500 closed at a fresh record high yesterday, while the S&P 600 SmallCap Index closed at its highest level since February 21.

While there is plenty for the worriers to worry about in the short term – next Wednesday’s Fed meeting, next Thursday’s PCE price index (the Fed’s preferred inflation data), tariffs and Liberation Day 2.0 next Friday – the market seems to be saying, “Don’t sweat it, this will all work out.”

Short selling stocks is controversial–and not appropriate for all investors–so if you’re considering the practice, here’s everything you need to know.