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With interest rates expected to fall in the next few months, now is a prime opportunity for investors to consider buying gold and other rate-sensitive assets.

The market’s traditional “spooky season” is here, and stocks are dutifully selling off as they normally do the first week of September. The selling could last a few days or a few weeks. But on the other side of it, there will be big buying opportunities. Until then, let’s try and limit the damage, which we do in today’s issue by selling off one underperformer that’s taken a beating after an underwhelming earnings report and buying a deep value consumer staple that’s too oversold. It’s a stock Clif Droke recommended to his Cabot Turnaround Letter audience last week, and we follow suit here today.

Details inside.

Tariff fears have eased, or are at least on extended hold, and the market feels jubilant for the first time in months. Is it the start of an extended rally that could get us back to new highs? Probably too early to tell. But it’s been a boon for our portfolio, led by Tesla (TSLA), which is up 14% in the last week. Today we add an undervalued travel stock to the portfolio that’s a household name that got hammered during Covid but has come out the other side with flying colors – and yet shares are still playing catch-up. It’s a stock I recommended to my Cabot Value Investor audience earlier this month.

Details inside.

This week, financial markets bring us earnings reports from Adobe and FedEx (and possibly Carnival), and a speech by Fed Chairwoman Janet Yellen.

Cyclical stocks are soaring and technology is floundering in the transformed market.

The bull market is turned upside down. For most of the first three years, technology, and particularly AI stocks, soared while most other stocks did very little. Now, previously meandering stocks are killing it while technology sinks.

The big-cap indexes remain in an uptrend, but it’s still a tricky and narrow environment, with just about every other index making no progress (net-net) for the past few weeks while they test their key 50-day moving averages. That means the intermediate-term trend is on the fence, which is obviously something that bears watching. On the positive side of the ledger, though, we’re still encouraged by what we’re seeing during earnings season, with many signs of strength from growth-y titles. All in all, we’re sticking with the stance we’ve been in—our Market Monitor remains at a level 7.

This week’s list has something for everyone, with strength seen in a variety of sectors. Our Top Pick just broke out of a beautiful launching pad after earnings, with some others in the general group also doing well.

The major indexes and most stocks were hit fairly hard at the open today, though, as the day wore on the losses become minor and many stocks were actually green. Is that encouraging? You bet, especially as the big-cap indexes held support right near recent lows. That said, does it change the intermediate-term evidence at all? Not really, with the themes of the past few weeks (pockets of strength, but choppy action and some yellow flags) still with us. We’ll leave our Market Monitor at a level 6 and remain flexible.

This week’s list has something for everyone, with some cyclical plays, growth titles and a few recent breakouts. Our Top Pick is a mid-sized outfit with accelerating growth as its chips ride the AI (and other fast growing) waves.

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

The good news is that four weeks of upside action has brought a new buy signal from Cabot’s intermediate-term market timing indicator. But this doesn’t mean you can jump in with both feet yet; there’s still reason for caution.

One way Cabot Stock of the Week exercises caution is by diversifying widely, not only among industries but also among investment strategies. Today’s recommendation, a big undervalued robotics company in Japan, is an excellent example.



As for the rest of the portfolio, it’s acting well and thus the only change today is a downgrade of one stock—which has got a bit high—from buy to hold.



Full details in the issue.

Housekeeping: We’re sending out this update a day ahead of time, given tomorrow’s holiday. We hope you have a great end to the holiday season and, of course, a healthy and prosperous new year. Our office will be open Friday, and we’ll be back at it in full next week. Cheers!

WHAT TO DO NOW: Stay flexible. The market’s overall evidence is positive but not powerful, though growth stocks continue to lag, with our growth measures (such as the Growth Tides and Aggression Index) neutral-ish here. We expect volatility over the next few days as the calendar flips, which could provide some opportunities. For now, with most names we own or watch marking time, we’ll hold what we have and see what comes as we hit January. We have no changes tonight.

From stamps and coins to art, cards, cars and even wine, collectibles have been rapidly growing their share of the global financial markets. And while some portfolio managers may position them as “alternative assets,” are collectibles even really investments? More importantly, are they worth your hard-earned money? This month, let’s look at the trends of the booming (and busting) collectibles market.

The market has strengthened again, which is great for our three open covered call positions, all of which are trading above the strike price of the call we sold. That being said, a sideways market is also fine for our volatility selling strategy, that is focused on buying the strongest stocks, while keeping the portfolio diversified.

Cabot analyst Tyler Laundon writes the introduction to this week’s update. Unsurprisingly, it related to small-cap stocks, which is Tyler’s focus in Cabot Small-Cap Confidential. One rating change.

The market has recovered in a big and fast way over the past week. Are we out of the woods?


What a difference a week makes. Things were frog ugly at the beginning of last week. We were approaching a trade war with the whole world. The S&P 500 came within a whisker of bear market territory (down 20% or more from the high on a closing basis). In fact, it hit the 20% mark down from the high on an intraday basis twice. Then last Wednesday happened.