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Note: Due to the Christmas holiday, there will be no Cabot Small-Cap Confidential update next week. Happy holidays!

In last week’s update I spoke about the potential for a market retreat early in 2025 given that investors are sitting on sizeable paper profits, and selling after December 31 would allow them to postpone capital gains taxes.

My projection may have been off by a week and a half.

Good gracious, last week was volatile for the market as the indexes moved violently day-to-day. Yet, by the close of trading on Friday the S&P 500 and Dow were only down marginally on the week, while the Nasdaq had declined by 1.5%.

Good gracious, last week was volatile for the market as the indexes moved violently day-to-day. Yet, by the close of trading on Friday the S&P 500 and Dow were only down marginally on the week, while the Nasdaq had declined by 1.5%.

U.S. stock markets continue to suffer, revisiting lows from October and November. We could see modest improvement through year end, but I don’t expect a strong stock market rebound until at least January.

Cabot Market Letter is “one of just a handful of services whose market timing has beaten a buy-and-hold over the last 15 years on a risk-adjusted basis.
Hulbert Financial Digest, October 2011

Financial fraud has been around for as long as financial systems themselves, but the proliferation of the internet has drastically increased the opportunities for scammers to separate you from your hard-earned money. This month, we’ll take a hard look at the most common scams and schemes that you face today, who they affect, and practical steps you can take right now to protect yourself.

The market seems to be lending itself to more bullish price action in June, and I’m looking forward to making money this month! Today’s issue brings you one new stock, and one rating changes.

Unless you’re a brand new subscriber to Cabot Undervalued Stocks Advisor, you’re aware that as we entered 2018, I had been advising investors to raise cash so that they could buy low during the yet-to-occur-but-overdue stock market correction. There was nothing amiss with U.S. stocks, in my estimation, other than that the markets rose continuously since the November 2016 general election.

Current Market Outlook


The evidence has been steadily improving, but July has changed that—first came a lot of narrowing (most stocks below their 50-day lines even though the big-cap indexes were near new highs) along with a lack of breakouts, then came last week’s selling pressure (that saw many growth stocks show real slippage), and today we saw the sellers really start to hit things left and right. On the positive side of things, many growth titles were resilient today, and we still see a good number of setups out there; given that there are renewed fears of the virus, it’s possible many growth titles could do well even if the market has a rough go of it. But right now, the onus is on the bulls as the market’s intermediate-term trend has turned down and most stocks look iffy. We’re moving our Market Monitor to a level 5 but are keeping our eyes open for what comes next.

This week’s list is a mix of names, though some of the growth titles look like decent risk-reward situations on this dip. One of them is Marvell Technology (MRVL), a leading chip maker that’s pulling back normally after a persistent move to new highs.

Stock Name	Price	Buy Range	Loss Limit
Autodesk (ADSK)	287	284-290	270-274
Avantor (AVTR)	36	35-36.5	32-33
Bruker (BRKR)	78	76-78	70-71
Burlington Stores (BURL)	311	307-313	290-295
Chipotle Mexican Grill (CMG)	1551	1520-1560	1400-1425
CrowdStrike (CRWD)	250	247-253	223-226
Dexcom (DXCM)	435	425-438	390-395
Horizon Therapeutics (HZNP)	92	90-93	84-85.5
Marvell Technology Group (MRVL)	55	53.5-55.5	48.5-49.5
Revolve Group (RVLV)	64	62.5-65	56-57.5

Also this week, President Biden signed the $280 billion CHIPs and Science Act. American companies such as Intel and Micron Technology have announced substantial investments in chip manufacturing in an effort to lobby for these subsidies but now announce that they are pulling back as demand for chips used in electronics such as laptops and cell phones is weakening.

Most of the outperformers of the last two months—including financials, energy stocks and industrials—are consolidating, but we haven’t seen significant pullbacks.

The S&P 600 Small Cap Index, which hadn’t broken above 1,000 for most of 2019, is now comfortably above that level and appears to be heading higher.

The selling pressures of the past two weeks continued last week as traders grappled with tariff concerns, a possibly slowing economy, and growth stocks again falling dramatically. By week’s end the S&P 500 had lost 3.1%, the Dow had fallen 2.4%, and the Nasdaq had dropped another 3.5%. The selling only worsened on Monday, with all three indexes down more than 2%.

This past May, I recommended buying calls in PTON stock. The result was perhaps the greatest options trade I’ve ever made.