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Remain bullish, but be selective on new buys as earnings season revs up. The overall market remains in great shape, with all our market timing indicators solidly bullish. Short-term, a pullback wouldn’t be surprising, but the odds remain in favor of higher prices down the road.

Three ratings changes and one stock looks strong.

One of our stocks reported third-quarter results that met Wall Street’s estimates, two stocks move from Buy to Hold, and there’s new price action on another.

The iShares EM Fund (EEM) has been in a downtrend since September 22, turning the Cabot Emerging Markets Timer neutral. We will continue to manage our stocks individually, but will curtail new buying and keep stocks on a shorter leash until momentum improves.

Over the past week, small caps looked particularly good as most sectors outperformed their large-cap peers. Our asset class is now up 4% year-to-date, a vast improvement after being flat a week and a half ago.

The market and especially leading growth stocks were trounced today. In response, we’re selling half our shares in two stocks.

The Dow and S&P 500 both closed at all-time highs yesterday, as the Dow notched its eighth straight day of gains. Financials were the week’s best-performing sector, as interest rates suddenly reversed direction to post big gains.

As always, we advise going with the flow. You should remain mostly bullish, but be sure not to put things on autopilot. Honor your stops and loss limits with your existing stocks, and for new buys, continue to look for names that have pushed to new highs and have shown excellent recent buying volume.

The general market picture continues to look bright. All three of our key market timing indicators remain bullish—both the market’s intermediate- and longer-term trends are pointed up, and the broad market is in great shape, with the Two-Second Indicator continuing to record fewer than 20 new lows day after day.

Two of our stocks are closing in on price targets, plus a list of great stocks to buy today.

Here is a special update on two of our stocks.

It’s been a relatively quiet week in the major indexes, with the S&P 500 and Nasdaq hovering around breakeven on the week coming into today. But below the surface, there’s been plenty of volatility and some developing trends.

The week has brought some impressive rebounds, and I’m putting two stocks back on Buy today. That brings our total number of Buy-rated positions to six (plus our bond ladder), a slightly more constructive stance than we’ve taken in recent weeks.

There’s a lot on my mind lately: hurricanes, child-rearing, college freshmen, human tragedy and Dollar Tree (DLTR).

The market backdrop is much improved this week and small caps posted another week of encouraging action (up 2.1% over the last five sessions). The S&P 600 had that sketchy drop below the 200-day line (red line in chart) in mid-August, but the index has come back strong since.

We’re encouraged but not yet fully bullish. If the market and leading stocks can hold (or build on) their gains next week, then the odds would improve that the longer-term uptrend is resuming. At this point, we’ll likely bump up our Market Monitor a notch or two next Tuesday, and further strength could have us flooring the accelerator.

Shares of one of our stocks have been under pressure since Friday due to a short attack from a Seeking Alpha author. His article was published this morning, but I suspect a group of investors knew about it on Friday and got the action going early.

What a week! I’ve been asked a few times by friends and family members (but no subscribers, c’mon guys!) why small caps have suddenly sprung to life. Check out the one-year chart below of the S&P 600 Small Cap Index.

Today brought a wave of selling that took the major market indexes (and most of the stock in our portfolio) down a peg or two. Despite the selloff, most of our stocks remain in their recent trading ranges and look like they will do just fine unless the market takes another leap off the end of the dock tomorrow.

Stocks pushed higher again this week, enough so that our intermediate-term trend following indicator turned positive. Following three constructive weeks, this week’s move continued to push the arrow toward the bullish side.