Search

What’s in store for 2014? This is a trick question—since you know we don’t predict what the market’s going to do.

“The Wheel” is an income-producing options strategy that can be used indefinitely on stocks you’re bullish on to generate income without taking on added risk.

AI has been the dominant narrative on Wall Street for over a year now, but are we in the midst of an artificial intelligence bubble?

Current Market Outlook


For the third straight Monday, Greece caused the market to gap sharply at the open, this time on the upside as a deal in Europe is coming into view. The snapback from last week’s panic has been excellent, and we’re especially pleased to see many resilient, growth-oriented stocks spike to (or close to) new highs. That said, even after the past two days, the major indexes are still hovering near their 50-day moving averages, and it’s obvious that news is driving the market on a day-to-day basis. Throw in the fact that earnings season is about to rev up, and we’re sticking with a relatively neutral stance—focusing on the strongest stocks makes sense, but so does holding some cash and ditching any broken stocks.

This week’s list has a group of names that should do well if the market’s recent strength develops into a sustained uptrend. Our Top Pick is old friend Illumina (ILMN), which is emerging from a very long sideways phase. Start small, and look to add shares if the stock reacts well to earnings next week.

Stock Name	Price	Buy Range	Loss Limit
WhiteWave Foods (WWAV)	0.00	48-50	46-47
Ulta Beauty (ULTA)	331.95	161-164	153-154
Tyler Technologies (TYL)	0.00	135-140	125-127
Tesoro (TSO)	0.00	95-99	89-90
RH Inc. (RH)	252.93	96-100	92-93
Nordic American Tankers (NAT)	0.00	14-15	13-13.5
Neurocrine Biosciences (NBIX)	123.40	47-50	42-43
Meritage Homes (MTH)	102.20	48-49.5	44-45
LifePoint Hospitals (LPNT)	0.00	85-87	77-78
Illumina Inc. (ILMN)	289.74	215-220	205-209

This month we’re jumping into a small software company that provides solutions for a specific small- and mid-sized business (SMB) market.

While the market for SMB software has been tough for the last two years, this company’s revenue growth has accelerated and customers that bailed in 2022 are coming back. In short, best-of-breed software isn’t dead! And this player is about to become profitable too. Enjoy!

At the start of the year, I listed my 10 favorite buy-and-hold stocks for 2018. So far, this mid-cap stock is up 26% year to date - with more room to run.

Global asset managers are prospering, bolstered by cash inflows in a bull market. And there’s one large cap growth stock in the sector I especially like.

All investors should be aware of the quality-control scandal emanating from Kobe Steel, in which the company admitted falsifying data on its steel products for a currently-vague amount of time between one and 10 years. On October 11, I predicted that the scandal would be more extensive in reach than initially reported.

It’s earnings season, first featuring bank stocks, then oilfield service companies a week from today. Most of the other companies in our portfolio won’t report results until early May. Others operate on different fiscal cycles.

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.

Emerging market stocks have had another soft week, with the iShares EM Fund (EEM) below its 25-, 50- and 200-day moving averages, although Chinese stocks continue to hold steady.

Back in 1972, Thomas W. Phelps wrote a book about the ultimate in buy-and-hold investing. His “forever stocks” strategy can bring you profits of 10,000%.

After last week’s selloff in tech, this week has been relatively calm, though the action at mid-day today suggests we could see more selling before the closing bell.

It’s been another week of mixed stock performance and assorted headlines that collectively give me the sense that, while a lot of investors may be shifting money around, there’s no real consensus yet on what will work and what won’t in the near-term.

The so-called FANGMAN stocks now account for 30% of the entire stock market. Where they go next will determine where stocks as a whole go.

With the clean energy revolution in full swing, these 2 low-risk alternative energy stocks are a way for conservative investors to play it.

Over the past year, I’ve had many great conversations with our Dick Davis Digest contributors, as part of our Contributor Interview Series for Investment of the Week. In today’s Dividend Edition, I thought I’d collect some of the best income investing advice these experts shared with me. Together, their advice...

Current Market Outlook


The market staged a nice-looking rebound today, especially given that both the S&P 500 and Nasdaq were hanging around their 50-day lines coming into today. Up is definitely good, but when examining the evidence, we see a tale of two markets. Growth stocks still look ragged, as many cracked key support last week and have been extraordinarily choppy during the past month (a sign bulls and bears are fighting it out after big runs). However, the broad market is largely fine, with small- and mid-cap indexes perched near their highs and many sectors acting fine. All in all, the evidence has worsened, so we’re knocking our Market Monitor down a notch, but we’re mostly taking things on a stock-by-stock basis, ditching those that break down while targeting new buying at resilient names.

This week’s list is heavy on cyclical and re-opening plays, though chip stocks remain a bastion of resilience. Our Top Pick is Kulicke & Soffa (KLIC), which staged a long-term breakout in November, has huge growth and has been unaffected by the market’s wobbles.

Stock Name	Price	Buy Range	Loss Limit
Ameriprise Financial, Inc. (AMP)	229	218-225	200-204
Amkor Technology (AMKR)	25	23-25	19-20
Avis Budget Group (CAR)	58	53.5-56.5	46-48
Bausch Health Companies (BHC)	32	29.5-31	26.5-27.5
The Cheesecake Factory (CAKE)	55	51.5-54	45-46.5
HubSpot (HUBS)	527	490-510	430-440
Kulicke and Soffa Industries (KLIC)	52	48.5-52	41-43
Pioneer Natural Resources (PXD)	149	141-146	125-128
Shake Shack (SHAK)	118	113-118	100-103
Valmont Industries (VMI)	244	226-236	203-208

Current Market Outlook


The market performed well last week, and nothing has changed from a top-down point of view—the intermediate-term trend remains up for the major indexes and many stocks, so we remain optimistic the path of least resistance is up. That said, it’s really all about what you own: Many indexes (small- and mid-caps) and sectors (industrials, financials, transports) look OK, nothing great, but growth oriented stocks are lighting up the sky, with more big earnings-induced breakouts last week than we’ve seen in a very long time. In the near-term, these hot stocks might be a bit too hot; some potholes (or even rotation out of them and into the broad market) could certainly be on the table. But we also think that, assuming the general market holds up, the first retreats in many of these names are likely to provide solid entry points, as the fresh breakouts bode well overall. We’re moving our Market Monitor up to level 7.

This week’s list has many of last week’s most powerful gaps and a few others with solid setups and/or persistent uptrends. It was hard to settle on one, but we’ll go with Chegg (CHGG) for our Top Pick, as it just emerged from a picture-perfect consolidation on earnings.

Stock Name	Price	Buy Range	Loss Limit
Atlas Air Worldwide Holdings, Inc. (AAWW)	38.45	36.5-38.5	32-33
Atlassian (TEAM)	182.16	174-179	155-158
Barrick Gold (GOLD)	27.20	25-26.5	22-23
Chegg (CHGG)	74.21	58-62	50-52
MercadoLibre, Inc. (MELI)	980.83	750-790	660-680
Peloton (PTON)	53.03	40.5-43.5	34-35.5
Schrodinger, Inc. (SDGR)	59.05	53-56	45-46.5
TG Therapeutics, Inc. (TGTX)	19.88	17.5-19	14.5-15.5
Twilio (TWLO)	183.39	175-187	149-154
Wingstop (WING)	121.52	116-122	99-103

Current Market Outlook


After an impressive four-month rebound, many investors are nervously expecting the return of volatility during earnings season. But despite some recent choppiness among the leading stocks, the market remains largely unperturbed. Growth stocks are holding up well, while the major indices remain above their key trend lines. And while there are signs lately of increased demand in defensive areas of the market (like consumer staples and precious metals mining), the more aggressive segments remain strong. Finally, a healthy number of stocks are still making new 52-week highs on both major exchanges (especially the NYSE), while new lows have been remarkably sparse. All of this tells us that the intermediate-term trend still favors the bulls. While volatility may yet rear its head, we’ll continue to follow the weight of evidence.

This week’s list contains a nice mix of some of today’s leading themes: healthcare, internet, real estate/home improvement and education. Our Top Pick is Owens & Minor (OMI), which has a solid story and has broken out of an extended base on more than 10 times normal volume.

Stock Name	Price	Buy Range	Loss Limit
Farfetch (FTCH)	26.23	21-22.75	19.5-20
Floor & Décor (FND)	68.03	69-72	62.5-63
GSX Techedu (GSX)	97.59	85-88	74-75
Invitae (NVTA)	32.06	30-32.5	27-27.5
Meritage Homes (MTH)	102.20	92-98	84-85
Owens & Minor (OMI)	17.01	15-16	13-13.5
SailPoint Technologies (SAIL)	31.60	30-32	28.5-29
Sea Limited (SE)	132.86	110-116	99.5-100
Watsco (WSO)	237.50	220-230	210-212
Wix.com (WIX)	302.53	262-275	248-250