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The market remains in a correction, with most indexes, sectors and stocks in control of the sellers, and until that changes, we’re advising a cautious stance with plenty of cash and little new buying; in the Model Portfolio, we trimmed further this week and are up to around 65% in cash.

That said, we’re staying alert for many reasons, not the least of which is that we’re starting to see some real, true oversold readings (which we consider “alerts”) and because more than a few growth stocks are resisting the decline, hitting higher lows since August. That’s not a reason to buy, but we’re keeping our watch list in good shape and are ready to move if the buyers appear.

It’s Fed rate-cut week. Will Jerome Powell and company come out of the gates quickly, slashing rates by a full 50 basis points, as the majority of traders now expect? Or will they start with a more sober, 25-basis point cut … which is what I expect? In the long run, it probably doesn’t matter much. But in the current market, the answer will likely determine whether last week’s bounce-back has legs – or if another October bottom is in order.

In the meantime, today we add a stock that has nothing to do with interest rates: a fast-growing water company. It’s a recent recommendation from Tyler Laundon in his Cabot Early Opportunities advisory.

Details inside.

Calm has been restored to the stock market, at least for now. A week ago – when the VIX briefly spiked as high as 66(!) – it was the opposite of calm. So even if stocks don’t suddenly go straight back up again, this is a welcome return to pre-August form. With that in mind, we have no new sells or downgrades (several of our stocks are hitting new highs!), and we add a very normal-looking growth stock that’s been sailing along just fine despite the many headwinds of the last few weeks. It’s a recent recommendation from Mike Cintolo in Cabot Top Ten Trader.

Details inside.

In the June Issue of Cabot Early Opportunities, we continue to lean into AI themes while taking a swing at a speculative space communications company. We’re also trying to keep things real here on earth with a picks-and-shovels-type infrastructure play, and we pull back the curtain on a real rarity in 2024, a software stock with a nice chart!

As always, there should be something for everybody.

Despite a number of domestic and international geopolitical concerns, the market continues to act well. The S&P 500 is within a stone’s throw of its February all-time high.

This month, we add two high-growth tech names and place three additional compelling opportunities on our Watch List.

Glad to be back! A lot has happened in the two weeks since I last wrote, with the market reaching new record highs despite the tariff deadline coming and going without a ton of clarity. And now second-quarter earnings season has arrived, which could provide further wind in the market’s sails, though estimates are more tempered (5% growth, vs. 14% growth among large-cap companies in Q1) this time around.

Meanwhile, our portfolio is humming, with TWO of our stocks reaching their price targets today! We’ll “retire” them to make room for today’s new recommendation, from an industry I wrote extensively about in our last update: movie theaters. The hope is that this movie theater stock will follow in the footsteps of United Airlines (UAL) and Carnival Corp. (CCL) and quickly reach our price target as shares play catch-up to their fundamentals due to some post-Covid lag.

Details inside. Enjoy!

The market remains in a rough spot, with a hawkish Fed that continues to raise rates into what’s become a rolling bank crisis, with some big names going under and others walking the plank. Far more important to us than the news is the market’s reaction to the news--and it remains mixed when it comes to the indexes (intermediate-term trend neutral), but growth stocks remain iffy at best, with many good-looking setups falling apart on earnings of late, and with relatively few really powering ahead. All of this can change in a hurry, but until it does, we continue to think growth investors should remain generally cautious and flexible as we wait for a more certain environment that will entice big investors to pile in.

In tonight’s issue, we have no changes to the Model Portfolio (though one small position is on a tight leash), holding north of 60% in cash and working on building our watch list. Elsewhere tonight, we write about the market’s very narrow nature, highlight the housing group (which has a history of trending even in bad markets) and have re-added a few names back to our watch list after some old favorites have popped on earnings.

The major indexes are up to new highs, though they again have become very dependent on the Magnificent Seven in the last month after stocks of virtually all sizes and sectors rallied in November and December. Outside the Mag Seven, most stocks have been stagnant so far in 2024. Not so in the Stock of the Week portfolio, where we have multiple stocks hitting new highs, none of which belong to the Mag Seven, and TWO stocks that have doubled in the last year! We try and keep the hot streak going by adding a familiar, big-name growth stock that was beaten to a pulp during the bear market of 2022 and 2023 but has demonstrated some real momentum in the last three months. It’s a recent recommendation from Cabot Explorer Chief Analyst Carl Delfeld.

Stocks continue to move higher despite more tariff news. A 25% tariff was announced over the weekend on all imported steel. But the market is so far taking the news in stride during a good earnings season.

We’ll see what happens with the tariffs. But whatever happens with this latest round, it is most likely that tariff issues will remain at least a background story for most of this year. Meanwhile, stocks are being buoyed by strong earnings.

The market has been sideways for the past couple of months. It’s up YTD because of a rebound from the December swoon. But the S&P is still at about the same level it was in early December.

Earnings have been solid, averaging about 11% growth in the quarter as tech earnings moderate and the rest of the market catches up. Earnings are expected to average about 14% in 2025. But the solid earnings quarter is only helping the market hold serve in the face of higher interest rate expectations, tariffs, and a strong dollar.

Growth as a whole has been stagnant for three months, and this week, we started to see the selling spread out a bit, with our Two-Second Indicator waiving a yellow flag and with more names coming under pressure (and with many growth stocks really caving in). To be fair, the top-down evidence isn’t much changed, so we’re flexible--if this is the final shakeout to the past three months of rest, there could be many things to sink our teeth into soon.

But as growth investors, we’re focused on the growth evidence, which tells us to remain in a cautious stance until the buyers step up.

Tariffs are back in the news, and the market doesn’t like it. How long they remain in the news is anybody’s guess. Perhaps the situation will be settled over lunch in Davos this week. In the meantime, fourth-quarter earnings season serves as a welcome diversion and ramps up this week after some mixed results from the banks last week. Speaking of banks, today we add a regional play that should pair well with our Morgan Stanley (MS) holding. It’s a lower-risk, income-generating stock that is a new choice of Cabot Dividend Investor Chief Analyst Tom Hutchinson.

Details inside.

The market’s evidence has clearly worsened the past two weeks and, really, there hasn’t been any money made in growth stocks since late September, when more names began to flash abnormal action and crack. We’ve mostly been selling in recent weeks, building up a big cash position of 56%, and tonight we’re hanging on to that as our Cabot Tides is on the fence, Two-Second Indicator is negative and many stocks are headed south. To be fair, the indexes are hanging in there and we still have many stocks we like (we write about some liquid biopsy stocks and other potential leaders in tonight’s issue), so we’re staying flexible--but right now it’s prudent to hold our cash and see how this selling wave plays out.

The market’s evidence continues to improve, with our core market timing indicators returning to the bullish side of the fence. That’s obviously a good thing and has us optimistic -- though upside follow through from here will be key, as many growth measures are still lagging behind, though we are seeing more setups, especially from areas that sat around for much of the past year (see the issue for much more on that). All told, we are doign some new buying tonight, and will have more to come if the market continues to act well.

“With the advent of motion-sensing video game consoles, there came a demand for motion-based video games. No longer do gamers need to plug their controllers in and sit on the couch to enjoy their interactive experiences. Now, they can interact in an all-new way. Majesco Entertainment Co. (COOL 2.19 Nasdaq)...

The major indexes haven’t done much since the market’s opening-day jump this year, but the vast majority of stocks and sectors are in firm uptrends. In fact, probably our biggest takeaway of the past couple of weeks is that the sellers look spent—most shakeouts or downdrafts are met with buying within hours or a couple of days, and so far, any pullbacks have come on far lighter trade than their prior advances. Of course, earnings season is getting underway, and that’s sure to add volatility to the mix, but the evidence is bullish and thus you should continue to hold most of your best performers, while looking to add exposure on normal pullbacks.

This week’s list has a bunch of great-looking charts from a variety of industries; many of them have shown excellent buying volume of late, which bodes well. Our favorite is Transocean (RIG), a powerful turnaround situation that is getting going after a rough couple of years. We’re now seeing institutional investors pile back in.

Stock Name	Price	Buy Range	Loss Limit
Urban Outfitters (URBN)	0.00	40-42	-
Trinity Industries (TRN)	0.00	35-36.5	-
Seagate Technology (STX)	0.00	31-33	-
Transocean Ltd. (RIG)	0.00	51-54	-
NXP Semiconductors (NXPI)	0.00	26-28	-
Nationstar Mortgage (NSM)	0.00	35.5-37.5	-
Goldman Sachs Group, Inc. (GS)	0.00	129-135	-
Facebook, Inc. (FB)	0.00	29.5-31	-
Celgene (CELG)	0.00	92-95	-
Chicago Bridge & Iron (CBI)	0.00	45-47	-

Our weekly note usually follows the theme of “what’s on our minds.” The topics range from discussions about individual stocks to the overall market to inflation and other matters. We usually have a lot on our minds, so it’s mostly a matter of picking one.

When a famous company’s stock falls, there are lessons to be learned that can help you improve your game. Shares of 3M Co. (MMM) fell last week when first-quarter results revealed revenue and profits that did not meet the market’s expectations.

Current Market Outlook


Last week, the market took another step on the road to health, as the intermediate-term trend of the major indexes began to turn up and many potential growth leaders showed strong accumulation. That’s enough for us to nudge up our Market Monitor another notch and, assuming you’ve been in a relatively defensive stance, you should begin to put some money to work. That said, we also think it’s best to go slow—the longer-term trend remains sideways-to-down, very few stocks have hit new highs (as many new lows as new highs on the Nasdaq today) and there’s still a bunch of overhead for most indexes, stocks and sectors to chew through. Still, despite the potential issues, we’re growing more positive as the market’s action has improved in recent weeks.

This week’s list is full of stocks from a variety of sectors that look poised to do well if the market’s recent strength continues. Our Top Pick is Workday (WDAY), which, while it could pull back a bit, is acting like a liquid leader of any sustained advance that develops.

Stock Name	Price	Buy Range	Loss Limit
Amedisys (AMED)	174.06	133-138	120-123
Delta Air Lines (DAL)	54.28	58.5-60.5	54.5-55.5
Glaukos Corp. (GKOS)	67.84	65-68	57.5-59.5
Omnicell (OMCL)	81.03	72.5-75	67-69
PRA Health Sciences Inc. (PRAH)	96.08	114-118	105-107
Tesla, Inc. (TSLA)	818.87	350-360	323-318
Trade Desk (TTD)	468.02	142-147	123-126
Veeva Systems (VEEV)	180.23	97-100	89-91
Workday (WDAY)	194.88	160-166	145-148
Xilinx (XLNX)	134.50	89.5-93	82-84

Current Market Outlook


The day-to-day (and sometimes hour-by-hour) action remains very volatile, with headlines (both company-specific and economic) coming at investors quickly. But taking a step back, not much has changed—the intermediate-term trend is pointed down and the vast majority of leading stocks are in the same boat, with a good amount of damage on their charts that will likely take time to repair. That doesn’t mean you should stick your head in the sand; odds favor earnings season allowing some names to grab pole position for the next market uptrend. But right now, it’s best to remain defensive as we wait for the market to find some strong support and more stocks to build launching pads. Our Market Monitor remains at a level 4 today.

This week’s list includes a broad mix of stocks and sectors, including one very new IPO and a couple of special situations. Our Top Pick, though, is Ciena (CIEN), the mid-sized networking outfit that looks ready for a sustained upturn once the pressure comes off the market.

Stock Name	Price	Buy Range	Loss Limit
Ciena (CIEN)	44.25	29.5-31	27-28
Dine Brands (DIN)	93.05	80-83	74-76
Eli Lilly (LLY)	117.78	107-110	100-102
GasLog (GLOG)	21.39	20-20.7	18-18.5
Guardant Health (GH)	88.34	35-38	29-31
Intelsat (I)	25.46	32.5-35	28-29
Ollie’s Bargain Outlet (OLLI)	103.94	87-90	81-82.5
Spirit Airlines (SAVE)	57.03	49-51	43-45
Tabula Rasa Healthcare (TRHC)	76.14	75-78	67-70
United Continental Holdings (UAL)	96.76	86-89	79-81