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Stocks showing strength and breadth like we haven’t seen in a long time, particularly with the broad market at a record high. Despite flattish returns from the formerly high-flying mega-cap tech stocks, the broad stock market is no longer grinding higher, it is surging higher, lifting the S&P 500 index to a month-to-date gain of 8.8% through Monday.

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

January is living up to its volatile reputation but there’s no doubt it’s begun to improve—the intermediate-term trend, which was negative for most everything out there, is back to neutral; the broad market is showing some rapid, intriguing improvement; and individual stocks have improved their standing, with some popping to new highs. To be clear, this isn’t a buying panic, but after a few weeks of tedious action that has brought sentiment down, we’re OK with gradually extending your line while remaining nimble. We’ll up our Market Monitor to a level 7 today.

This week’s list is a mixed bag, with everything from growth to turnarounds to commodity names. Our Top Pick looks like one of the leaders of a new group move after being in the doghouse for a couple of years. Try to get in on dips.

All in all, the evidence remains unchanged: The major indexes are positive but not exactly powerful, with resistance (such as near 500 on QQQ) still capping many measures, but leadership remains intact, with strong stocks refusing to give much ground and fresh breakouts from the past month acting well. Of course, earnings season is still ongoing, and you can never rule out the market’s key leadership being dented or some abnormal action appearing. But you can always find something that could go wrong in the market—right now, the buyers are in control. We’ll keep our Market Monitor at a level 8.

This week’s list is very broad, with everything from industrials to real estate to true-blue growth stories. Our Top Pick is a pure cyclical name that just busted out of a long-term consolidation on giant volume.

While the market has rallied roughly 25% off its closing low from March it’s not exactly a roaring bull market. We are where we are because the Fed and Treasury are lobbing money-filled grenades in all directions. Near-term market fundamentals are weak, but looking out a few quarters (or more) things should improve drastically, and that’s what the market is trying to factor in. On balance, it’s time to be conservative, but to take shots here and there. This month’s Issue of Cabot Early Opportunities offers up five options that look good right now.

Given the still-iffy broad market, we\'re not advising you to dive in with both feet, but we are adding one new stock to the Model Portfolio tonight and will look to put more cash to work should the bulls continue to make headway.

We’re adding what we believe can be a leading glamour stock of the bull market. Elsewhere in tonight’s issue, we write about the recent long-term breakout by Chinese stocks.

We included comments on earnings from nearly a dozen recommended companies, news about other recommended stocks, and a delay in the publishing of the May edition of the Cabot Turnaround Letter as the chief analyst is stuck in London.

While growth stocks had a rough time last week, the broad market remains strong, and thus I continue to think you should remain heavily invested as we head into the last month of the year.

Today’s stock has the potential to be a huge winner as it occupies a central position in a world-changing trend, but risk is high—as it should be when potential is high.



On the sell side, Coupa Software (COUP) gets the ax today, as it is going the wrong way.



Details inside.

In this issue, I identify the bluest of blue chip energy infrastructure stocks at a dirt cheap price with a 6% yield. Business is booming and it is only a matter of time until the market starts rewarding the stock.

The action of the past few weeks looks like a solid bottoming attempt by the market, and we received a Cabot Tides buy signal late last week. But yesterday’s huge decline is a good indication that sellers are still lurking, which along with our still-bearish longer-term Cabot Trend Lines, is a reason to remain mostly defensive and go slow on new buying.

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.

Here is your summer issue of Cabot’s 10 Best Marijuana Stocks, with updates on the industry as a whole as well as all the important fundamental developments regarding the stocks in the portfolio.

In general, I remain very bullish on the marijuana sector long-term. I’m impressed by both the creativity demonstrated by the management of these companies, and the appetite for investment in the sector, by both individual investors and private equity. The future is bright.

The Middle East uncertainties came to the forefront just over a week ago, and that uncertainty flared up further this weekend with the U.S. joining the fray on Saturday night. Even so, stocks have remained resilient, with all of the indexes remaining in intermediate-term uptrends and not far from their recent highs, and there’s been very little abnormal action among individual stocks even after their big runs in May. That’s all to the good—but, at the same time, nothing has changed for the better, as very few stocks are reaching new high ground and there hasn’t been much net progress for the past month, even in many leaders. We’ll leave our Market Monitor at a level 7.

This week’s list has names from every nook and cranny in the market, which is a good sign. Our Top Pick is a real leader but has rested a bit during the past couple of weeks as the 25-day line has caught up. We’re OK entering here or (preferably) on dips.

The charts and the fundamentals of leading growth are likely pointing toward a new sustained advance. With 22% cash, we’re building our Watch List and looking to put more money to work, ideally on dips or shakeouts.

There are a few yellow flags out there, from short-term sentiment measures to a weakening broad market (our Two-Second Indicator is again unhealthy), but the trend of the major indexes is firmly up, and the action of growth stocks has been terrific, including a bunch that have surged on earnings in recent weeks.

The market hit a pothole today, which isn’t totally unexpected given the recent run-up; in fact, in the short-term, we don’t see much of an edge either way, as earnings season is underway and growth stocks have generally been lagging.

However, longer-term, the evidence remains piled up on the bullish side of the ledger, both via our trend-following indicators and with a growing number of bullish studies. Thus, we remain heavily invested, though we remain choosy on the buy side given the market’s short-term uncertainties.