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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.

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.

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.

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.

While there are an endless number of things being talked about and analyzed, keeping it simple is usually better. And with the trends of the major indexes and most stocks pointed down, we remain in a defensive posture—in fact, we’ve had at least 70% cash on the sideline for the past two months.

That said, we’re ready and waiting for the next upturn. In tonight’s issue we continue to massage our watch list, review our three holdings, write about two names that are leaders of new growth “theme” and review a couple of secondary market timing indicators. When the next sustained upmove comes, there will be lots to sink our teeth into, but until then, stay patient.

Last but not least: If you celebrate, have a very Merry Christmas!

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.

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.

The market’s action since its late-June shakeout has been solid, with the major indexes and many leading stocks pushing back toward new high ground. Granted, not everything looks perfect, but the majority of evidence remains positive, including our trend-following indicators, so we remain mostly bullish.

Cabot’s intermediate-term market timing indicator has swung back to the positive side, lending a bit of ammunition to the bulls, but a look at the bigger picture reveals that the market remains in the sideways trading pattern that has defined it since the market’s initial selloff at the start of February.

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 roller coaster continued this past month, with inflation worries and rising interest rates leading the charge.

I believe this volatility will continue at least until the first quarter of next year. Consequently, I’m moving the portfolio in a more conservative direction at the moment.



Having said that, however, economic indicators continue to be positive. Motor vehicle sales are still strong, with 13.5 million units sold last month, better than expected. The ADP employment report also exceeded forecasts, with 208,000 new jobs coming online. And the unemployment rate fell to 3.5% from 3.7% the prior month.

The market overall and growth stocks in particular have shown great improvement during the past two to three weeks, with the major indexes hitting new highs and selling pressure drying up.

Granted, it’s late August, so we’ll see what big investors do when they come back from the beach next week, but given the evidence we’re continuing to put money to work. Tonight, we’re adding one new name, leaving us with around 17% in cash.

The top-down evidence isn’t completely green, but it’s certainly taken steps in the right direction, with our Cabot Tides clearly on a buy signal, the broad market improving in the face of tons of bad news and sentiment still in the dumps. We think there’s a decent chance this rally can morph into the real deal.

That said, there’s no rush to jump in when it comes to growth stocks, as few are really moving on the upside–the sell-on-strength pattern remains in place, with far more air pockets out there than moonshots. That can change, and if it does, we’ll embark on a buying spree, but we still favor going slow on the buy side for now.

In tonight’s issue, we go over all our stocks and our recent moves, as well as dive into the sell-on-strength action, which to us, is the #1 market trait of 2022. When it ends, many will likely be caught leaning the wrong way (selling/shorting at new highs), but that’s what we’re waiting for to floor the accelerator.

This week, we comment on results from General Electric (GE), Mattel (MAT), Polaris (PII), Vodafone (VOD), Volkswagen AG (VWAGY), Western Union (WU) and Xerox Holdings (XRX).

Next week, twelve companies are scheduled to report.

We also include the Catalyst Report and a summary of the August edition of the Cabot Turnaround Letter, which was published on Wednesday. We encourage you to look through the Catalyst Report. This report is a listing of all of the companies that have reported a catalyst in the past month. These catalysts include new CEOs, activist activity, spin-offs and other possible game-changers. We source many of our feature recommendations from this list. You will find it nowhere else on Wall Street.

If you are a commodities or small-cap investor, you’d probably be heavily invested right now -- but, for growth stocks, the environment remains challenging, with lots of ups and downs but no real progress, and with most growth funds (including the Nasdaq) under performing even defensive stocks. The odds favor the next major move being up, but until that starts, we’re staying relatively close to shore and waiting for more stocks to get going, possibly during earnings season.