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Remain mostly bullish, but continue to pick your spots. The overall market looks great, and our own 7.5% Rule has flashed, portending higher prices in the months ahead.

Small caps and growth stocks continue to look better for the third consecutive week. This is a welcome trend given that the beginning of May was pretty tough.

Crista updates us on some Earnings and has two rating changes

WHAT TO DO NOW: The market continues to improve its standing, with our Cabot Tides now positive and, barring a meltdown tomorrow, a green light is likely from our Cabot Trend Lines, too. Individual stocks remain trickier, especially on the growth side of things, so we’re not cannonballing into the pool. But with things looking better we’re continuing with our path of putting money to work. Tonight, we’re adding a new half-sized position in Las Vegas Sands (LVS), filling out our stake in Academy Sports (ASO), and putting another 3% position into ProShares S&P 500 Fund (SSO). That should leave us with around 50% cash; we hope to deploy more of that in the days ahead.

The market looks healthier today than it has in nearly two weeks. After its big drop on June 9, the Nasdaq found support repeatedly last week, and this Monday brought an impressive surge in all the indexes.

Note: There will be no issue of Cabot Stock of the Week next Monday, as our publishing schedule is fifty issues a year. I hope you have a great holiday with family and friends.

As for the market, it’s still strong, and our portfolio is still fully invested, and today we’re jumping back into the marijuana market (the focus of my other advisory) with a young marijuana stock that just came public this year.



On the sell side, CrowdStrike (CRWD) gets the ax today, as it is going the wrong way.



Details inside.

Polypore (PPO) has gained over 93% since being recommended in August.

The S&P 500 index, of course, is the most widely used benchmark for stock market returns. Individual investors, financial media and those overseeing complicated institutional portfolios use this metric as their core measure of absolute and relative performance.

Professional investment consultants may take umbrage with this statement. These highly trained analysts are well-versed in the intricacies of quantitative analysis and can parse portfolio returns, relative to potentially hundreds of alternative benchmarks, into dozens of marginally relevant categories down to the 8^th decimal place.

Emerging market stocks in general strengthened this week, keeping our Cabot Emerging Markets Timer firmly on the positive side. Our new stock is an express delivery company with a China-wide network that covers 96% of China cities and towns. We have ratings changes on two of our stocks.

The last two market-driving events of 2022 arrive this week with the latest CPI data (Tuesday) and the Fed’s latest interest rate hike (Wednesday). How those numbers look versus expectations will largely determine how this week, and the rest of December, goes. To have all our bases covered, we continue to add a blend of investment types and sectors. And this week we add something we don’t currently have in the Stock of the Week portfolio: a biotech, recommended by our resident growth investing expert, Mike Cintolo.

Today’s new addition is a semiconductor company. It designs products that are the heartbeat of digital technologies. Its content is found in electric vehicles, datacenters, IoT devices, airplanes, mobile devices and more. It is benefitting from surging demand from Apple (AAPL) products, from which it generated 40% of revenue in 2020. While the market cap is a little larger than we typically look for, the opportunity warrants the exception at this time.

We’re letting go of Equifax (EFX) today, booking a nice profit, and reducing our exposure to Home Depot (HD) by half. We also sold Amgen (AMGN) on Monday, after health care industry stocks suffered a major selloff. Drug companies and distributors are anticipating even more pressure to rein in drug prices next year.

Remain bullish, but take things on a stock-by-stock basis. The market has begun to pull back after a great couple of months, and stocks could easily correct and consolidate further.

Today I’ll give you a short list of the biggest challenges of bull markets, plus a little advice about how to deal with them.

This week, we comment on earnings from Bayer AG (BAYRY), Berkshire Hathaway (BRK/B), Dril-Quip (DRQ), Holcim (HCMLY), Kohl’s Corporation (KSS), Macy’s (M), Six Flags Entertainment (SIX), Viatris (VTRS), Volkswagen AG (VWAGY) and ZimVie Holdings (ZIMV).


Next week, we provide an update on earnings from ESAB (ESAB) and Duluth Holdings (DLTH), which should wrap up this earnings season.

With earnings season largely over most of our stocks are now moving based on news that affects the broad market, and less on company-specific trends, with a few exceptions.