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Current Market Outlook


With all of the measures (both in real life, and in the financial markets) taken during the past month, one thing has remained the same: The trend of the major indexes and the vast majority of stocks has been down since late February, which has kept us cautious and holding lots of cash. And until that changes, your top priority is to remain defensive and patient as we wait for the buyers to show up for more than a couple of hours. That said, we’re always on the lookout for rays of light, and we are seeing one from the broad market, as fewer stocks are participating on the downside during the last week. That’s a plus, though we need to see it backed up by real buying and a break of at least some shorter-term moving averages (10-day, etc.) to think a workable low could be in. Right here, we remain cautious.

Encouragingly, though, this week’s list is fairly heavy on the growth side of the equation, including many stocks that found big-volume support on earnings last week. Our Top Pick is Chewy (CHWY), a defensive growth stock that’s executing well and has seen some major accumulation.

Stock Name	Price	Buy Range	Loss Limit
Adobe Inc. (ADBE)	315.23	295-305	265-270
Chewy (CHWY)	43.92	29-32	25-26
Cloudflare (NET)	39.32	19-21	16.5-17.5
Coupa Software (COUP)	262.20	124-132	107-111
Gilead Sciences (GILD)	75.10	69-72	63.5-65.5
JD.com (JD)	39.58	35.5-37.5	32-33.5
Moderna (MRNA)	29.39	25.5-28	21-22
Smartsheet (SMAR)	44.12	41-43.5	34-36
Vertex Pharmaceuticals (VRTX)	230.36	196-204	185-189
Zoom Communications (ZM)	155.83	130-145	110-118

Current Market Outlook


First and foremost, with the virus now affecting most everyone, all of us here at Cabot are hoping you stay safe (and if you’re home with your kids, sane!). As for the market, there’s not much to say except the obvious: We remain in a very steep selloff, with bounces limited to a couple of hours, though we’re seeing such crazy extremes (price and sentiment) that a near-term low is possible at any time. Our advice really hasn’t changed despite the once-in-a-lifetime action of the past couple of weeks: You should remain cautious, holding plenty of cash and keeping any new buying on the small side. Eventually, there will be huge opportunities, but we need to see the market and potential leading stocks find support before thinking a workable low could be in.

In the meantime, we’re mostly focused on eying stocks that are showing some resilience—if something can hold up in this disaster, it’s definitely worth at least keeping a close eye on. Our Top Pick is Masimo (MASI), which could be a port in the virus storm.

Stock Name	Price	Buy Range	Loss Limit
Acceleron Pharma (XLRN)	75.11	71-75	64-66
Apple (AAPL)	248.94	238-248	217-223
Bilibili (BILI)	28.71	23.5-25	21-21.5
DocuSign (DOCU)	107.98	70-74	63-65
Equinix, Inc. (EQIX)	547.73	538-550	505-510
FTI Consulting (FCN)	120.09	112-116	103-105
Inphi (IPHI)	120.16	62.5-66	56.5-58.5
Masimo (MASI)	159.56	172-177	157-160
Repligen (RGEN)	91.34	83-86	75-77
TAL Education (TAL)	50.49	47-50	42-43.5

The market was in a normal, shake-the-tree correction for most of November, but the past two weeks have seen a massive wave of selling that’s cracked our Cabot Tides and scores of individual stocks. Yes, there’s a chance this could be a big news-driven shakeout (virus and Fed tapering worries, etc.), so we’re not sticking our head in the sand, but there’s no question the sellers are in control and many stocks are going to need a ton of repair work.

We’ve sold a bunch of names from the Model Portfolio in the past two weeks, and while we’re not opposed to adding a half position or two if the market finds its footing, we’re sitting tight with a large cash position tonight.

The market advanced nicely today, continuing the bounce it’s enjoyed during the past week and a half. It’s encouraging action, and we’re not opposed to doing a little buying here or there given our large (76%) cash position.

That said, our trend-following indicators are still negative, telling us that, despite the nice rally, we need to see continued positive action before starting a major new buying spree. Right now, we’re mostly focused on fine-tuning our watch list, which we’re not having trouble doing given the many strong earnings gaps seen recently.

In tonight’s issue, we talk a bit about how markets usually bottom after a big decline, something that’s good to keep in the back of your mind. And we spend a lot of space discussing potential leaders of the next advance.

There’s been a lot of bad news in the past couple of weeks, but nothing has changed with the market--it’s still trending down, and the broad market remains on the outs, and today, we started to see the first signs that even the many resilient stocks are coming under the gun. Big picture, we’re continuing to advise a cautious stance with much more cash than stocks and patience as we wait for the bulls to re-take control.


And we do think they can re-take control, possibly sooner than most think: There’s so much negativity and bearishness out there that any spark could ignite a big rally, if not a sustained uptrend. But as always, we have to see it first to act on it, so we’re continuing to stay close to shore--we’re selling one name tonight and placing the rest on Hold.


We spend most of tonight’s issue discussing the overwhelming negativity out there, which is setting the stage for the next advance, as well as diving into a handful of new names to watch, including one cheap cookie-cutter story that looks ready to go if the market can stabilize.

This week’s note includes our comments on earnings from 10 of our companies. The deluge continues next week.

The note also includes the monthly Catalyst Report and a summary of the November 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.

Investing in precious metals is normally seen as a good inflation hedge, but a strong dollar has held them back. That could be changing.

Current Market Outlook


Once again, the major indexes tested new high ground last week, and once again, the sellers appeared and drove the indexes and many stocks lower. Day-to-day fluctuations aside, the story remains the same—the intermediate-term trend remains sideways, though below the surface, there are many stocks and sectors making good-sized multi-week moves. So the goal, of course, is to stick with what’s working (though taking partial profits on the way up makes sense) while jettisoning any stocks that break support. Keeping some cash on the sideline is also wise, at least until the market begins a sustained uptrend.

This week’s list has it all—some speculative stocks, some stocks that have pushed ahead on big news and some turnaround situations. Our Top Pick is Ligand Pharmaceuticals (LGND), partly because of the big story, and partly because of the lower-risk set-up in its chart.

Stock Name	Price	Buy Range	Loss Limit
T-Mobile US (TMUS)	0.00	36-38	33.5-34.5
NetEase, Inc. (NTES)	0.00	138-143	127-128
MercadoLibre, Inc. (MELI)	980.83	140-145	130-133
Louisiana-Pacific (LPX)	0.00	17.5-18.5	16-16.5
Ligand Pharmaceuticals (LGND)	267.14	83.5-87	79-80
Integrated Device Technology (IDTI)	0.00	23-24	21-22
Dunkin’ Brands Group, Inc. (DNKN)	0.00	52-53	49-50
Clovis Oncology (CLVS)	0.00	84.5-87.5	77-78
Ciena (CIEN)	44.25	23-24	20.5-21
Broadcom Limited (AVGO)	266.26	143-148	128-130

The market remains in full bull mode, despite the “shocking” (to some) news that the U.S. economy contracted by 2.9% in the first quarter. We’re not easily shocked, and we know that the message of the market is what matters, so we continue to recommend that you invest heavily in leading stocks, particularly those that present attractive entry points. Happily, there are plenty to choose from these days, and this week’s issue offers a fine variety, from energy to medical to retail to restaurants to automobiles.

Our favorite stock in today’s crop is Agnico Eagle Mines (AEM), a gold miner that has solid growth prospects and a great technical set-up. While the big jump in gold stocks two weeks ago got a lot of attention, Agnico’s capable management has made a lot of moves that augur well for the long term.

Stock Name	Price	Buy Range	Loss Limit
Tesla, Inc. (TSLA)	818.87	232-245	215-216
Sanchez Energy (SN)	0.00	35-37.5	32-32.5
Schlumberger (SLB)	0.00	109-113	102-103
SolarCity (SCTY)	0.00	68-70	59-60
KapStone Paper (KS)	0.00	32-33	29-30
JD.com (JD)	39.58	27-28	24-25
InterMune (ITMN)	0.00	42-45	37-38
Buffalo Wild Wings (BWLD)	0.00	160-165	147-148
Allegheny Technologies (ATI)	27.78	42.5-44.5	39-40
Agnico Eagle Mines (AEM)	79.05	35-37	33-34

The market continues to chop around, with forays into new-high ground inviting plenty of sellers and sharp dips quickly attracting bargain-hunting buyers. We are seeing more set-ups out there, which is a good sign—if the market does kick into gear, there should be some solid leadership. However, until then, this is about as neutral and choppy an environment as we can remember. That doesn’t mean you shouldn’t take any action (this isn’t 2008!), but it’s best to wait for the market to show some bullish action before getting heavily invested. Patience and cash are your allies today.

This week’s list is the first in a while that has a growth tilt to it; there are still some cheap, stable-type stocks, but also some real potential leaders of the next advance. Our favorite is Arris Group (ARRS), which has excellent growth prospects, a huge backlog and a nice-looking launching pad.

Stock Name	Price	Buy Range	Loss Limit
WhiteWave Foods (WWAV)	0.00	29.5-31	26.5-27
Vipshop Holdings (VIPS)	14.25	150-160	138-140
Trinity Industries (TRN)	0.00	78-82	73-74
Rice Energy (RICE)	0.00	29.5-31	27.5-28
Pacira Biosiences (PCRX)	54.85	72.5-75.5	67-68
InterMune (ITMN)	0.00	36-38	33-34
Gilead Sciences (GILD)	75.10	79-83	75.5-76.5
CBRE Group (CBG)	0.00	28-29	26-26.5
Arris Group (ARRS)	0.00	29-31	26.5-27.5
Apple (AAPL)	248.94	580-600	530-540

Overall, the main trends of most stocks, sectors and indexes remain firmly up; that’s why we’re leaving our Market Monitor in bullish territory. That said, we’re confident in saying that the next month will be more challenging than the straight-up action of the past month—more names are showing wide-and-loose action, which isn’t always abnormal but does make it harder to be patient and find low-risk entries. Remain bullish, but also stick to your plan and don’t be afraid to throw some losers or laggards overboard.

Once again, we’re pleased to see so many attractive, growth-oriented stocks in this week’s list, a sign that the buyers haven’t left the building. Our favorite of the week is Regeneron Pharmaceuticals (REGN), which is part of the strong biotech sector and has enjoyed an orderly pullback of late.

Stock Name	Price	Buy Range	Loss Limit
Western Digital Corporation (WDC)	0.00	59-63	54-55
Tesla, Inc. (TSLA)	818.87	95-100	83-85
Regeneron Pharmaceuticals (REGN)	512.96	245-260	220-225
Qihoo 360 (QIHU)	0.00	42-44	36-37
Pandora Media Inc. (P)	0.00	15.5-17	13.5-14
Old Dominion Freight Line Inc. (ODFL)	221.91	42-43	39-40
Hornbeck Offshore (HOS)	0.00	50-53	46-47
First Solar (FSLR)	83.74	48-52	43-44
3D Systems (DDD)	0.00	44-47	40-41
American Axle (AXL)	0.00	15-16.5	13-14

Current Market Outlook


The market had another decent week, with the major indexes finishing above key moving averages, though all are still stuck in multi-month ranges. But the calm action hid another round of vicious rotation beneath the surface, with most growth-oriented stocks at least taking on water, if not unraveling altogether. With few stocks in sustained uptrends and the major indexes effectively trending sideways, we continue to advise a mostly cautious stance, with small new positions and plenty of cash on the sideline. That said, you shouldn’t stick your head in the sand, either—we continue to see a good number of setups out there, and we believe a lot will come down to earnings season. A spate of breakouts would be encouraging, but as usual, we have to see it first.

This week’s list is mostly full of the steady growers and special situations that the market is favoring these days. Our Top Pick is Tempur Sealy (TPX), which looks like a solid turnaround situation, with surprisingly big growth numbers to boot.

Stock Name	Price	Buy Range	Loss Limit
Arconic (ARNC)	17.00	26-27	24-24.5
Cabot Microelectronics (CCMP)	156.17	143-148	129-131
Fastenal (FAST)	37.08	35-36	32-32.5
Kansas City Southern (KSU)	176.54	140-144	129-131
Nike (NKE)	89.77	92.5-94.5	85-86
Taiwan Semiconductor (TSM)	78.41	48-50	44-45
TAL Education (TAL)	50.49	38-39.5	34.5-36
Target (TGT)	124.77	109-112	100-102
Tempur Sealy (TPX)	85.53	79-82	71.5-73.5
TJX Co. (TJX)	59.24	58-60	53.5-54.5

Current Market Outlook


The major indexes have now rallied five weeks in a row, with most having at least eked out to new highs during that time. That push higher has created a few short-term yellow flags among overbought and sentiment measures; similar readings during the past few months have preceded multi-week, tedious retreats in the market. What happens this time around will be key: With the trends up and longer-term measures supportive, we’re optimistic the market has changed character for the better, but should the market and leading stocks suffer a deep retreat, that would probably put us back in the soup. In the meantime, we’re going with the evidence, which continues to improve both for the indexes and new leading stocks.

This week’s list has another round of stocks that have recently enjoyed outsized accumulation. It’s a tough choice, but our Top Pick is United Rentals (URI), which looks like a potential leader among cyclical stocks.

Stock Name	Price	Buy Range	Loss Limit
Cirrus Logic Inc. (CRUS)	0.00	66-69	58.5-60
Dexcom (DXCM)	421.36	196-205	177-181
InMode Ltd. (INMD)	38.86	40-43	34-36
Insulet (PODD)	175.69	168-174	154-156
MKS Instruments (MKSI)	109.43	108-112	97-99
State Street (STT)	79.42	69-71	62.5-63.5
Tesla, Inc. (TSLA)	818.87	320-335	280-290
United Rentals, Inc. (URI)	0.00	151-156	136-138
Visteon (VC)	89.82	91-95	82-83.5
Winnebago (WGO)	48.56	47.5-49.5	42.5-43.5

Current Market Outlook


The downtrend continues, with the major indexes extending their latest leg lower, with most reaching new lows this morning and some (like the S&P 600 SmallCap) falling more than 20% from their all-time peaks. We continue to keep a very open mind, especially given the horrific sentiment environment that’s emerged—various measures tell us investors are beginning to throw in the towel, which, combined with the fact that we still see many resilient growth stocks means it wouldn’t shock us to see another rally attempt unfold. But that’s speculation at this point—with the trends pointed down for the market and most stocks and sectors, you should remain in a defensive stance, with most of your portfolio in cash and, if you buy, buying just small positions.

This week’s list is another that’s full of stocks we think can do very well if the market can get going. Our Top Pick is Tableau Software (DATA), one of the strongest growth stocks in the market today as big investors buy into its transition to the cloud.

Stock Name	Price	Buy Range	Loss Limit
Ciena (CIEN)	44.25	32-33.5	29-30.5
Cree, Inc. (CREE)	67.96	42-44	39-40
CyberArk (CYBR)	111.74	68-71	63-64.5
Franco-Nevada (FNV)	125.51	69.5-72	63-64
MarketAxess (MKTX)	439.96	213-218	200-204
PayPal (PYPL)	147.00	82.5-85	77-78
Pinduoduo (PDD)	87.53	21-22.5	17.5-19
Tableau Software (DATA)	126.42	116.5-121	107-109
Twilio (TWLO)	183.39	85-89	75-77
Twitter (TWTR)	40.37	32-34	29-30.5

Thank you for subscribing to the Cabot Turnaround Letter. We hope you enjoy reading the January 2022 issue.

This issue includes our Top Five Stocks for 2022, our annual market review and outlook for 2022, as well as our update on the bankruptcy and high-yield bond markets.



Our featured recommendation this month is Brookfield Asset Management Reinsurance Partners Ltd (BAMR). This recent spin-off has received little market attention yet offers considerable long term potential.



We note our recent ratings change that moved shares of GCP Applied Technologies (GCP) to a Sell with a +77% total return.



Please feel free to send me your questions and comments. This newsletter is written for you. A great way to get more out of your letter is to let me know what you are looking for.



I’m best reachable at Bruce@CabotWealth.com. I’ll do my best to respond as quickly as possible.

Thank you for subscribing to the Cabot Turnaround Letter. We hope you enjoy reading the May 2023 issue.

Capital market conditions have tightened in the past year, making companies that hold excess cash more valuable and less reliant on fickle external financing. Our search for cash-rich companies that have real products and services with proven and enduring demand whose shares are out-of-favor turned up three promising stocks. Several currently recommended Cabot Turnaround Letter names would also make this list.

Our research process involves looking at a large number of possible turnaround ideas. As investing legend Peter Lynch once said, “The person that turns over the most rocks wins the game.” We uncovered six stocks that have both promising turnarounds ahead yet also have discounted share prices.

Current Market Outlook


October is an infamous month in market history, with many huge dips and crashes taking place at this time of year. This time around, the major evidence is much more positive than when the market experienced those prior wipeouts—the longer-term trend is up and we remain impressed with the resilience of the broad market and growth stocks. Of course, the intermediate-term trend remains neutral, and with so many uncertainties out there (U.S. election, Deutsche Bank, etc.), we can’t rule out a leg down in the near-term to scare out many investors. As always, we advise going with the flow—today, that means leaning bullish, but not flooring the accelerator until the bulls decisively retake control.

This week’s list has more of a mix of stocks and sectors than previous weeks, but that’s fine with us. Our Top Pick is Inphi (IPHI), a fast-growing networker that looks ready to get going after a few weeks of rest.

Stock Name	Price	Buy Range	Loss Limit
Apache (APA)	0.00	64-61.5	55.5-54
Autodesk (ADSK)	229.00	72-70	65-64
Carrizo Oil & Gas (CRZO)	24.03	41-39	36-35
Inphi (IPHI)	120.16	43-41.5	39.5-38.5
Line Corporation (LN)	0.00	48-46	43-42
Micron Technology, Inc. (MU)	43.31	18.5-17	16-15.5
Quanta Services (PWR)	91.45	28-26.5	25-24
Symantec Corporation (SYMC)	0.00	25-24	23-22.5
Thor Industries (THO)	104.76	85-83	77-76
XPO Logistics (XPO)	0.00	37.5-35.5	34-33