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As I expected, President Donald Trump’s executive order (EO) to reschedule cannabis was a sell-the-news event.

We had been writing about some of the secondary yellow flags that had been popping up of late, mainly due to the incredible rise in many growth stocks in both price (well above moving averages) and time (the biggest winners got going back in September), as well as near-term sentiment (getting giddy, not just with growth stocks but everything post-election).

In the past week or two we’ve written that near-term risk is elevated for a few reasons (complacent sentiment, indexes extended to the upside, late September is almost always tricky, etc.), and this week we saw some of that come home to roost—after a good Monday, the indexes pulled in and a few highfliers hit air pockets while the broad market took some hits, too.

FTAI Infrastructure (FIP) Reports

It’s been another up week for the market, bolstered a bit by the Fed’s well-expected quarter-point rate cut—interestingly, the Nasdaq and small-caps both led the way this week, though just about every index is up for the week.

It’s been yet another constructive week in the market, with prices rising and some key levels being overcome—after this morning’s open, most major indexes are up 2% or more and are now beginning to “live” above their 50-day lines. By the letter of the law, in fact, the intermediate-term trend has turned back up, joining the longer-term trend (which never came close to turning down).

The market is no longer as healthy as it was, but the bull market is not dead, either, just going through a change of character—a change that helps some of our stocks and hurts others. That’s investing!

As for this week’s stock, it’s a name you may not have heard of yet—it’s young—but lots of Chinese have, as it serves the mass market.

And in the portfolio, there are two changes—one simple sell and one “retirement” of a stock that has achieved its short-term potential but that might still be kept around for the long term.

Details in the issue.

Talking about sell disciplines can feel like admitting defeat, but it’s not.

Micro-cap stocks can sometimes be volatile due to lower trading volumes, but these three companies are built for the long term.

Extreme sector rotation has been the story of the last week as red-hot growth sectors came under some pressure, while out of favor value stocks finally found some buying. This is a fine situation for our diversified portfolio as we are selling expensive calls that help offset any short-term stock/sector weakness. This brings me to our pick of the week, which is in a red-hot sector and recently reported very strong earnings.

Stocks moved lower again this week, though we will say the buyers have at least put up a little bit of a fight, with both Wednesday and (so far) this morning showing some buying.

A few of our stocks have been taking a breather, but the Cabot Emerging Markets Timer remains resolutely positive. Investors have remained optimistic despite a truckload of negative news and the fundamentals are solid for the stocks in the portfolio. I also have an overlooked Indian stock to recommend that ties in with the recent improvement in commodity prices.

The Emerging Markets Timer is doing just fine, as the iShares EM Fund has rebounded from its May 17–18 dip.

Continue to play things halfway. The market has made solid progress during the past two weeks, increasing the odds that a low has been formed. That said, few growth stocks have kicked into gear, and the longer-term trend is still down. We continue to fine-tune our watch list, but tonight, we’re standing pat in the Model Portfolio with five stocks and a cash position near 52%.

You may have seen that a relatively new Explorer idea, Fisker (FSR), was up 38% yesterday. It turns out that my analogy of comparing the company to Apple’s relationship to Foxconn was truer than even I could imagine. The news yesterday was that Foxconn will be making a future Fisker model electric vehicle, and even better, it may be doing so in my home state of Wisconsin.

Here’s an introduction to stock chart reading, something that’s key to my growth stock methodology.

The major indexes continue to act well in the wake of our Cabot Tides buy signal, which is clearly a good thing. That said, the vast majority of action remains in stocks that are buried on their charts, while those that acted resilient in recent months are mostly just sitting around.

Stocks were pummeled Thursday, with tech showing the worst losses. The Nasdaq closed down 1.4%, and the S&P 500 and Dow both lost about 0.8%. Financials and energy stocks were among the only names spared, as oil prices continued their recovery and the Fed approved the banks’ new capital plans.

Two of our stocks—Reynolds American (RAI) and U.S. Bancorp (USB)—reported earnings this morning (details are below). So far, earnings season is off to a good start, with the big banks and Netflix (NFLX) beating estimates in recent days.

After trading as low as 1139 on May 12 the S&P 600 Small Cap Index has staged a modest recovery, crossing back above the January and February lows of around 1230 two weeks ago.