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As has been the case for the past decade, the fate of cannabis stocks lies largely in the hands of politicians.

Cannabis companies have been getting solid support from state-level politicians. Forty states now allow sales of medical cannabis.

Sure, they are permitting too many stores, and that is putting downward pressure on pricing. At some point, the market sorts that out. Prices will fall to a point where it is no longer that enticing to bring on new supply, yet companies will have gotten lean enough to produce profits. We are not there yet. But we will get there.

The broad market and growth stocks started to have issues in late September and by early November everything went over the falls, cracking the intermediate-term trend of most indexes and stocks. Encouragingly, though, the market has rebounded this week as we march toward the Thanksgiving holiday--it’s good to see, but especially for growth measures, there’s still more proving to do. Of course, with a lot of cash, we’re willing to buy, and if we see strength continue into early next week (past the holiday period) we could start putting money back to work. For now, though, we think it’s best to be patient and see if the market (and, more important) growth stocks can tell us the selling storm is definitively over.

The market remains mostly in the same position it has been, with the big-cap indexes trending nicely higher and, based on historical studies, the outlook for the indexes very bullish looking out 3 to 12 months. That said, the broad market is borderline iffy (our Two-Second Indicator is negative) and the chop factor is still with us for growth stocks, so we’re still not cannon-balling into the pool ... though we do see many setups (as so many stocks have marked time for the past 1 to 3 months) out there. Tonight we’re adding another new half-sized position but are still holding about one-third in cash as the next couple of weeks will be telling.

The market has been terrific. But uncertainty is growing, particularly with regard to the economy and artificial intelligence.

The government shutdown is over. Tariffs are increasingly less of an issue in the market. But the economy is about to take center stage. There haven’t been the usual economic reports during the shutdown and there is a risk that when they do finally come out the market could be startled.

At the same time, there has been a tug-o-war regarding the AI trade, and Wall Street doesn’t know what to think. AI has driven the market higher for most of the last three years. The future direction of AI and technology will determine the future direction of the overall market.

Fortunately, there are trends and stocks that are not overly dependent on the unpredictable technology sector or the state of the economy. Electricity demand is soaring because of artificial intelligence data centers, electric vehicles, and manufacturing onshoring. The best health care companies will thrive with the enormous tailwind of the aging population megatrend.

Electricity demand will boom, and people will get sick and need medicine regardless of the near-term gyrations of the economy or the market. In uncertain times like this, I like to go with bankable trends.

In this issue, I highlight two of the very best stocks to buy in the areas of utilities and health care.

Stocks made another new high this week as investors expect a resumption of Fed rate cuts on Wednesday.

The Fed Chairman indicated that the fed funds rate will be cut at the September meeting during his Jackson Hole comments last month. Wall Street traders are pricing in a 90%-plus probability of a 0.25% cut on Wednesday. And consensus expectations are for two more such cuts before the end of this year.

The market is melting down with no end in sight. The question is, does this more closely resemble the July/August carry trade/weak jobs report selling of last year, when the major indexes fell an almost identical amount to what they have in the past three weeks? Or are we hurtling toward the end of the 28-month bull market? We may know the answer soon, as the all-important February inflation prints are released later this week.

In the meantime, we’re playing plenty of defense in today’s issue, selling out of six of our positions that have completely broken down, and adding shares of a low-risk gold miner that’s been a favorite of Cabot Explorer Chief Analyst Carl Delfeld for some time.

Details inside.

The cannabis sector remains unloved as investors abandon hope that President Donald Trump will come through on his campaign promise to reschedule the drug.

Moving cannabis to Schedule III from Schedule I under the Controlled Substances Act would help cannabis companies by obviating an IRS rule that prohibits them from deducting operating expenses (Rule 280E).

I continue to think Trump will live up to his “promises made, promises kept” mantra. It will take some time, because he’s obviously active on many fronts, and cannabis reform does not rise to the level of top priority. Polls continue to show the majority of voters favor reform, particularly younger voters. So, there’s a favorable political angle for conservatives in cannabis reform. Cannabis sales growth continues to be particularly strong (6.2%) in Missouri, a red state.

The market remains relatively mixed from a top-down perspective, but growth stocks remain a different story -- some still look fine, but the action is very hit or miss, and recently, more have come under pressure, with air pockets appearing all over the place this week. That doesn’t portend doom -- in fact, some things like sentiment are encouraging, and the indexes aren’t in bad shape -- but we’ve pared back this week and will look to reinvest the proceeds once big investors decisively step up to support growth stocks.

Today’s Special Bulletin focuses on quarterly earnings reports from five of our stocks. There are no rating changes.

A look at the third quarter, July though September, when the market plunged.

In this topsy-turvy market, it helps to know how the big hedge funds and institutions are spending their money. This Options Barometer gives you the answer.

Smart investors don’t rely on the news to make investing decisions, they use SNAC analysis. Here’s what that means.

After two and a half months of a choppy-to-down environment, the bulls have done enough good things to turn the intermediate-term trend back up. And that means our Market Monitor is back in bullish territory and you should adopt a more positive market outlook. You shouldn’t buy hand over fist, though—it’s best to pick up shares of some strong, resilient stocks (preferably newer names most investors haven’t heard of) … and then watch closely to see if the market can hold (and build on) its gains in the days and weeks ahead. If it does, you can look to extend your line.

This week’s list again contains an array of stocks from a variety of industries. Our Top Pick is Cavium (CAVM), which looks like a new leader in the still-strong chip sector. It’s very volatile, so handle it with care, but we think you can start a position around here.

Stock Name	Price	Buy Range	Loss Limit
TripAdvisor (TRIP)	55.14	94-97	88-89
T-Mobile US (TMUS)	0.00	33.5-35	31-31.5
Synaptics (SYNA)	0.00	65-68	60-61
Sanchez Energy (SN)	0.00	32-34	30-31
Palo Alto Networks (PANW)	236.92	71.5-75.5	65-67
Nabors Industries (NBR)	0.00	25.5-26.5	24.5-25
Molina Healthcare (MOH)	0.00	41.5-43	39.5-40
Cavium (CAVM)	0.00	46.5-49	43.5-44.5
Baker Hughes (BHI)	0.00	69-71.5	66-67
Air Lease (AL)	0.00	39.5-41	36-36.5

The big news today is that last week’s market weakness turned our intermediate-term market-timing indicator negative. But no one indicator is perfect, and at Cabot, we use another indicator to measure the market’s long-term trend—and that indicator is still positive. Thus it’s a standoff, which means our Market Monitor is positioned at dead neutral. Short-term, we tend to think the market is ripe for more of a pullback, simply because it’s had such a great, long advance. But long-term, we remain optimistic that once the correction is complete, the main uptrend can continue, and this thinking, in part, is because there are so few investment alternatives! In any event, our goal is to continue presenting you with stock that are most prone to short-term strength, and this issue brings a nice mix of old and new. Read them all, choose your favorite story, and work to find a good entry point. Our favorite this week is Twitter (TWTR), which has a huge fundamental story and a decent technical setup.

Stock Name	Price	Buy Range	Loss Limit
Valeant Pharmaceuticals (VRX)	0.00	125-131	123-124
VeriSign (VRSN)	190.71	58.5-60.5	56-57
Vipshop Holdings (VIPS)	14.25	91-95	80-82
Twitter (TWTR)	40.37	56-62	52-53
Insulet (PODD)	175.69	41-43	39-40
Pandora Media Inc. (P)	0.00	31-33	29-29.5
Medivation (MDVN)	0.00	70-75	69-70
The Hain Celestial Group, Inc. (HAIN)	0.00	91-93	83-85
Gilead Sciences (GILD)	75.10	76-79	73-74
CalAmp (CAMP)	0.00	27-29	24-25

Despite all the current issues, the market is doing gangbusters.

The S&P 500 is up over 12% YTD. And the year isn’t even half over. The index has also rallied more than 20% from the bear market low in October. That’s the definition of a bull market.

But things aren’t as rosy as they seem. This is the thinnest rally I’ve ever seen. Just ten stocks account for the entire YTD rise in the S&P 500 index. The other 490 stocks have collectively gone nowhere.

Today’s recommendation is a doozy. It may go to the moon, or it may fall flat on its face, but it’s got a good story, and I think we’ve got a decent entry point here.

In addition to a detailed explanation of the market’s moves and our portfolio’s holdings, we write about the puzzling failure of the average investor to take part in the equity rally and how to handle stocks around their Initial public offerings.