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The markets reacted strongly—and bullishly—to the results of the presidential election and also found favor after the Federal Reserve’s quarter-point rate reduction.

As of today, they’ve pulled back a bit, awaiting the latest inflation report.

However, the economy continues rolling along. Unemployment remains steady, and consumer sentiment is positive. And while the housing market continues to be challenged by low inventory and rising prices, on the local level, I’m seeing improvement in both categories.

Today’s featured stocks are those that I sense are most likely to rise this month. We’ll probably see near-term strength in energy companies, alongside rising oil prices; and insurance companies, as their fourth quarter results include capital gains from investment portfolio performance. Earnings season kicks off this month with banks reporting fourth quarter results. It’s not too late to sell the worst stock in your portfolio and replace it with shares of a high quality, growing company that has a bullish price chart.

The market and some growth stocks held their own around year-end and popped to start the year, but last week was a bad one, with the sellers hitting most everything. There are tons of crosscurrents out there, and we’re starting to see some oversold measures really get stretched, so we’re not hibernating in a bear cave. But the bottom line is that the intermediate-term trend of most indexes, sectors and stocks are down so we continue to favor being cautious. Our Market Monitor now stands at a level 5.

This week’s list has something for everyone, with a lot of good setups for if/when the market does turn up. Our Top Pick has hung in there very well in recent weeks despite the market’s tumble.

The back-and-forth between the US and China rattled markets early this week as our emerging market signal turned negative. But stocks have bounced back with investors taking advantage of some emerging market bargains. Nevertheless, our portfolio is in a conservative posture with sizable cash allocation. We put some of this to work in a high quality idea from the land of the rising sun.

Emerging and global markets had a good week with some standout performers such as NIO and SEA. Zero progress on U.S.-China talks was overshadowed by anticipated interest rate cuts. Today we recommend a stock from the Watch List and upgrade an idea in the portfolio.

Andy Crowder has been making investors money for over two decades with his unique options trading approach. Now, he joins the Cabot team!

Last week, I changed the recommendation on Dollar Tree (DLTR) to Hold, and on Big Lots (BIG), Kraft Heinz (KHC) and WellCare (WCG) to Buy.

The party continues on Wall Street, and we’re not going to forecast when it will end. Instead, we’re going to try and capitalize on the strength, a strategy that has worked very well for the Stock of the Week portfolio over the last four months. Today, we take another big swing in a stock that was a home run for Cabot Explorer Chief Analyst Carl Delfeld several years ago, before the sellers came for it. Now, it’s back. It’s an overseas stock that doesn’t have the China stench on it, something that hurt other perfectly good stocks (see BYD (BYDDY)) in the last year.

The pros and cons of the rise of the Internet and similar technology.

The past year has been relatively easy for investors. But I know that these boom times won’t last.

Current Market Outlook


All eyes are on Janet Yellen this week, who is set to speak Friday morning, and whether she’ll offer hints to the Fed’s next move. As always, we’ll let others slice and dice the comments; we’ll stick with the market’s action itself. And on that front, things look solid—the market’s consolidation of the past few days has been normal thus far, and while a short-term shakeout of some sort wouldn’t surprise us, the odds continue to point toward higher prices down the road. We continue to advise you to remain heavily invested, though be sure to honor your stops for any stocks that break support.

This week’s list includes a nice array of stocks and sectors, including a few recent earnings winners. Our Top Pick is Gigamon (GIMO), a hot stock that’s recently taken a few weeks to catch its breath. Further dips are possible but buying here with a tight stop makes for a good risk-reward opportunity.

Stock Name	Price	Buy Range	Loss Limit
Yelp (YELP)	41.30	35-37	32-33
US Silica Holdings, Inc. (SLCA)	0.00	38.5-40.5	35.5-36.5
Royal Gold, Inc. (RGLD)	129.66	80-83	74-75
Pioneer Natural Resources (PXD)	0.00	177-183	164-166
Insulet (PODD)	175.69	40.5-42.5	37-38
MercadoLibre, Inc. (MELI)	980.83	160-165	149-150
Line Corporation (LN)	0.00	44-46	39.5-40.5
Gigamon (GIMO)	0.00	43.5-46	40-41
Dicks’s Sporting Goods (DKS)	0.00	56-58	50-51
Acuity Brands (AYI)	0.00	273-280	253-256

The top 10 stocks of the decade might not be what you expect - evidence that the next great growth stocks could come from anywhere.

We all want to find those rare gems that are disrupting big markets with new solutions.
Today’s company may be one such opportunity. It’s relatively unknown and has a software platform that can address $45 billion in annual enterprise spending right now. That’s a big pond.
It’s a story about big data, digital transformation and business intelligence (BI). These are more than buzzwords. They’re what every company in the digital age needs. And this little guy can give it to them.

The S&P 500 rose 15% year-to-date through October 20, and the Dow Jones Industrial Average rose 18% year-to-date. Those achievements are not remotely unusual when stocks are having a good year. However, it would be normal to expect price corrections along the way—corrections which have been curiously absent this year.

Markets rallied strongly last week, with growth stocks in particular showing strength, so the odds are improving that the recent correction is over and new highs are ahead. If so, today’s recommendation of a data-warehousing company will likely thrive.

As for selling, I have no recommendations today, just one downgrade to hold. And I’ll be following Tesla carefully, reading the quarterly report on Wednesday, and watching the stock’s reaction.



Details inside.

Current Market Outlook


Our title last week was “What Happens from Here Will Tell the Tale.” And so the market’s impressive and immediate snapback from the two-day Brexit decline is a good sign that the bears just aren’t able to take control of this market, even when obvious bad news hits. That said, while the panic low from last Monday should hold, we can’t say the bulls are in control, either, as all the major indexes are still stuck below longtime resistance levels dating back to early 2015. Altogether, we’ll nudge our Market Monitor back up a notch, but what we’re really looking for is a decisive move to new highs before getting bullish. For now, you should hold your top performers, but keeping new buys relatively small and holding some cash is also prudent.

This week’s list has a bunch of mid-cap names that are showing excellent strength—they could be among your leaders if the bulls step up to the plate. Our Top Pick is Beacon Roofing (BECN), a growing play on housing and construction, which may actually get a boost as interest rates plunge.

Stock Name	Price	Buy Range	Loss Limit
TAL Education (XRS)	0.00	60-62.5	56-57
TransUnion (TRU)	83.09	32.5-33.5	30-30.5
NetEase, Inc. (NTES)	0.00	181-185	169-170
Newfield Exploration (NFX)	0.00	41.5-43	38-39
Dycom Industries (DY)	0.00	85-88	79-80
DOC (DOC)	0.00	20-21	19-19.5
Beacon Roofing (BECN)	0.00	45-46.5	42.5-43
Activision Blizzard, Inc. (ATVI)	0.00	38.5-40	36-36.5
AG (AG)	0.00	13.5-14.5	12-13
Abiomed (ABMD)	0.00	106-109	98.5-100

Forever stocks are meant to be held for long periods of time (but not necessarily stocks to buy and hold “forever”) - to provide you with steady income.

This was another big week for our portfolio as four stocks reported quarterly results. Fortunately, the wind was at our backs as the broad market is on track for its best weekly gain since March!

Tim Lutts, CEO of Cabot Wealth Network, talk about current conditions in this (hopefully) post-corona crash market and shares high-potential growth stocks.