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The stock market is strong and headed upward. This is not a time to sit out.

Silicon chips have long been a mainstay in all types of electronics, from household appliances, to vehicles, to almost anything that runs on electricity.

While tech stocks have boomed this year, financials have lagged. When the economy recovers post-Covid, these 2 big bank stocks should thrive.

The kind of list I want to talk about briefly is a watch list of stocks that you are interested in.

Use the stock market itself as the source for your investing tactics. It’s the only financial news that you can really use.

The market succumbed today to some bad news from Europe, although some buyers did support shares after the early-morning dip. Net-net, today and last Friday were bad, but the major indexes remain range-bound; amazingly, the Nasdaq is now in the midst of its sixth 4% swing up or down since early June, and yet, has made basically no progress during that time. It’s choppy out there! Thus, we see no reason to change our Market Monitor from its neutral position. As for individual stocks, it, too, is a mixed bag—some big leaders broke down last week, but many are still base-building and a couple actually poked into new-high ground after solid quarterly reports. All in all, a little buying is fine, but do your buying on weakness, keep positions smaller than normal and adhere to your stops.

This week’s list is a hodgepodge of stocks from different industries; most are strong for individual reasons (earnings, etc.). Our top pick is PPG Industries (PPG), which isn’t an exciting company, but it delivered a solid earnings report and announced a merger that kicked the stock higher. We think it could do well if bought on pullbacks.

Stock Name	Price	Buy Range	Loss Limit
A.O. SMITH (AOS)	0.00	49-50.5	-
ASML Holding (ASML)	350.01	52.5-54.5	-
DVA (DVA)	0.00	94-97	-
eBay Inc. (EBAY)	0.00	43-45	-
Medivation (MDVN)	0.00	90-94	-
Mellanox Technologies (MLNX)	92.00	84-90	-
PPG Industries (PPG)	0.00	109-112	-
Skyworks Solutions (SWKS)	0.00	27-28	-
USG Corp. (USG)	0.00	18.5-20	-
WOR (WOR)	0.00	21-22	-

The market remains healthy and thus I continue to recommend that you remain fully invested in a diversified portfolio. My last two recommendations were chip companies that consumers can’t really “see,” but this week’s recommendation is a consumer-facing company, so you can easily “kick the tires.”
As for the current portfolio, there are no sales, but four stocks get downgraded to Hold, for various reasons.


Details inside.

The market has been ripping higher with broader participation from sectors that weren’t doing much a couple months ago. That’s the good news. And it’s showing up in the charts with the Small Cap Index at multi-month highs (but well below all-time highs). IPOs are starting to find their legs too. The not-so-good news is that the market is looking a little stretched, which could mean a pause or pullback is coming sooner rather than later. But, the market has a way of doing the unpredictable and with so many investors thinking it’s time for break we could see just the opposite. This month we try to play both sides of the ball by spreading things around in different sectors and across market caps. There’s some IPOs, some high growth software and MedTech ideas, and another growth + value name. They all have their own qualities and stand out to me for different reasons right now.

The major indexes have been hitting new highs in recent days, all Cabot’s market timing indicators are currently positive, and our portfolio looks good!

However, there is one sale—of a strong stock that now has less upside potential—as well as one downgrade to hold and one upgrade to buy. Details in the issue.

As to the new addition, with true growth stocks turning strong again, I’m recommending one of the strongest, a provider of hardware that enables ever-faster movement of data in the cloud-computing environment.

Details in the issue.

Current Market Outlook


The first week of the year was extremely volatile, but all in all the action ended up positive, with major indexes kissing fresh all-time highs and many leading stocks ending up nicely on the week. Overall, then, not much has changed—the primary evidence remains positive, so we’re content to ride things higher, but there’s little doubt the environment is hot and heavy (basically the opposite of what we saw 10 months ago), so you should continue to keep your feet on the ground (trail stops, take partial profits when available) and be discerning with your buys (aiming to enter after a bit of rest or some sharp shakeouts to support areas).

Because of this, most of our buy ranges are a bit below current prices (looking for pullbacks), though we still see some solid setups. One is Snap (SNAP), which is a clear leader in the internet space and has just returned to its highs after its first test of the 10-week line since its October blastoff.

Stock Name	Price	Buy Range	Loss Limit
8x8, Inc. (EGHT)	35.5	32.5-34.5	27.5-29
LPL Financial Holdings (LPLA)	116.8	108-112	97-99
The Mosaic Company (MOS)	26.8	25-27	21.5-22.5
Palo Alto Networks (PANW)	364.6	345-360	310-320
Progyny (PGNY)	44.9	40.5-43	36.5-38
Snap Inc. (SNAP)	54.4	53-55	47-48.5
Spotify (SPOT)	344.2	335-347	297-304
Sunrun (RUN)	95.8	87-91	74-77
Vale S.A. (VALE)	18.6	17.4-18.2	15.8-16.2
Zillow (Z)	143.2	134-140	119-122

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