Search

Current Market Outlook


Not much has changed with the major indexes during the past week—all remain in intermediate- and longer-term uptrends, with small- and mid-cap indexes leading the way and the Nasdaq pulling up the rear. Below the surface, we have seen some profit taking in among many of the market’s top stocks and sectors (even the super-strong industrials, commodities and transports), and given the huge runs those names have seen during the past month, further retrenchment is certainly possible. But when we consider all of the evidence, the odds strongly favor dips being buyable, as pullbacks or shakeout-type action will probably lead to higher prices down the road. We’ll keep our Market Monitor in bullish territory at level 8.

This week’s list is heavy on turnaround stories, especially those in the industrial and commodity sectors. Our Top Pick is Steel Dynamics (STLD), a leader of the steel sector that’s starting to pull back after a big run. You can buy some here or (preferably) on further weakness.

Stock Name	Price	Buy Range	Loss Limit
Cavium (CAVM)	0.00	61-63.5	55-57
DeVry (DV)	0.00	29.5-32	27-28
Oshkosh (OSK)	95.04	67-69.5	61-62
PDC Energy (PDCE)	0.00	77-81	70-72
Signature Bank (SBNY)	0.00	147-151	136-138
Steel Dynamics (STLD)	0.00	35-37	31-32.5
SunCoke Energy (SXC)	0.00	11-12	10-10.5
Tailored Brands (TLRD)	0.00	24.5-27	22-23.5
Transocean Ltd. (RIG)	0.00	14-15	12-12.5
Western Digital Corporation (WDC)	0.00	63-67	56.5-58

Represented by the symbol “Li,” lithium is the lightest and least dense of the solid elements. Lithium production has been growing for decades thanks to its use in small batteries. Powering a car with electricity takes more than a few AAA cells, but it can be done. The idea is...

“Renren, Inc. (RENN) is currently known as the Facebook (FB) of China. It is down some 80% since it went public almost three years ago. But the company is much more than a Chinese Facebook (which is blocked in China). Half of its revenue comes from its gaming...

To most people it’s May the fourth be with you day, and tomorrow is Cinco De Mayo. But to the market it’s Fed day. And that’s all that matters.
The Fed meets today and is widely expected to raise the Fed Funds rate by 0.50%. That would be the largest single-meeting rate hike in more than twenty years. It’s necessary because the Central Bank is a million miles behind the curve in countering this high and persistent inflation, currently running at more than 8%.

Explorer stocks were steady or slightly down this week but don’t get discouraged. It is likely that Fed interest rate hikes have ended and, combined with a debt ceiling deal, could ignite a rally. Next week I will give an update on our three Explorer ETF positions.

The unemployment rate for Chinese people ages 16 to 24 rose to a record of 20.4% last month. The rate of youth unemployment in China has consistently been two or three times higher than the general population. Not a good sign.

Since Halloween, the last seven times I have made a call in Cabot Cannabis Investor to buy the AdvisorShares MSOS 2X Daily (MSOX) in sector weakness, the exchange-traded fund has gone up 68% on average over the next one to seven weeks.

The last time I made a trading call to buy the cannabis sector was on May 29.

Since that was less than two weeks ago and the maximum time to profit after trading calls is seven weeks, I am not too concerned about the flat performance of cannabis stocks since then.

We have a wonderful library of investing books here in the Cabot offices and refer to them very often. Here are some of our favorites.

Many analysts now expect a “Goldilocks scenario,” with the economy growing nicely but not too fast. This would mean that the Fed does not need to worry about raising interest rates further to combat inflation. Good news for stocks.

I would like to clarify there are two reasons that I remove a stock as an Explorer recommendation. When I recommend a stock, I expect that it will deliver appreciation and dividends over the long haul unless I highlight that it is a more of a short-term trading opportunity.

With a 29% average annual rate of return over 13 years at Fidelity, Peter Lynch certainly earned his status as a legendary investor.

Recently, Lynch revealed that indexes like the S&P 500 and Nasdaq have been propped up by a handful of high-flying tech stocks. “The truth is, we’ve been in a stealth bear market for a long while now if you don’t count those 10 or so darling mega-caps,” Lynch remarked with his trademark sarcasm.

That may soon be coming to an end.

More than $15 trillion in assets are linked to the performance of the S&P 500 index in some way, according to S&P Dow Jones.

Apple, at about $2.4 trillion, and Microsoft, at $2.1 trillion, are so large that, taken together, the two companies would be the third-largest sector of the index, behind tech and health care. This share is trending lower as other companies rise.

Centrus Energy (LEU) shares recovered five points this week to reach 35 as the Department of Energy announced that it and Centrus Energy’s American Centrifuge Operating, LLC will share the $150 million cost 50-50 to demonstrate production of a fuel called high assay low enriched uranium. This is still a buy for aggressive investors.

For today’s stock, my recommendation is a mid-sized ($1 billion in revenues) steelmaker named General Steel Holdings (GSI). I look at the chart and I see a stock that came public in October 2007, peaked at 19 two days later, coinciding with the broad market’s top, and then declined to build a broad bowl formation that bottomed at 6. When Paul Goodwin wrote about the stock a month ago it was selling at 13 and trending up. Today it’s 15. I think it will hit its old high of 19 in time, and eventually break out to new highs.

This week’s Monday Week in Review is a bit different than most weeks, with a focus on our open positions, as I spent most of my weekend getting caught up on unusual option activity from the previous week while I was in Europe. Let’s dive in …

This week’s Monday Week in Review is a bit different than most weeks, with a focus on our open positions, as I spent most of my weekend getting caught up on unusual option activity from the previous week while I was in Europe. Let’s dive in …

Cabot Publisher Timothy Lutts discusses his late January vacation to Madeira and the Azores.

Continuing the story of my recent road trip from Salem, I focus on two cities, Wilmington and Cary.

Treace Medical (TMCI) delivered a Q3 beat after the bell yesterday with revenue of $33.1 million (+53%) beating estimates by $3.03 million and EPS of -$0.22 beating by $0.07.