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The broad market remains in fine health, with the major indexes trending higher and sentiment measures still bullish. Thus I continue to recommend that you be heavily invested in a diversified portfolio of stocks that fit your investment needs.

Today’s recommendation is a well-known name on the consumer side, the biggest airline on the west coast. And, interestingly enough, it will be replacing our current airline stock, which is now being sold for a decent profit after less than four months.

Beyond that, there’s only one change to the portfolio today. Last week’s recommendation, which was bought at an unfortunately high point, will now be downgraded to Hold. Details in the issue.

Our emerging market signal stays in positive territory. With our new global mandate in place, we move beyond emerging markets to a European quality play on technology. We also explore what the new Fortune Global 500 rankings can tell us about the changing landscape of investment opportunities.

Current Market Outlook


Out-of-the-blue tariff threats emerged over the weekend, which roiled markets overnight and led to the usual spate of predictions as to what comes next in the U.S.-China trade saga. But when things get volatile, it’s even more important to simply stick with the facts and not get caught up in the guesses of what may come. Today, while the major indexes were down, they held well above support, which keeps the intermediate-term trend pointed up. And leading stocks fared even better, with many actually finishing up after horrid opens. Of course, it’s always possible that this is the start of a more meaningful pullback/correction, and if the uptrend is cracked, we’ll take a more cautious stance. But so far, the facts remain bullish, so you should remain heavily invested.

This week’s list is relative mixed, with a wide variety of stocks, sectors and growth stories represented. Our Top Pick is Inphi (INPH), a smaller chip and networking firm that looks to be a big beneficiary of the new networking boom.

Stock Name	Price	Buy Range	Loss Limit
Abercrombie & Fitch (ANF)	15.37	28-29.5	25.5-26.5
Coupa Software (COUP)	262.20	102-105	92-94
Enphase Energy (ENPH)	46.70	12.5-13.5	10.2-10.9
Exact Sciences (EXAS)	116.91	101-105	90-93
Harris Corp. (HRS)	198.60	174-179	161-164
Inphi (IPHI)	120.16	48-51	43-45.5
Lattice Semi (LSCC)	23.92	13.5-14.5	12-12.6
LPL Financial Holdings (LPLA)	85.22	80.5-84	73-75
MercadoLibre, Inc. (MELI)	980.83	550-575	475-495
Strategic Education, Inc. (STRA)	182.36	158-164	144-148

At a new all-time high, this is a tough market to navigate. Sure, the market could stay good for a while. But at this late-stage of the bull market and recovery, how much is left in the tank?

It’s hard to muster the enthusiasm to take on risk to get the last drop of this late stage bull market before the next downturn. While defensive stocks make a lot of sense here, most are very expensive. But there is one place where stock prices are still cheap, value stocks.

Investors have been rotating toward the long-neglected value stocks and they are starting to perk up. These stocks represent a way to get bargains in an expensive market as well as protection from the next downturn. And some stocks even have momentum.

In this issue, I highlight a stock that is one of the best healthcare companies in the world that is perfectly positioned ahead of the world’s most pronounced megatrend. It also offers great value in an expensive market and has recently found upward momentum.

The potential vaccine and mixed election results pushed the market forward this past week, but the acceleration of the pandemic and near-term uncertainty in Washington pulled it back. It is a time to be a bit cautious. Emerging markets are showing some strength, as our timing indicator turns decidedly positive. Rotation into international stocks may be coming.

Alibaba (BABA) is a good example of the push and pulls. The Chinese e-commerce giant raked in a record-breaking $56 billion in sales in the first 30 minutes of China’s Singles’ Day on Wednesday, much higher than the $38 billion total in the entire 24-hour period last year. In comparison, Amazon booked $10.4 billion during its two-day Prime Day event last month. Yet, Alibaba’s stock was down sharply for the week. Find out why inside, where you can also learn about this week’s new SPAC recommendation.

The market was just beginning to turn the corner last week before sellers re-appeared Thursday and especially Friday, driving the major indexes back toward their January lows. Thus, from a top-down perspective, you should respect the bears, which is why our Market Monitor above is again tilted toward the bearish side. On a sector-by-sector basis, however, many stocks are working – mainly oil, gas and gold, though coal stocks are also a bastion of accumulation these days. Right now, these inflation-related plays are just about the only game in town; how long it lasts, nobody knows, but that’s where you should focus your attention, if anywhere. This week’s Top Ten is once again heavy in these strong areas, with our favorite of the week being Goldcorp (GG), which has staged a good-looking breakout on healthy volume. You could buy a little on any weakness, while placing a relatively tight stop under 39, leaving a good risk-reward ratio.

Stock Name	Price	Buy Range	Loss Limit
CLF (CLF)	0.00	105-115	-
COG (COG)	0.00	42-48	-
CTRP (CTRP)	0.00	55-62	-
EOG (EOG)	0.00	108-117	-
FCN (FCN)	0.00	59-62	-
GFA (GFA)	0.00	34-41	-
GG (GG)	0.00	39 1/2 - 42	-
NFLX (NFLX)	0.00	30-32	-
PAAS (PAAS)	0.00	36-40	-
XEC (XEC)	0.00	48-51	-

We will place ProShares S&P 500 Ultra Fund (SSO) on Hold to respect the message from our Tides.

As of November last year, Agilent’s (A) Electronic Measurement business unit is now traded as a brand-new public company—Keysight Technologies (KEYS). Keysight’s three main business segments are Aerospace/Defense; Communications; and Industrial, Computer, Semiconductor. Keysight currently invests more than 12% of its revenues in R&D, which has led...

MarketWatch columnist Peter Brimelow reports Cabot China & Emerging Markets Report and Cabot Market Letter have both turned bullish.

With markets expecting a deal right around the corner, the Trump administration signaled its frustration by threatening to raise tariffs on roughly $200 billion of Chinese imports to 25%, from 10%, last Friday.

It’s a critical time for Greece, its countrymen, the nations that hold its debt and its investors. The big question is: Will Greece default on its 1.5 billion euro debt payments that are due tomorrow on the 322 billion euros that it owes to other countries?

Many of the predictions hinge on resurgences, revivals and rebirths.

Happy New Year! I’ve spent the last few issues looking back at 2011, and the trends and stocks that dominated the year. Now, it’s 2012, and it’s time to look ahead. Over the last couple weeks, submissions have been rolling in for The Dick Davis Digests’ upcoming Top Picks for 2012 issues....

After a rough start to the year, the market has stabilized and recovered somewhat.

Earnings are terrific again. About 80% of S&P 500 companies have reported, with average earnings growth of around 23%. Earnings have saved and revitalized the market throughout the pandemic recovery. And this is another stellar quarter for corporate profits.

The Russian invasion of Ukraine will surely roil markets today and raise uncertainty over the next week. U.S. markets are off about 10% since early January as tech and growth stocks in particular reset their valuations amidst higher expected interest rates and geopolitical risk in Ukraine and Asia. Losses are broad-based with 10 of the S&P 500’s 11 sectors down, with only the energy group bucking the trend. On the positive side, valuations are more attractive, the pandemic seems to be fading and China seems to be growing.