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The market has been acting in a near picture-perfect manner for the past few weeks, and we’ve responded by steadily adding to our exposure—we put 15% of our cash to work in early January, another 20% last week when our Cabot Tides turned positive, and tonight we’re adding one new (but familiar) name to the Model Portfolio, leaving us with around 35% on the sideline. There are still headwinds (like our Cabot Trend Lines being negative), so we’re not flooring the accelerator, but as the evidence has improved, we’ve grown more optimistic. Tonight’s issue goes over all our current stocks (including tonight’s new addition), and details a better way to “buy low” than most investors use.

August has featured one big whipsaw after another, with the major indexes breaking down early in the month and making many dramatic moves since. But the overall evidence really hasn’t changed much—the intermediate-term trend still isn’t up for the market or most stocks, while the longer-term evidence is still mostly bullish. Thus, we’re sticking with a cautious stance. Tonight, we’re selling a small chunk of Okta (OKTA), which leaves us with a cash position of around 36%.
Elsewhere in tonight’s issue, we write about all of our current holdings (including newer addition Carvana) and discuss one major indicator to watch closely and how to find resilient stocks in the market. If today’s rally is for real, we could be putting money to work soon, but we’re content to patiently wait for a decisive green light.

The market and leading stocks have hit a few potholes during the past couple of days, and given the recent run and some short-term measures, more selling wouldn’t be shocking. But bigger picture, the outlook remains sunny: The trends are up for the major indexes and many fresh leading stocks have emerged. We’ve done a bunch of buying during the past month, though we’re still holding 24% on the sideline as we see how these new buys act.

In tonight’s issue, we talk about our market view, give you our latest thoughts on all our recommendations and write about the two themes that we think are leading the market higher, at least for now. Throw in some new ideas and there’s something for everyone in tonight’s Growth Investor.

Big picture, this year’s growth stock correction still looks normal, and encouragingly, we are now seeing some names bounce decently after the destruction of the prior two weeks. However, just going with the evidence, there’s still a lot of work to do, with few stocks in position to breakout and little in the way of upside power.

There will be another sustained rally (or two) down the road, but right now, we’re mostly biding our time, holding a lot of cash and fine tuning our watch list for whenever the buyers retake control.



In tonight’s issue, we dive into some precedent analysis that gives us confident in the big-picture point of view, and also highlight three new-ish additions to our watch list. In the Model Portfolio, we’re standing pat, but we could nibble if things continue to stabilize in the days ahead.

Not much has officially changed with the market since our last issue, with the Cabot Tides positive, but the other indicators still down and with most growth stocks still having trouble making any real progress. That said, we are seeing a gradual improvement in the evidence, with other indicators closing in on green lights and, even among individual stocks, some better, more proper action.

Overall, we remain defensive, but we are making a couple of small moves tonight, adding two half-sized positions, including one in a stock we already own.

In tonight’s issue, we go over all our stocks, highlight some new names and even talk about one non-growth sector that intrigues us. Ideally, the market is ready for a real rally, and if so, we’ll be aiming to put our remaining 70% cash position to work. But for now, going slow remains your best course.

Stocks finally had a bad week on the heels of a two-month, off-the-bottom rally that hadn’t relented since mid-June. One bad week doesn’t mean we’re destined to return to the kind of selling we saw in the first half of 2022. But the retreat was sharp enough to sell three of our weakest performers and add some safety in the form of another dividend stock. But the newest addition to the portfolio, courtesy of Tom Hutchinson, isn’t some stodgy utility company. It’s a fast-growing technology company whose stock is starting to regain traction with investors.

Details inside.

We continue to see more and more setups among growth stocks, but overall, the market remains in a spin cycle, with few stocks letting loose on the upside and incessant rotation among stocks and sectors. With the recent rally running into trouble, we cut bait with DraftKings (DKNG) earlier this week, but are willing to give the rest of our names some rope as we head into earnings season. Get all our latest thoughts on our stocks and our latest watch list in tonight’s issue.

The vaccine is changing everything. Stocks that had been left for dead by the market recovery are springing back to life and leading the market higher.

One area of opportunity ahead of the New Year is in banks stocks. As a cyclical sector, banks took it on the chin during the pandemic. They crashed during the bear market and have lagged the recovery. But they are rising fast and have great momentum ahead of what looks to be a promising year for the sector.



In this issue, I highlight one of the very best and most profitable banks in the country. It still sells at a great value, pays one of the highest dividends in the industry and now has solid upward momentum.

It’s been a great year for growth stocks, and we’re glad to have easily outperformed the major indexes, adding to our longer-term track record. Whatever the exact numbers, we hope you enjoyed a prosperous 2020, and have a great and healthy New Year.

That said, we’re always looking ahead. Big picture, we remain bullish, but growth stocks have hit a bit of a pothole this week, which wasn’t totally unexpected. We’re not reacting to the action yet, though we’re also comfortable holding our 19% cash position and see what comes as the calendar flips.

The market remains in great shape, and even better, growth stocks have (mostly) avoided any further severe rotation in recent weeks, with more and more joining the party. There are a couple of bugaboos out there (especially sentiment, which has gotten giddy), but we continue to steadily put money to work as opportunities arise. Last week, we added a new half position in Halozyme (HALO), and tonight, we’re filling out our position in Uber (UBER), which looks like a fresh, early-stage leader to us.

Open up tonight’s issue for all our latest thoughts on the market, our stocks, some new ideas and the myriad longer-term breakouts we’re seeing across sectors and themes, which should bode well.

Current Market Outlook


Last week brought some upside-down action, with the leading growth stocks doing OK (some up, some down) while the lagging names (small- and mid-caps, economically sensitive sectors) did very well. And that trend continued today, with growth stocks getting hit while the major indexes ramped up. Overall, the upmove in the beaten-down areas means the intermediate-term trend has survived its first test, and while taking on some water, growth stocks remain in fine shape, with very little abnormal selling. (In fact, pullbacks in some of the hot names could offer up some solid entry points, but we’ll see how that goes.) All in all, the divergent environment isn’t ideal and will probably lead to further crosscurrents; it remains important to pick your stocks and entry points carefully, and taking some partial profits on the way up isn’t a bad idea, either. But overall, most of the evidence remains positive, so you should, too. Our Market Monitor remains at a level 7.

This week’s list has many names that have just come to life after long rest periods. Our Top Pick is Spotify (SPOT), which has always had a good story, but now has decisively broken out following a meaningful catalyst.

Stock Name	Price	Buy Range	Loss Limit
Allogene Therapeutics (ALLO)	48.94	46-48.5	40.5-41.5
Big Lots (BIG)	43.12	31-33	27-28
BJs Wholesale (BJ)	36.69	34-36.5	30.5-32
Guardant Health (GH)	88.34	87.5-91.5	79-81
Horizon Therapeutics (HZNP)	49.89	45.5-48	40.5-42
Neurocrine Biosciences (NBIX)	123.40	114-119	104-107
1Life Healthcare (ONEM)	34.01	32.5-35	28.5-29.5
Spotify (SPOT)	272.82	184-191	166-169
Wayfair (W)	167.03	152-162	126-130
Wix.com (WIX)	302.53	195-205	175-180

Last Monday’s dramatic selloff and reversal smelled like a short-term low, but the sellers had other ideas—the bounce from that low lasted just a couple of days before the bears were back at it, with today’s decline further unraveling growth stocks. All in all, we remain in the same cautious stance as we have been for a while: Given the extreme selling in growth and choppiness in many other areas, we think holding a good chunk of cash is paramount; we’re not opposed to a little buying here and there in resilient areas, but we don’t advise playing heavily until the bulls step up to the plate. Our Market Monitor now stands at a level 4.



This week’s list is mostly cyclical and commodity names, all of which are acting or are set up well. Our Top Pick is a Canadian copper and coal play that just lifted from a multi-month rest on big volume.

Current Market Outlook


After a couple of horrid weeks for growth stocks, we’ve seen a ray of light lately, as many found solid support with some volume beginning to show up in some stocks as they rally, an early sign that big investors are engaged. Thus, we’ll chalk it up as a nice first step, and definitely a change from the recent carnage, but we still need to see more—many indexes are now doing more chopping than rising (the overall intermediate-term trend is basically neutral at this point), and most of the action in recent days has been among stocks that took the biggest hits (and thus still have a ton of overhead to chew through). Don’t get us wrong, we’re intrigued by what we see—it could prove to be the early stages of a change in character for growth stocks after three months in the outhouse—but the bulls still have more to prove before we meaningfully increase our exposure.

This week’s list remains mixed, with lots of turnaround and cyclical situations, but with a few growth-y issues too. Our Top Pick is Analog Devices (ADI), which has come back to life after a three-month rest thanks to great earnings, huge cash flow and a pending acquisition.

Stock Name	Price	Buy Range	Loss Limit
Acuity Brands (AYI)	180	176-181	162-165
Analog Devices (ADI)	163	159-164	145-148
Avery Dennison Corp. (AVY)	219	215-220	197-200
Blackstone Group (BX)	91	86-89	79-81
Children’s Place (PLCE)	95	90-93	80-82
EOG Resources, Inc. (EOG)	80	78-81	70-72
EPAM Systems (EPAM)	485	465-475	425-430
Owens Corning (OC)	105	101-104	92-94
Progyny (PGNY)	59	54.5-57.5	48-50
Roblox Corporation (RBLX)	89	85.5-89.5	73.5-76.5

Current Market Outlook


Last week was generally one of rotation back out of growth and into the broader market, and today, that trend accelerated, with growth-oriented funds and indexes (like ARKK and IWO) gapping below multi-week support and longer-term moving averages, while many recent leaders tested their 50-day lines. This sets up a key test—if a lot of stocks go down the drain, it’ll clearly be a sign of cut back on growth titles, though if we see a strong bounce from here, it could actually set up some decent pullback/resumption entry points. Meanwhile, we’re seeing an increasing number of setups in the cyclical areas, which are coming to life after two-plus months of rest. Right here, we’re not making any dramatic changes, but be sure to honor your stops. The next few days could be telling.

As for this week’s list, it definitely has more of a turnaround/cyclical feel to it as those stocks find buyers. Our Top Pick is Paylocity (PCTY), a leader in what’s looking like a new group upmove for HRM stocks.

Stock Name	Price	Buy Range	Loss Limit
Avis Budget Group (CAR)	93	91-94	81-82.5
CPRI (CPRI)	58	57-59	52-53
Colfax (CFX)	49	48-49.5	44.5-45.5
Dexcom (DXCM)	506	488-508	445-455
Five Below (FIVE)	228	221-228	200-204
HubSpot (HUBS)	657	630-650	570-580
LTHM (LTHM)	25	23-25	19.5-20.5
Nucor Corporation (NUE)	124	117-122	103-106
Paylocity (PCTY)	251	242-248	214-218
Saia Inc. (SAIA)	247	237-244	217-220

Current Market Outlook


The selling in growth stocks spread to the rest of the market last week, with most major indexes finishing lower, led again by growth-y indexes and funds. The good news is that, for now, the worst-case scenario has been avoided—many growth stocks tested key support in recent days (50-day lines, etc.) and almost all held up, with Friday and today seeing some solid bounces. Cyclical stocks have done a similar dance, with many pulling in, but few really cracking, and now the bounce is underway. Ideally, this rebound will develop some power—strong bounces off support often provide low-risk entry points—but, while we won’t wait weeks to see how it plays out, it’s too soon to conclude the recent selling wave is over. We remain more optimistic than not, and the past couple of days are certainly encouraging, but let’s see if some new and potential leaders lift off in classic fashion.

This week’s list is a mix of various different stocks, including a number of names we haven’t written up before. Our Top Pick is Chart Industries (GTLS), an under-the-radar name that’s set to see earnings soar as demand for its various energy infrastructure items (including many that play into the clean energy space) takes off.

Stock Name	Price	Buy Range	Loss Limit
Axon Enterprise, Inc. (AXON)	187	183-188	168-171
Builders FirstSource (BLDR)	50	49-51	44-45.5
Chart Industries (GTLS)	178	173-178	154-157
Elastic (ESTC)	157	153-158	135-138
PKI (PKI)	182	178-183	161-164
Rapid7 (RPD)	113	109-113	99-102
Regeneron Pharmaceuticals (REGN)	667	630-650	575-585
UPST (UPST)	203	185-195	157-162
WK (WK)	137	130-134	117-119
Zscaler (ZS)	251	240-247	220-225

Current Market Outlook


Earnings season is always important, but it looks even more so this time—many growth stocks have been sitting around for the past two to three months (some even longer), while a decent number of cyclical names have been mostly up-and-down for the past four to five weeks. Thus, a collection of positive, powerful reactions to earnings could result in a bunch of good-looking buying opportunities … but, as always, we have to wait to see that happen before pouncing. Just going with what’s in front of us, nothing much has changed, with a lot of good setups but also a lot of selling in names that approach their old highs. Once that changes (due to earnings reports or anything else), it will be time to get more aggressive, but right now we’re sticking mostly with a buy-on-dips approach and waiting for buyers to really flex their muscle.

This week’s list has a broad mix of names, though most are more cyclical or turnaround plays. Our Top Pick is Steel Dynamics (STLD), which just leapt to new highs out of a tight area on huge volume. You can start a position here or (preferably) on weakness.

Stock Name	Price	Buy Range	Loss Limit
Burlington Stores (BURL)	321	312-318	285-290
Floor & Décor (FND)	113	109-113	97-100
Goldman Sachs Group, Inc. (GS)	343	335-345	305-310
Harley-Davidson Inc. (HOG)	48	45-47	40.5-41.5
The Middleby Corporation (MIDD)	181	176-182	160-163
Okta, Inc. (OKTA)	285	275-282	248-252
Qorvo (QRVO)	199	194-200	173-176
Seagate Technology (STX)	93	85-89	76-78
Steel Dynamics (STLD)	55	52.5-55	46-47.5
Tractor Supply Company (TSCO)	191	183-187	167-170

Current Market Outlook


The selling pressure that we saw emerge two weeks ago really picked up last week, with the vast majority of leading growth stocks cracking intermediate-term support. That said, the rest of the market has refused to follow the Nasdaq’s lead; there’s been some damage and plenty of wobbles, but so far the broader indexes have held up, and buying in many cyclical areas has picked up. Just going with the evidence, we’d be shying away from growth stocks while looking for opportunities in the strong sectors should they rest or shakeout. Our biggest thought, though, is that making money has become much harder during the past month and a half, with wild moves, rotation and volatility, so now’s a time to go slow and give some thought to capital preservation until we see the buyers really flex their muscles. We’re moving our Market Monitor to a level 5.

As expected, this week’s list is heavy on cyclical and re-opening themes, with many names showing excellent action. Our Top Pick is Marriott Vacations (VAC), which has soaring earnings estimates and a stock that just lifted out of a three-year base on huge volume.

Stock Name	Price	Buy Range	Loss Limit
Abercrombie & Fitch (ANF)	32	28.5-30.5	24.5-25.5
Affiliated Managers Group, Inc. (AMG)	139	134-140	119-123
Applied Materials (AMAT)	106	102-107	92-94
Diamondback Energy (FANG)	84	76-80	66-68
Lyft (LYFT)	64	58-62	51-53.5
Marriott Vacations (VAC)	184	177-183	154-158
The Middleby Corporation (MIDD)	166	162-167	144-147
Nucor Corporation (NUE)	66	63-65	56.5-57.5
PDC Energy (PDCE)	38	34-36.5	28-29.5
Texas Roadhouse (TXRH)	95	91.5-94	82.5-84

Current Market Outlook


The market has been thrashing around during the past few trading days, with big gaps up and down, dramatic reversals and news-driven moves. But overall, nothing has really changed from our point of view—most growth leaders are still under pressure after suffering abnormal selling the prior couple of weeks, which, coming after a prolonged upmove, raises the odds that further potholes are ahead. Of course, it’s not all bad—today was a stick save for the major indexes (most bounced nicely off their 50-day lines), and while the broad market has pulled back, many areas are doing so normally. All told, we remain flexible, and are open to the possibility that the recent dip was more of a shakeout than the start of a rough patch, but the burden of proof is on the bulls to step up. Until then, we prefer being cautious.

The good news is that our stock screens continue to pick up on some potential fresh leaders should the market find its footing. Our Top Pick this week is Novocure (NVCR), an innovative player in the cancer market that’s come to life after a year-long rest. Try to buy on dips.

Stock Name	Price	Buy Range	Loss Limit
10X Genomics (TXG)	121	116-120	103-105
DouYu (DOYU)	16	15.2-16.2	13-13.7
The Gap, Inc. (GPS)	17	16.5-17.5	14.5-15.2
Guardant Health (GH)	103	98-102.5	88-90
The Mosaic Company (MOS)	18	17.2-18.2	15.4-16
MyoKardia (MYOK)	124	116-121	103-106
Novocure (NVCR)	98	93-98	81-84
Snap Inc. (SNAP)	24	22.5-24	20-21
Taiwan Semiconductor (TSM)	80	78-81	71-73
Target (TGT)	148	145-149	132-134

The title sounds counterintuitive. After all, the market has been terrific. And technology stocks, which rarely pay dividends, are leading the charge.

The S&P 500 has spent much of this year making new all-time highs. The index has rallied 27% since late October and 46% from the low in October of 2022. But most of those gains have been driven by the technology sector, which represents an outsized portion of the S&P. Returns for the rest of the market have been rather lame.

After a stunningly strong market so far this year, with the S&P 500 producing a 20% total return through Monday, the slow grind-down of most stocks since early September has seemed interminable. The 1,100 largest stocks in our 3,000-stock database have declined only 2% in the past two weeks, but the steady flow of higher inflation news, a growing likelihood of interest rate increases, a never-ending pandemic, the prospect of higher taxes of all kinds and memories of the tragic events of 9/11 makes us feel like we’re stuck inside on a cold, rainy day watching an awful four-hour movie.