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Good news was able to outrun the problems in 2021. But the problems are catching up. The economy ran so hot because if was picking up the slack from the pandemic and making up for lost time. But that slack will soon run out.

We are likely heading towards a more normal environment on the other side of the pandemic recovery. It is highly unlikely that market returns going forward are as high as they have been. That pace can’t be sustained. We are likely headed for choppier waters and a more sideways market where stock picking should be more crucial.



Inflation and rising interest rates may not be great for the overall market, but certain sectors can thrive in such an environment. In this issue, I highlight one such stock. The stock should shine on the other side of the pandemic recovery that lies ahead in the new year.

Sure, it was a tough year for stocks. But 2022 was the worst year ever recorded for bonds.

The benchmark 10-year Treasury lost more than 15% in 2022, the worst calendar year performance ever recorded since it started being tracked in the 1920s. The 10-year + Treasury Bond Index lost 29.45% for the year, also the worst performance on record.

But the disastrous year creates an opportunity. Last year seems to have squeezed many years of poor performance into one. Now bonds actually pay decent interest again. And every negative year for bonds ever recorded has been followed by a year of positive returns.

In this issue, I highlight a long-term corporate bond fund. It allows access to some of the highest yielding investment grade bonds in the last 15 years while also providing a monthly income. The fund is very likely to have a positive total return for the year, and perhaps very positive, at a time when the stock market is highly uncertain.

Current Market Outlook


Our intermediate-term trend model has effectively been neutral for months, with the big-cap indexes acting pretty well but most other areas chopping sideways. Today, though, the sellers got their act together, with the S&P 500 decisive diving below its 50-day line and small caps actually falling below their 200-day line! That’s certainly a change in character and, for the first time in months, turns the intermediate-term trend down. Of course, the evidence hadn’t quite lined up for a while now, so we’ve been playing it more cautiously than normal, but now it’s time to step carefully and see how this plays out. As for positive tidings, there are some: The bad news out there (Chinese real estate) is obvious, and looking at individual stocks, many growth titles are now holding up far better than the Dow or S&P 500 (a marked change from earlier this year). Thus, we’re still holding our resilient names and are OK doing a little buying as stocks pull in to support, but it’s not time to be a hero, with the focus shifting more toward preserving capital. Our Market Monitor has moved to a level 5.

If you are aiming to put a little money to work, you want to look for names that have recently shown good-volume buying. Happily, this week’s list has many names in this club, and our Top Pick is Lululemon (LULU), which is emerging from a long rest and has held its recent earnings gap despite the market’s dip.

Stock Name	Price	Buy Range	Loss Limit
Align Technology (ALGN)	710	685-705	640-650
Catalent Inc (CTLT)	136	129-133	121-123
Chesapeake Energy Corporation (CHK)	60	58-60	52-53
Cloudflare (NET)	127	120-124	108-110
Entegris (ENTG)	129	124-127	114-116
KKR & Co. L.P. (KKR)	62	63.5-65.5	59.5-61
Lending Club (LC)	27	25.5-27	22.5-23.5
Lululemon Athletica (LULU)	420	407-420	370-375
Natera (NTRA)	120	115-119	105-107
Wingstop (WING)	182	173-177	159-161

The situation remains the same as it has for the past week or so. When it comes to selling pressures, we’re seeing some signs that they’re starting to ease, but, on the buying side, there isn’t much evidence to suggest the bulls are flexing their muscles, as most indexes, sectors and growth funds are still in downtrends while rallies into resistance (whether for an index or stock) almost always attracts quick selling. Yes, there are still many old world stocks that are acting well (though we’ll see how today’s commodity-related selloff goes), so we’re not opposed to nibbling on these sorts of pullbacks. But overall, we think watchful waiting is the right course.



This week’s list is intriguing as there are a good number of fresh breakouts here, some from very long ranges. Our Top Pick is one of those, with the company’s massive step-up in earnings last year expected to persist for at least the next couple of years.

Here is your summer issue of Cabot’s 10 Best Marijuana Stocks, with updates on the industry as a whole as well as all the important fundamental developments regarding the stocks in the portfolio.

In general, I remain very bullish on the marijuana sector long-term. I’m impressed by both the creativity demonstrated by the management of these companies, and the appetite for investment in the sector, by both individual investors and private equity. The future is bright.

The market’s evidence has clearly improved during the past couple of weeks, so much so that our Cabot (and Growth) Tides are now on the fence, while our old Two-Second Indicator is starting to pick up on a bullish change in character for the broad market. That said, it’s close, but we haven’t seen anything definitive yet--tonight, we have no changes, but if we see some green lights, we’ll be on the horn with two or three new additions most likely.



In the meantime, we continue to hone our watch list and put together our game plan should the evidence continue to improve; we’re not going to go whole hog right away, but after six months of punishing action, we’re remaining flexible and write about a few potential fresh leaders in tonight’s issue.

Patience remains a virtue in this market, as the major indexes and individual stocks have been unable to get going, though for the most part, sellers have failed to take control, too. We’ll see if today changes that; today’s post-Fed selling was ugly, though it hasn’t cracked our Tides buy signal or most stocks that were setting up. Either way, we’re remaining defensive, with nearly three quarters of the portfolio in cash.

Tonight’s issue is very stock heavy, with a big watch list and write-ups on on a variety of names (including some recent IPOs) that are acting well and have great stories. We continue to think a few good days could make all the difference, but until we see it happen, less remains more as we keep our eyes open for signs the buyers are showing up and the sellers have left the building.

The market’s weakness didn’t last long; the indexes snapped quickly back, though breadth is not quite as good as previously. Still, the market strength restores my confidence that we’ll see higher highs in the months ahead, and I recommend that you invest accordingly.
For today’s recommendation we swing back to the aggressive side. Remember those promises of DNA-based personalized medical treatments from a decade ago? We’re getting closer and today’s recommendation is a leading force in the field.

I’ve chosen five great dividend-paying stocks from the latest issue of the Dividend Digest to tell you about today.

The 10 highest-paying dividend stocks in the Dow Jones Industrial all yield more than 3%. But which of them would I buy today?

The chances that the stock market will rise another 18% during the next 12 months or so are pretty good.

Crista reports good earnings announcements in five portfolio stocks.

Not surprisingly, this week wasn’t a great one for our portfolio. I had a feeling the party was winding down last week, when we had an average gain of 105% going and had just seen our stocks pop an average of 6% over five days.

With the stock market near all-time highs, there aren’t many good undiscovered stocks out there. Here are three small caps that look promising.

You’ve probably heard of the term 5G technology. But have you heard of these 3 5G technology REITs? They’re the best way to play the 5G boom.

2022 has gotten off to a rough start, but corrections and bear markets can quickly put high-quality companies in oversold conditions. These mid-cap stocks are three such companies.

While the market hangs on every word from the Fed and the headlines are full of stories about inflation and the debt ceiling, there’s an ongoing megatrend set to drive these stocks higher.

Business development companies are a great place to find high yields. Here are three worth buying now, according to Bob Ciura of Sure Dividend.