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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.

Current Market Outlook


May and June were generally great for leading stocks, but some yellow flags began to appear during the past couple of weeks—the major indexes were showing widening divergences, sentiment reached giddy levels and some stocks (like many recent IPOs) went vertical. Some sort of retreat was likely, but the severity of the selling in recent days looks abnormal; many stocks are pulling back after big runs, but a bunch of others are cracking, and the lagging indexes look sick—the NYSE Composite is below its 200-day line! We don’t advise hitting the panic button, as most indexes and stocks are still above intermediate-term support, so you can hold your strong, profitable stocks. But given the evidence, it’s smart to pare back—honor your stops and loss limits, and on the buy side, keep new positions small until support appears.

This week’s list has stocks that have been yanked down recently, but the action looks normal after strong prior advances. Our Top Pick is Carvana (CVNA), which is early stage and holding up well after a big run. Again, keep new positions small and try to buy on dips.

Stock Name	Price	Buy Range	Loss Limit
Carvana (CVNA)	82.90	36-39	32-34
Cheniere Energy (LNG)	63.82	64-67	59.5-61.5
Darden Restaurants (DRI)	106.63	104-107	96-98
Heron Therapeutics (HRTX)	35.25	38-40	33-34.5
Illumina Inc. (ILMN)	289.74	271-276	255-258
Spotify (SPOT)	272.82	166-171	154-157
Stitch Fix (SFIX)	36.79	26-27.5	23-24
Trade Desk (TTD)	468.02	86-90	78-81
Turtle Beach (HEAR)	26.70	19.5-21.5	15.5-17
Wix.com (WIX)	302.53	96-99	87-89

Today I’m highlighting three different types of trading opportunities: buying stocks in the days leading up to earnings reports, buying stocks when they fall a silly amount on neutral or good news, and putting great stocks on watch as we await pullbacks. There are many changes in Buy recommendations today, reflecting both dramatic changes in year-to-date price action and significant earnings revisions as Wall Street contemplates final 2018 numbers and solidifies their 2019 earnings projections. I’m not trying to be fickle! I’m just trying to stay on top of the facts so that you can have a clear idea of where tomorrow’s profitable opportunities can be found.

Thank you for subscribing to the Cabot Turnaround Letter. We hope you enjoy reading the December 2023 issue.

Every investor has loser stocks. We discuss two ways to convert this year’s losers into assets and winners, including tax loss selling and buying shares that others have discarded for artificial reasons. Last year’s crop of bounce stocks performed exceptionally well. We discuss five for this year that look promising.

One of our more productive methods for sourcing new ideas is to see what other like-minded investors are buying. We discuss how to refine the vast data in 13F filings and review four from the most recent batch of filings that look attractive.

This month’s Buy recommendation, Fidelity National Information Services (FIS), was used in a February 2023 article about how we evaluate candidates. It was too expensive then, but its recent 26% share price slide and encouraging fundamentals make it attractive to buy now.

Listen to Jacob Mintz, chief analyst of newsletters Cabot Options Trader, Cabot Options Trader Pro and Cabot Profit Booster, shares his options trading expertise.

Stocks are doing a nice job weathering a very choppy earnings season, with mixed – though perhaps better than expected – results coming in from mega caps and the banks thus far. Today, we sidestep U.S. earnings landmines by venturing overseas to add an electric vehicle company that’s a household name in China, but perhaps less well-known here in the States. And it’s starting to give Tesla a run for its money. It’s a recent recommendation from Cabot Explorer Chief Analyst Carl Delfeld.

We comment on recent earnings reports and other company-specific news about our recommended stocks, and include some thoughts on cryptocurrencies and the current burndown in momentum stocks.

Did you have some serious losses in 2015? If so, figure out where you went wrong and try your best not to make the same mistakes in 2016. Investing is a constant learning experience. We all need to review our past performance, and adjust or refine our methodologies to do better in 2016 and beyond. What will happen in 2016? Which stocks will make big moves?

2016 was a monster year for small companies, and the five best small cap stocks all came from the same sector: cyclicals.

Abbott Laboratories (ABT) and Advance Auto Parts (AAP) are among five stocks with the right credentials to perform well in 2012.

Today’s note includes earnings updates, ratings changes and the podcast.

Canadian Pacific Railway (CP) and Lululemon Athletica (LULU) both look promising.

As we’ve been writing in recent weeks, the evidence was clearly improving in a step-by-step manner, but few stocks were hitting new highs and the market’s longer-term trend remained down. Thus, it’s not a shock that, after a few good weeks, the sellers are beginning to step up. The question is whether the recent rally has run its course, and we’ll just take it as it comes: So far, the dip has been acceptable, but what happens from here will be key, with continued slippage likely having us pare back (possibly quickly).



This week’s list has a broad mix of names, some of which would look good on modest weakness. Our Top Pick is a potential new leader in the chip space after it gapped up huge on earnings last week.

While some restaurant chains regularly make adjustments and continue to prosper, others correct their mistakes in time. And some recognize their mistakes too late..

However, several casual dining restaurant chains that have lost their way have turnaround appeal. In this issue, we take a look at five.

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.

If you can find low-risk stock buy points, you can maximize growth potential on every investment. Here are two ways to find those buy points.

It’s been a brutal stretch for growth stocks. But eventually that will change. And you’ll want to own the top mid-cap stocks when it does.

There are plenty of growth stocks in this bull market, but many are overvalued. Here are three growth stocks that still trade at a bargain.