Search

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.

Markets had held up pretty well—weathering inflation and interest rate worries—until the last week of February, when Russia’s Putin decided to invade Ukraine. That radical move sent the markets roiling with some pretty hefty drops and increased volatility. But action today was impressive, with the Dow Jones Industrial Average up almost 600 points, the S&P 500 up 80, and the Nasdaq up 219.

It’s been an interesting week for the market, with the biggest piece of headline news being Wednesday’s worse-than-expected inflation report, which roiled Treasuries (yields up 12 to 18 basis points on the week). Beyond inflation, there have been rumblings of late (including this morning) that Iran is set to attack Israel in some way or another, which is causing some angst this morning.


Despite those headwinds and uncertainties, the action of stocks hasn’t been awful—most indexes are down on the week (led by the broad market), but the losses haven’t been huge, with the Nasdaq actually up a smidge for the week after today’s open.

Inflation appears stuck at a much higher level than acceptable for the Federal Reserve so lower interest rates are on pause. Gold is one beneficiary.

This means that some high-flyer tech stocks may be vulnerable. Meanwhile, Japanese stocks remain near all-time highs.

Fortunately, we have exposure to both gold and Japan in the Explorer portfolio, and today we add to that exposure.

Before we get into this week’s idea we need to clean up a couple of positions from April expiration last Friday. This is what we are going to do …

Sell FROG Stock
Sell HOOD Stock
Sell IOT Stock

Stepping back, we are closing our FROG and IOT positions for losses, while HOOD will be closed at its max profit.

With weeks of churning action and complacent sentiment, the market was flirting with trouble for a while, and now it’s hit the intermediate-term tripwire. Thus, we mostly advise defense here—after a big run-up and the aforementioned churning, the odds favor more short-term downside testing and/or pain ahead. That said, the odds also favor a resumption of the longer-term uptrend down the road, so it’s best not to get too holed up in your bunker, either. Tonight, we’ll leave our Market Monitor at a level 6, and the main message is to hold a good chunk of cash, honor stops and be very selective on the buy side.

This week’s list is another broad mix of stocks, with something for everyone in terms of stories, sectors and setups. Our Top Pick is a reliable grower in the infrastructure area that’s pulling back toward support. Given the market, keep new buys on the small side.

New technology is driving huge demand growth in old technology. The growth of artificial intelligence, electric vehicles, and semiconductor manufacturing will generate huge growth in electricity.

After being stagnant for most of the last two decades, electricity demand is soaring. Most of the increasing electricity demand (from data centers, EVs, and chip manufacturing) is coming from climate-conscious technology companies that will likely try to secure carbon-friendly power sources whenever possible.

Companies that can provide low-carbon electricity generation should be the primary beneficiaries of this increasing electricity demand. Opportunity is being created for certain companies that also tend to be very recession-resistant at a time when the economy is slowing.

But there is one utility that stands above all others in terms of the current opportunity. And it is highlighted in this month’s issue.

It looked like the bulls were ready to put up a fight last Wednesday, but it’s been all down since then, lowlighted by today’s action. Stepping back, we have two thoughts: Short term, there was definitely some panic today, and the fact that we saw a solid intraday bounce (closed well off the lows) implies some sort of bounce is possible. That said, the sharp, straight-down action from the market peak less than four weeks ago tells us a good amount of repair work is needed even if we do bounce. In terms of actions, we haven’t been pushing the envelope for many weeks, so if you have a good-sized cash position, we wouldn’t necessarily sell wholesale. That said, you should honor most stops (simply holding everything and hoping isn’t advised) while remaining patient. We’ll drop our Market Monitor to a level 4 (from 6) given the damage.

This week’s list has a lot of proper charts even after the latest selling storm. For our Top Pick, we’re going with a well-situated biotech firm that popped on positive drug trial results that will dramatically expand the opportunity for the big-selling drugs already on the market.

Welcome to the post-Labor Day market. A sobered-up investor can be an ornery investor.

Stocks kicked off the first trading day after Labor Day on a decidedly negative note. The August manufacturing number was still somewhat weak, but all eyes are on the August jobs number that comes out Friday. It was the weak July jobs number that prompted recession fears and the market selloff in early August. Another bad number could reignite recession worries that had faded in the second part of August.

What recession? After a terrible start to August, the market has completely turned around. The S&P 500 has moved 7.5% higher since August 5 and is again near the high.

The recession fears that contributed to the worst day for the market in over a year were overblown. And numbers have come out since that indicate a recession is unlikely any time soon. But the Fed is still expected to start slashing rates next month. It looks like we will still get the rate cuts without a recession. The market loves it.

This market just continues to impress with the S&P within a whisker of the all-time high in these waning days of summer.

Why shouldn’t the market be strong? Everybody expects the Fed to start cutting the Fed Funds rate next month. The benchmark 10-year Treasury rate has fallen below 4%. And there’s no recession in sight. We’re getting the lower rates without the requisite economic pain.

In today’s note, we discuss pertinent developments for some of the stocks in the portfolio, including Agnico-Eagle Mines (AEM), GE Aerospace (GE), Paramount Global (PARA), Sirius XM (SIRI), Teladoc Health (TDOC) and UiPath (PATH).

Gold and silver continue to benefit from safe-haven buying, boosting our holding of Agnico-Eagle Mines (AEM).

Trump’s tariffs are directly, or indirectly, roiling some of holdings, including Sirius XM (SIRI) and UiPath (PATH). The favorable long-term outlooks for both stocks remain unchanged, however.

I don’t know about you, but these market swings are definitely making me dizzy! Tariffs, inflation, the reemergence of recession fears—are all serving to rattle investors.

This morning’s inflation report, however, did push us into somewhat positive territory, with February’s CPI rising 0.2% (2.8%, annually), a bit less than the 0.3% forecast and considerably better than the 0.5% rise in January.

Also, on the good news front, mortgage rates have finally begun to decline, with the average 30-year interest rate now at 6.72%.

This has been a week for the history books with record-breaking volatility and uncertainty.

My advice? Stay on the conservative side, leaning to blue-chip dominating stocks not tied to U.S.-China trade. Buy more gold. Since early 2022, gold has strongly outperformed inflation-protected Treasurys, so gold is now the world’s preferred safe-haven asset by many investors.

The President Trump reversal yesterday as Treasury bond market yields jumped and the U.S. dollar fell sent markets soaring. The U.S. raised China tariffs and China responded in kind. Unfortunately, both sides remain on a collision course.

In a tough week for markets, Explorer stocks held their own. Banco Santander (SAN) shares are up 50% so far in 2025, significantly outperforming bank and European indexes. Luckin Coffee (LKNCY) was up 10% this week and Sea Limited (SE) shares have risen 25% rise so far this year. All our dominating stocks held firm this week.

It was interesting to be in Tokyo and meeting for lunch today with a former Japan Ministry of Finance official as new tariffs of 24% on Japan were announced.