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The market seems to be lending itself to more bullish price action in June, and I’m looking forward to making money this month! Today’s issue brings you one new stock, and one rating changes.

The market’s main trend remains up, though there is certainly some rotation going on, with technology stocks pulling back and financials and medical stocks surging. My advice is to react slowly to these shifts, taking things on a stock by stock basis according to what the stocks are actually doing—and not assuming anything.

In choosing today’s stock, I selected one that’s not only undervalued but also at a low-risk entry point, technically. It’s a company you’ve never heard of, and I think you’ll like the story. As to the current portfolio, most of our stocks still look great! But I’m recommending taking profits in two.

We’re restoring Buy ratings on a couple of stocks, and averaging up in one of them as it has begun to emerge from a multi-month rest period. That said, we’re still holding about 14% in cash given the iffy broad market and the many divergences in the market.

Current Market Outlook


The major indexes have done a decent job of holding above the August 24 lows, and a few stocks and sectors have pushed to new high ground. In the short term, we still think further upside testing is possible, especially if the Federal Reserve issues some reassuring words later this week. However, it’s going to take more than just another couple of good days to turn the market’s trends back up—right now, all of the major indexes (and the vast majority of stocks) are still buried beneath resistance and are trading below key moving averages. Thus, we’re sticking with our defensive stance—the onus is clearly on the bulls to re-take control.

This week’s list has another batch of potential leaders; there’s not many defensive stocks making the list, which is encouraging. Our Top Pick is Royal Caribbean (RCL), a big-cap leisure stock that has a strong chart and big earnings estimates.

Stock Name	Price	Buy Range	Loss Limit
WellCare Health Plans, Inc. (WCG)	271.83	92-96	86-88
Virgin Airlines (VA)	0.00	33-35	30-31
Tempur Sealy (TPX)	85.53	74-77	68-69
RH Inc. (RH)	252.93	97-99	85-86
Royal Caribbean Cruises (RCL)	0.00	90-93	85-86
Neurocrine Biosciences (NBIX)	123.40	51-54	46-48
Martin Marietta Materials (MLM)	261.52	170-174	158-160
Clovis Oncology (CLVS)	0.00	98-102	86-88
Amazon.com (AMZN)	2.00	510-530	460-470
Abiomed (ABMD)	0.00	90-95	85-86

Beginning next week, Smart Investing in Turbulent Times will receive a new name: Cabot Undervalued Stocks Advisor. But don’t worry! Everything below the title remains the same. All of the portfolio stocks will remain intact, with weekly updates on excellent value stock opportunities. In today’s Update, there are a few noteworthy portfolio stock news items.

Toll Brothers (TOL) reported earnings blowout and the stock is rising; maintain Buy. BorgWarner (BWA) stock is rising; rating change to Hold. Also, brief notes on Applied Materials (AMAT), Archer Daniels Midland (ADM), Big Lots (BIG) and Tesoro (TSO).

I’m adding BorgWarner to the Buy Low Opportunities Portfolio today, and I encourage you to buy at the current price.

We have no rating changes today; I continue to recommend you focus on what’s working, while keeping your personal investing goals in mind. The healthiest stocks in our portfolio today are the financials, Prudential (PRU) and US Bancorp (USB), dividend growth tier holding Carnival (CCL) and safe income tier recommendations Automatic Data Processing (ADP) and UPS (UPS).

Housing sector stocks—including homebuilders, raw materials, and appliances—look stronger right now than any other major industry group. Their charts are bullish, with many of them showing signs of near-term upside breakouts. In that light, I’m expecting good things from Boise Cascade (BCC), D.R. Horton (DHI), Vulcan Materials (VMC) and Whirlpool (WHR) this month.

Before this week, we were seeing some minor divergences in the market—clearly many old world sectors like financials, transports and materials were doing well, but most growth stocks were meandering, with a few doing okay and others struggling. Overall, though, the evidence was relatively bullish. This week, though, definitely raises an eyebrow or two.

Most stocks in our portfolios were the subject of research articles from high-profile financial media outlets, this past week: Forbes, Barron’s, TheStreet and others. We have one dividend increase today: Carnival Corp. (CCL), and I’m lowering the rating on Federated Investors (FII) to Hold.

The Cabot Emerging Markets Timer continues to give a Buy signal, but many stocks in both emerging and developed markets are trading sideways. We have no changes to our portfolio today.

Good news! Last week, the S&P 500 broke out of a sideways trading pattern, where it had been resting since the late-August U.S. stock market correction. The S&P could easily rise to 2,120 this fall—a 5% move—barring unforeseen bad news.

The Cabot Emerging Markets Timer is flashing a warning signal, and even good earnings results are no guarantee of big advances. We are trimming the portfolio by selling Sibanye Gold and dropping YY Inc.