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The market hasn’t completely changed character at this point, but the recent action suggests that we’re at a key juncture here: After testing its October high, the Nasdaq has been fading, dragging down most other indexes while the number of new lows has picked up right off the recent high, all while defensive areas perk up—though, we’re also seeing many growth stocks hang in there well, with a few testing new high ground. All told, we’re again leaving our Market Monitor at a level 7, but we think the next few days will tell the tale of whether some new leadership can emerge … or whether a more general corrective phase gets underway. Stay tuned.

This week’s list has lots of strong names, including a few early earnings winners. Our Top Pick has a solid aerospace story but, like other names in this issue, is moving into the AI power space with some big future deals. We think nibbling on some here or on a further pullback makes sense.

The big-cap indexes remain in an uptrend, but it’s still a tricky and narrow environment, with just about every other index making no progress (net-net) for the past few weeks while they test their key 50-day moving averages. That means the intermediate-term trend is on the fence, which is obviously something that bears watching. On the positive side of the ledger, though, we’re still encouraged by what we’re seeing during earnings season, with many signs of strength from growth-y titles. All in all, we’re sticking with the stance we’ve been in—our Market Monitor remains at a level 7.

This week’s list has something for everyone, with strength seen in a variety of sectors. Our Top Pick just broke out of a beautiful launching pad after earnings, with some others in the general group also doing well.

Current Market Outlook


The market’s snapback last week was very encouraging, with the major indexes and most leading stocks leaping back toward (or in some cases, out to) new highs. As we wrote last week, there are a couple of short-term issues to keep an eye on—namely, we saw some non-confirmations, as small- and mid-cap indexes didn’t bounce that much and far fewer stocks hit new highs even as the S&P and Nasdaq did. At this point, that action is more descriptive than predictive; it does raise the odds that the market could throw us another curveball over the next week or two, but it’s not something we’d necessarily trade off of. Big picture, we remain mostly bullish, though for new buying, we still favor entering on weakness.

This week’s list is just about all tech, med tech and biotech, and we’re happy to see some improved setups after the past two to three weeks of action. Our Top Pick is Zendesk (ZEN), which looks like it wants to continue its breakout from a few weeks back.

Stock Name	Price	Buy Range	Loss Limit
Amarin (AMRN)	14.06	18-20	16.5-17.5
Cree, Inc. (CREE)	67.96	54.5-57	49.5-51
Exact Sciences (EXAS)	116.91	88-92	80-82.5
iQIYI (IQ)	0.00	25.5-27.5	22.5-23.5
Paycom Software (PAYC)	0.00	176-183	159-163
Q2 Holdings (QTWO)	80.81	66-69	60.5-62
Ubiquiti Networks (UBNT)	170.11	137-142	125-128
Ulta Beauty (ULTA)	331.95	326-343	290-300
Xilinx (XLNX)	134.50	119-125	108-112
Zendesk (ZEN)	82.19	79-83	72-73.5

Current Market Outlook


Last Friday saw a big, broad selloff in the market, not unlike what we’ve seen a few times so far this year. But, interestingly, while those other selloffs lasted a few days, this one might not—the market snapped back vigorously today. All of this is short-term stuff, of course; the overall trend is still generally sideways and few stocks are running away on the upside, so we’re not suggesting it’s time to become fully invested. But we’re seeing evidence that selling pressures are fading, which, if earnings season goes well, could launch a sustained advance.

This week’s list has a nice mix of charts; some are super-strong, some are tight after prior advances. Our Top Pick is MobilEye (MBLY), a company with as big a growth story as you’ll find and a chart that’s showing strength after a long decline. Stick with a small position and expect volatility.

Stock Name	Price	Buy Range	Loss Limit
WABCO Holdings (WBC)	0.00	124-126.5	116-117
Qunar (QUNR)	0.00	43-44.5	39-40
Universal Display (OLED)	187.54	45.5-47.5	41-42
Newfield Exploration (NFX)	0.00	36-37.5	33.5-34
Netflix, Inc. (NFLX)	423.92	540-560	490-500
Mobileye N.V. (MBLY)	0.00	43-46	38-39
First Solar (FSLR)	83.74	60-63.5	54-55
Esperion Therapeutics (ESPR)	0.00	98-100	89-90
Depomed (DEPO)	0.00	25-27	22-22.5
Builders FirstSource (BLDR)	44.12	12.5-13.5	11-11.5

Current Market Outlook


After nine straight down days and some signs of investor panic, the market enjoyed a much-needed rebound today (right off key support) ahead of tomorrow’s election. Ideally, the past two weeks were the final leg of the market’s two-plus-month correction and stocks kite higher into year-end; such a scenario is certainly possible. However, the fact is that all we’ve seen is one strong up day—all the major indexes remain below their intermediate-term moving averages, as do most stocks. Thus, on the sell side, you can consider letting go of any broken stocks you’ve been holding on to, and on the buy side, you should continue to keep new positions small until the market confirms a new, sustained uptrend. We’re keeping our Market Monitor at level 4 until that happens.
This week’s list has a bunch of resilient stocks, including another batch that’s recently reacted well to earnings. Our Top Pick is Gigamon (GIMO), which, after a quick shakeout, snapped right back on earnings and lifted to new highs today.

Stock Name	Price	Buy Range	Loss Limit
Archer Daniels (ADM)	0.00	45-47	42-43
AveXis (AVXS)	0.00	58-62	51-53
Clayton Williams Energy (CWEI)	0.00	94-98	85-87
Eagle Pharmaceuticals Inc. (EGRX)	0.00	72-74	66-67
Gigamon (GIMO)	0.00	54-57	48-50
Las Vegas Sands Corp. (LVS)	0.00	57-59	53-54
Martin Marietta Materials (MLM)	261.52	190-195	180-183
Melco Crown (MPEL)	0.00	16.5-17.5	15-16
Spirit AeroSystems (SPR)	92.54	51.5-53	48-49
Take-Two Interactive (TTWO)	123.32	47-49	44-45

The overall market continues to look very bullish whether looking at our core indicators or the many unusual signs of strength (that portend higher prices down the road). That said, there are some headwinds near-term, especially in many growth stocks, which have been doing more chopping than advancing in recent weeks. That’s no reason to be negative, but we’re following along with that growth stock evidence, trimming our sails a bit while looking to see what earnings season brings.

Travel search engine Kayak.com is considering a share offering.

Today’s recommendation, First Solar (FSLR) is shaping up to lead the industry in the current wave.

Digital payment companies are benefiting from the rise in non-cash payments. And these two digital payment stocks are already getting a nice boost.

Fred Smith, who founded FedEx (FDX) more than 50 years ago, passed away last month, leaving behind a lasting impact that helped reshape global shipping.

The cannabis sector is still in correction mode ... looking for a bottom somewhere.

This week I’m adding American supplier of camping supplies, recreational vehicles, parts and service, Camping World Holdings (CWH).

Investing in funds is a great way to add diversification. Exchange-traded funds (ETFs) are our pick over mutual funds, and here are three ideas to get started.

*Note: Your next issue of Cabot Profit Booster will arrive next Wednesday, January 21 due to the market holiday next Monday, January 20 in observance of Martin Luther King, Jr. Day.

A broad-based rally carried U.S. equities to fresh record territory last week as investors cheered softer labor data and tilted back toward risk. For the week, the S&P 500 advanced by 1.8%, the Dow climbed 3%, the Nasdaq rose 1.9%, and the Russell 2000 led the charge, adding 4.6%.

Coronavirus fears re-emerged in a big way over the weekend, causing today’s across-the-board selloff. As we look at the evidence, here’s what we see: The intermediate-term uptrend has been cracked, especially when you look at the broader major indexes, and given that this selling comes after a big run and more than a few yellow flags during the past month, it’s likely we’re in a correction that will take some time to play out. That said, it’s also very unlikely that this is the end of the overall bull market, as the longer-term trends and stance of the indexes and most leading stocks are positive; heck, many stocks look just fine (so far) on their charts. Put it together, and we think it’s time to play a little defense and build up some cash by cutting losers and laggards, though we’re also aiming to hold most of our resilient, profitable performers, giving them a chance to hold up and get going.

Encouragingly, this week’s list has a bunch of decent-looking growth-oriented names to consider. Our Top Pick is Zoom Video Communications (ZM), which has not only a very strong chart but also a growth story that appears to benefit from the spread of the coronavirus.

Stock Name	Price	Buy Range	Loss Limit
Advanced Micro Devices (AMD)	82.24	47-50	43-44.5
Carvana (CVNA)	82.90	102-106	91-94
Domino’s Pizza (DPZ)	339.47	353-365	320-327
Floor & Décor (FND)	68.03	55-57	50-51
HealthEquity, Inc. (HQY)	70.70	80-83	72-74
MercadoLibre, Inc. (MELI)	980.83	660-690	620-640
SiteOne Landscape Supply (SITE)	98.49	108-112	98-100
SolarEdge Technologies Inc. (SEDG)	124.37	132-137	116-119
Zillow (Z)	76.64	57.5-60	52-53.5
Zoom Communications (ZM)	155.83	100-105	86-89

The election is over. Earnings season is largely behind us. And the Fed matched investor expectations by cutting rates by another 25 basis points. The result? A market at fresh all-time highs and with newfound momentum on the heels of a sluggish October. And the Stock of the Week portfolio is performing even better, with no fewer than 10 stocks (!) trading at new all-time or 52-week highs as of this writing.

So, let’s lean into the growth environment while it lasts by adding a mid-cap fintech software stock that Tyler Laundon introduced to his Cabot Early Opportunities readers last month.

Details inside.

After last week’s selloff in tech, this week has been relatively calm, though the action at mid-day today suggests we could see more selling before the closing bell.

Current Market Outlook


If you haven’t stuck with a proven system in 2015, chances are you’ve been chopped to pieces by the market’s never-ending ups and downs. Today was another headline-driven selloff (Chinese stocks are seeing renewed weakness), but it doesn’t change the market’s condition—the intermediate-term trend is still sideways, with some stocks acting fine and others looking like it’s 2008. The plan remains the same—be selective on the buy side, honor all stops and hold some cash, but also give your most resilient stocks a chance to hold up and resume their advances. If leading stocks decisively break down, then we’ll change our tune, but so far focusing on the strongest stocks has been fruitful.

This week’s list features a few recent earnings winners, as well as a few that are set up well heading into their earnings reports. Our Top Pick is Valeant Pharmaceuticals (VRX), a big-cap growth stock that remains in a firm uptrend following a better-than-expected report.

Stock Name	Price	Buy Range	Loss Limit
Valeant Pharmaceuticals (VRX)	0.00	248-256	230-232
Netflix, Inc. (NFLX)	423.92	101-106	93-94.5
Infinera (INFN)	0.00	22.5-23.5	20-21
IACI (IACI)	0.00	78.5-81	75-76
GoPro, Inc. (GPRO)	0.00	59-62	54-55
Criteo (CRTO)	0.00	51-53	48-49
Chipotle Mexican Grill (CMG)	773.32	705-720	660-665
Cempra (CEMP)	0.00	42-44	37-38
China Biologic Products (CBPO)	0.00	112-117	105-106
Amazon.com (AMZN)	2.00	515-530	470-475

Current Market Outlook


Last week made it nine weeks in a row for most major indexes, and also brought another bullish “blastoff” signal (90% of NYSE stocks rose above their 50-day line), which portends nicely higher prices three to nine months down the road. As for the question on everyone’s mind (when will we get a pullback?), there is a growing chance of a short-term dip, partially due to lots of good news hitting the wires (such as today’s tariff delay). That said, pinpointing short-term moves is a tough game and rarely helps you make good money over time—the key is sticking with the major trend (up) and focusing on leading stocks and proper setups. Overall, we remain open to anything, but just going with the evidence, you should be mostly bullish.

This week’s list has a mix of stocks and sectors, from retail to medical to Internet. A bunch of the names look good, but for our Top Pick, we’ll go with Trade Desk (TTD), which looks like a real leading glamour stock. Try to buy on dips.

Stock Name	Price	Buy Range	Loss Limit
Avalara (AVLR)	102.00	48.5-52	43-45
Boot Barn (BOOT)	43.24	26-28	23-24.5
Dine Brands (DIN)	93.05	95-100	87-90
Invitae (NVTA)	32.06	18-19	16-16.5
iRhythm Technologies (IRTC)	51.15	92-96	83.5-86
Match (MTCH)	0.00	54-57	49-51
SS&C Technologies Holdings, Inc. (SSNC)	63.56	58.5-60	53.5-54.5
Trade Desk (TTD)	468.02	190-200	163-169
Wayfair (W)	167.03	150-155	133-136
Yeti Holdings (YETI)	42.80	22.5-24	20-21

Current Market Outlook


Following last week’s rolling crash in the market, everyone is wondering what comes next, but instead of predicting (guessing), it’s better to stick with the facts. Here’s where the evidence stands: The intermediate-term trend is clearly down for all major indexes and most (though not all) stocks, and given that this comes after a prolonged advance, some time is likely going to be needed to repair the damage. Short-term, though, we did see some legitimate extremes in a few key measures (900-plus new lows on the NYSE on Friday; just 3% of S&P 500 stocks above their 50-day line; record SPY volume on Friday) that says today’s bounce could go further. All together, it’s best to be in a cautious stance (holding cash, limiting new buying, pruning your worst performers), though you shouldn’t panic out of everything—holding on to your resilient winners is fine, and if you have plenty of cash, a little buying is fine as well.

This week’s list is a good place to start building your watch list (or, if you’re in the buying mood, looking for candidates to nibble on). Our Top Pick is Regeneron Pharmaceuticals (REGN), which has a good overall story and what could be a big catalyst, too. Aim for dips.

Stock Name	Price	Buy Range	Loss Limit
Atlassian (TEAM)	182.16	142-146	131-133
Bill.com Holdings (BILL)	88.76	55-58	47.5-49
Cloudflare (NET)	39.32	20.5-21.5	18-18.5
Datadog (DDOG)	81.52	42.5-44.5	39-40.5
Dexcom (DXCM)	421.36	267-277	239-242
Enphase Energy (ENPH)	46.70	48.5-51.5	42.5-43.5
Regeneron Pharmaceuticals (REGN)	512.96	435-455	390-400
RingCentral (RNG)	238.73	223-231	202-206
Seattle Genetics (SGEN)	150.85	107-111	98-101
Square, Inc. (SQ)	91.04	78-81	71-73