Search

WHAT TO DO NOW: Remain cautious, as there’s not much change with our indicators or stance—the intermediate-term trend of most stocks, sectors and indexes is down, and while sentiment is very bearish and a decent number of growth stocks are holding well, it’s best to stay close to shore until the buyers return. Yesterday, we sold one-third of our remaining position in ProShares S&P 500 Fund (SSO) and are now holding about 55% in cash.

Between the late-July/early-August market plunge and the relatively sharp post-Labor Day selloff, more than a few weak hands were likely kicked out of their positions. That paved the way for the past two weeks, which have been very encouraging, with the major indexes certainly improving and with many of those same leaders acting well, including a bunch that moved to new high ground. It’s all to the good, though a lot of the same flies in the ointment that we’ve written about are still out there, too. There’s definitely more good than bad out there, but we continue to pick our spots. We’ll leave our Market Monitor at a level 7 today.

This week’s list has something for everyone, from high-tech to infrastructure to stocks leveraged to asset prices. Our Top Pick is a potential liquid leader that, after a few months of choppy action, looks to have finally broken out on the upside.

There’s no question that last Thursday’s and Friday’s show of support in the major indexes and many stocks (especially growth-oriented stocks) was a positive sign—it tells you big investors are still interested in buying on weakness at or near support levels. (Many stocks found support near their 50-day lines.) That continues to bode well for the intermediate- and longer-term uptrend. That said, there are still question marks in the short-term—there’s been lots of distribution since mid-May, especially in many defensive and interest rate-sensitive areas, and sentiment remains a bit complacent. By all means, you should hold onto your top performers, but for now, we continue to advise caution when it comes to new buying (keep positions small) and holding some cash.

Perhaps the most impressive thing we saw this weekend were our own screens—this week’s list has a ton of great-looking charts despite the market’s recent sloppiness. Our favorite of the week is Parexel (PRXL), which remains in a tight, controlled uptrend and has great growth prospects.

Stock Name	Price	Buy Range	Loss Limit
Salix Pharmaceuticals (SLXP)	0.00	59-61	52-54
Pioneer Natural Resources (PXD)	0.00	139-144	129-131
Parexel Corp. (PRXL)	0.00	44-46	41-42
OmniVision (OVTI)	0.00	18-19	16.5-17
MercadoLibre, Inc. (MELI)	980.83	113-118	103-105
EQT Corporation (EQT)	0.00	78-82	74-75
Electronic Arts (EA)	0.00	21.5-22.5	19.5-20.5
Ctrip.com International Ltd. (CTRP)	34.94	30-32.5	27-28
Conn’s Inc. (CONN)	0.00	51-53	46-47
TD Ameritrade (AMTD)	0.00	22.5-23.5	20.5-21

Selling accelerated this week after last week was the worst since September. The S&P is down 4% YTD and at its lowest level in more than five months. The Nasdaq index is in correction territory, down more than 10% from the high.

The big issue seems to be tariffs. Tariffs on China, Canada, and Mexico are escalating. The new Canadian Prime Minister also appears to be taking a hard line, and it looks like the trade issues won’t be resolved for a while. But it’s also the fact that tariffs are hitting the economy at a vulnerable point as fears of a slowing economy are growing.

The market is taken another shot across its bow, with the indexes bending, with many leaders getting dented and with our Two-Second Indicator still negative. That said, while bending, things haven’t broken, with our Cabot Tides still positive and most leaders refusing to crack. We’re not complacent, as we’re holding our 30% in cash and placing three stocks on Hold--but we’re also not running for the storm cellar, as earnings season is likely to determine the next big move in the market and leaders.

Great Growth & Value Stocks That Are Poised for Immediate Upside | on April 18, 2019 Crista Huff, Chief Analyst of Cabot Undervalued Stocks Advisor, spoke about learning how you can combine the best of three famous stock-investing strategies to enhance your portfolio returns and lower your portfolio risk.

Here are four step-by-step instructions on stock investing from the American Association of Individual Investors.

An undisciplined trader will want to dive back in at the first decent bounce.

If I did nothing but buy volatility in instances when my downside is breakeven, I would do it literally 100 times out of 100.

If I did nothing but buy volatility in instances when my downside is breakeven, I would do it literally 100 times out of 100.

One stock reports fourth-quarter results, another moves from Hold to Buy and we reiterate the Buy recommendation on a third.