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The market remains under pressure, with our Cabot Tides and the “Growth Tides” (see more in this issue) negative, and even our longer-term Cabot Trend Lines on the verge of a sell signal. To be fair, we are starting to see some “real” extremes in terms of some sentiment and oversold measures, so we’re hopeful a bounce could get underway soon; we’re not ruling out some nibbling or re-jiggering in the Model Portfolio. But the main trends remain down, so our main advice is to stay mostly on the sideline and keep your watch list updated with potential fresh leaders.

There have been some positive baby steps since the market’s early-December low, but there remain many yellow flags, too, such as the fact that growth-oriented funds and indexes remain iffy at best. All in all, we’re a smidge more constructive than we were a couple of weeks ago, but we don’t advise making any big commitments until we see more individual names let loose on the upside.

This week’s list is heavier on cyclical names, as those have been holding up (some even advancing) much better than the growth areas of the market. Our Top Pick is a shipping name that’s posting huge numbers and is near new highs.

Two weeks ago, we thought the market had likely hit (or would soon) a workable low--and that was right, with the major indexes and (more important to us) a good number of growth stocks perking up. It’s encouraging, but we can’t say we’re bullish yet: The trends of the market and growth funds are still down, and even things that have popped nicely aren’t set up quite yet. All in all, we’re sitting on our hands, but we’re also watchful--another few good days could change things, but at this point the odds still favor more time being needed as a bottom is built.

The first news is the renaming of our advisory, from Cabot Marijuana Investor to Cabot Sector Xpress Cannabis Advisor, which is explained in today’s issue.

While the broad market was falling apart over the past week, several of our cannabis stocks held firm above their December lows, telling us that after an 11-month downtrend, the selling pressures are pretty much spent in that sector.



Today’s issue brings a few tweaks to our portfolio, but no big changes, as we are well positioned for the sector’s next uptrend.



Full details in the issue.

The S&P 500 is on the cusp of a correction, down 10%. The technology- laden NASDAQ is already well beyond a correction. Energy is the only S&P 500 sector in positive territory YTD.



The problem is inflation and the Fed raising rates to combat it. There is a realization that inflation can’t be handled seamlessly. That means we could face continued high inflation, or much slower economic growth induced by a hyperactive Fed making up for lost time. Neither scenario is good for stocks.



While the year might be difficult for the overall market, the energy and financial sectors should shine. These sectors actually like inflation and rising interest rates. While portfolio positions in those sectors have been dragged lower by the recent indiscriminate selling, I expect them to regain momentum when this selloff ends.



Two fantastic portfolio positions in energy and finance are highlighted to buy in this issue. They had momentum going into the selloff and should pick up where they left off when the selling abates.

Don’t expect this volatility to subside this week, as the Federal Reserve, economic data releases and a heavy earnings calendar will have traders on their toes.
This week, in an effort to keep the portfolio diversified, I’m adding a pharmaceutical play, AbbVie (ABBV).

As for market performance, speculative and growth areas continue to struggle while stocks tied to rising rates and cyclicals managed to garner the most attention from buyers. However, the recent short-term rally could see higher-beta areas come back into play.



Today, I’m adding Corning (GLW), which reported blowout earnings last week.

This week, as we continue to keep the portfolio diversified, we are adding a biotech/pharma play that recently reported strong earnings.

Despite some optimism early last week, the sellers obliterated that hope Wednesday through Friday, as the indexes fell sharply, pushing the S&P 500 into an official bear market (down 20% from its highs).

The market remains quite weak, and thus ripe for a major rally at any time. But until we see real strength, continued caution is advised.


In the meantime, you may want to nibble on today’s innovative consumer footwear stock, especially if you’re a customer.


As for the portfolio, we’re selling two stocks, cutting losses short so they don’t grow larger.


Note: next week’s issue will be published on Tuesday, due to the Memorial Day holiday.

As Mike Cintolo, Chief Analyst of Cabot Growth Investor and Cabot Top Ten Trader always says, “you shouldn’t fight the tape.” The markets are battling it out these days, trying to find a bottom. The constant news cycle of Russia-Ukraine, rising rates (up 0.5% last week) and increasing inflation are causing a severe case of market indigestion and volatility.



What’s an investor to do? As I’ve been saying for the past 6 or so months, judicious investing is the key. While most sectors (except Energy and Utilities) and the majority of equities, are down for 2022, there are still pockets of ideas worth investigating, including some defensive moves.



With that being said, I think investors should be keeping some cash on the sidelines, as when this market shows signs of a long-term turn, there will be plentiful bargains to be had.

This week we will be looking to take advantage of the current historic trend that’s taking place in the travel industry as seen through major U.S. airline carrier, United Airlines (UAL).

The market remains very challenging for high-growth stocks. While I have a list of innovative companies I’m excited to recommend (at some point), for now we’ll continue to diversify our portfolio with more value-oriented names.

This month’s new addition is a little-known supermarket chain I’ve been following for some time. The pitch is very straightforward – rising prices and an insulated business model should help the company post impressive growth in 2022 and 2023. Not to mention we have upside if/as the name spreads among investors that are increasingly looking for just this kind of stock.



Last but not least, the chart looks fantastic.

The market has been up and (mostly) down, but not much has changed with our thoughts: The primary evidence remains terrible, though we continue to see more than a few rays of light from some secondary indicators. For now, we’re remaining defensive (we sold two more half positions this week) and are patiently awaiting the bulls to return.



In tonight’s issue, we write about a couple of commodity-names that we’re watching closely, as well as go over some thoughts on handling big losers (it happens to the best of us) and some of those secondary indicators we’ve mentioned--you can cut the bearishness with a knife, so it’s best to at least stay alert to a positive change in the market’s character.

The market was hit hard again last week, so all trends are down, and increased caution is advised.
But I’m not selling any stocks this week, mainly because last week I sold four, and today so many of our stocks are sitting at their 200-day moving averages, thanks to last week’s broad selloff, that I see a good possibility for some bounces.


As for the new recommendation, it’s a well-known discount retailer whose stock is cheap.


Details inside.

There is no sugarcoating it: We are in the midst of a pretty nasty bear market, which unfortunately means we are going to be stopped out of our Cleveland-Cliffs (CLF) position today.

This week we will add an American energy company engaged in hydrocarbon exploration and pipeline transport, EQT Corp. (EQT).

Today was another day of bloodletting, with the major indexes and many former leaders continuing to melt down. Short-term, there’s little doubt things are getting emotional—thus, it’s certainly possible we’re close to a low point, but of course you could have said that a few days ago as well. As always, you shouldn’t fight the tape—with most things cratering, you should be holding much more cash than stocks, though we’re still not opposed to a nibble here or there. When this maelstrom is over, there are going to be some great buying opportunities, but right now, you should remain defensive. Our Market Monitor is down to a level 2.



This week’s list is heavy on commodity names, which did get hit today but in general remain in uptrends. Our Top Pick is a refining name that has recently shown accelerating strength.

Stocks are turning distinctly more bearish in the near term as slower growth in China hits a market that was already teetering in anticipation of a more aggressive Fed.
But the selloff in the indexes doesn’t reflect all stocks. Some stocks have more downside left. Others will likely hold their own even if the market keeps falling. And still other stocks have already been oversold. These stocks should have less downside from here than the overall market, and recover much more quickly when the selling abates.


In this issue, I identify two oversold stocks in the portfolio. These are stocks that have already been crushed and sell at vastly reduced prices despite continuing strong earnings growth. While these stocks may fall further in the weeks ahead if the market gets uglier, I believe they both sell at deep discounts compared to where their prices are likely to be later in the year.

The market’s main trend remains up and thus I continue to recommend that you be heavily invested, always working to “upgrade” your portfolio by selling weak stocks and buying healthier ones.

Today’s recommendation is a well-known big technology stock that’s spent the past eight months going sideways, despite the fact that revenue growth has been accelerating. To me, it’s a very attractive setup.



As for our current holdings, there are no changes. After selling two stocks last week, everything looks good today.



Details inside.