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Current Market Outlook


The top-down view of the market remains just so-so, with the intermediate-term trend effectively on the fence—most indexes are hanging around their 50-day lines and have recouped about half of the recent corrections. Thus, some caution is still in order, especially as further news-driven moves are likely in the days and weeks ahead. However, the leaders (and potential leaders) of the market are very impressive, with more and more flashing constructive action, including some that are rallying on outsized volume, both of which are a sign that big investors are getting comfortable putting money to work. It’s not a wild bull market obviously, with relatively few stocks hitting new highs, but it’s safe to say the evidence has improved, causing us to nudge up our Market Monitor today.

This week’s list has a bunch of good-looking stocks that have seen good-volume buying of late. Our Top Pick is Datadog (DDOG), which has returned to form after a big-volume breakout last week. Start small and add if the stock and market improve from here.

Stock Name	Price	Buy Range	Loss Limit
Alibaba (BABA)	288	280-288	260-265
Datadog (DDOG)	107	103-107	92-94
Purple Innovation (PRPL)	25	23-24.5	20-21
Seres Therapeutics (MCRB)	30	27.5-29.5	23-24
SolarEdge Technologies Inc. (SEDG)	273	243-257	218-224
STMicroelectronics (STM)	33	32-33.5	29-30
Teck Resources Limited (TECK)	14	13-14.2	11.5-11.9
Twilio (TWLO)	283	277-287	250-255
Twitter (TWTR)	47	44-46	40-41
Zendesk (ZEN)	105	101-105	92-94

This month we’re looking past all the current uncertainty in the market at a profitable, young company that should hold its own during this rough patch then accelerate growth into the back half of 2020 (assuming the pandemic eases as we move into the summer months).

The company offers intelligent identity solutions for global enterprises. These solutions are strategic imperatives because they help workers do their job from anywhere and help companies streamline customer experiences.



It’s not the type of stock that’s likely to surge on expectations of an immediate surge in demand, like Zoom Video (ZM) or Teladoc (TDOC). But with 115% net revenue retention the company should grow with current clients in the near-term, then grab its fair share of new business once economic activity picks up again.



We start today with a half position given the market conditions. All the details are inside.

We’ve entered a new bull market, and boy are those fun words to type!

Sure, the rally has been thin, led by seven or eight mega-cap tech stocks and, more recently, artificial intelligence. And yes, with inflation and another Fed meeting on the docket this week, a huge bucket of cold water could be thrown in the market’s face in the next 48 hours. But as of this moment, stocks are the healthiest they’ve been since 2021, and that means we’re keeping our foot on the growth pedal. So today we’re adding another potential technology leader that’s a very recent recommendation from Mike Cintolo in Cabot Growth Investor.

Stocks are doing a nice job weathering a very choppy earnings season, with mixed – though perhaps better than expected – results coming in from mega caps and the banks thus far. Today, we sidestep U.S. earnings landmines by venturing overseas to add an electric vehicle company that’s a household name in China, but perhaps less well-known here in the States. And it’s starting to give Tesla a run for its money. It’s a recent recommendation from Cabot Explorer Chief Analyst Carl Delfeld.

The good times keep rolling in the Stock of the Week portfolio, as more than a handful of our stocks are either at 52-week highs or all-time highs thanks in part to big earnings boosts in recent weeks.

While there are myriad potential potholes out there – another big regional bank failed, another interest rate hike is likely coming this week, the debt ceiling and mild recession are looming, earnings overall have been mixed, and so on – the market has been remarkably resilient of late. So this week we take another big swing by sticking with what has been our bread-and-butter niche since taking over this advisory last summer: up-and-coming retail leaders. The latest addition is a favorite of Cabot Growth Investor Chief Analyst Mike Cintolo.

Details inside.

In today’s note, we discuss pertinent developments for some of the stocks in the portfolio, including Agnico Eagle Mines (AEM), Alcoa (AA), Kenvue (KVUE), Pan American Silver (PAAS), Sirius XM Holdings (SIRI) and Toast (TOST).

Precious metals miners Agnico Eagle Mines (AEM) and Pan American Silver (PAAS) continue to lead the portfolio after making yet another series of new highs this week.

Stocks are the highest they’ve been since last summer, and with the debt ceiling in the rear-view mirror and the Fed sounding less hawkish these days, it’s possible they could keep rising as we enter Summer 2023. One sector that’s been unstoppable of late is artificial intelligence, so today we add some more AI exposure, which has already served us well with the performance of Microsoft (MSFT). The new addition is a lesser-known name but is equally red-hot. Mike Cintolo recently recommended it to his Cabot Top Ten Trader audience.

With the market down big today, it’s possible that the growth stock correction has done enough damage—but until we see real strength, it’s better to adjust to the trend—and that means going with a value stock today—an old technology name that you’ll recognize. As for our current holdings, there is only one change, a downgrade of one stock, Broadcom (AVGO), to hold.

All Quiet on the Western Front is an ironically titled movie about war that won several awards at last night’s Oscars. It could loosely describe the last few days in the U.S. stock market too, as the collapse of three major banks (and counting?) has abruptly sent stocks tumbling back down into bear market territory and brought anxiety, uncertainty and volatility back to the forefront. So today, we’re selling our one bank stock, plus one other shaky growth stock, but making room for a cookie-cutter retail company that’s on solid ground. It’s a longtime favorite of Cabot Growth Investor Chief Analyst Mike Cintolo.

The indexes are hovering perilously above their May lows, with the S&P 500 and the Nasdaq entering correction territory (-10%) last week. And this week, we’ll hear from the Fed again (gulp), the October jobs report comes in, and we’re still in the heart of earnings season, with Apple (AAPL) being the headliner. Spooky season indeed!

To prepare for all scenarios, this week we’re selling out of a couple laggards and adding a well-known retailer that’s actually in an uptrend. Mike Cintolo recommended this retailer in Cabot Top Ten Trader last week, in fact.

Details inside.

Calm has been restored to the stock market, at least for now. And while stocks haven’t exploded to the upside, it does appear as if a temporary bottom has been put in. With that in mind, today we add a pure growth stock – a cybersecurity play with plenty of momentum, recommended by Mike Cintolo to his Cabot Top Ten Trader audience last week. We also have no sells from our own portfolio, as many of them have been in full recovery mode the last week or two.

Details inside.

Another interest rate hike and negative second-quarter earnings growth have done little to slow the bull market rally or investor confidence, so this week we add a “Bull Market Stock” to take advantage of the strength. It’s a term coined by our Mike Cintolo, so naturally, today we add Mike’s favorite Bull Market Stock, one he recently recommended to his Cabot Top Ten Trader audience, a company that benefits directly anytime there’s a bull market and the big institutions are buying stocks hand over fist.

A banner November for the stock market rolls on, and an encouraging start to the holiday shopping season could act as a catalyst for another strong month in December. The Stock of the Week portfolio is thriving with the pickup in the market, with nine of our stocks hitting either 52-week or all-time highs. So today, we take another big swing by adding a mid-cap software stock recently recommended by Tyler Laundon in his Cabot Early Opportunities advisory.

Details inside.

“Smooth seas do not make skillful sailors.” - African Proverb

For the first time this year, this week all three major benchmarks closed at all-time highs during the same session on the hunch that a lousy job market will spur a series of interest rate cuts by the Federal Reserve.

Stocks had their first legitimately good week since July, thanks to declining bond yields, improving earnings and – surprise! – Jerome Powell. Can the market keep the momentum going? I’m betting yes, even if it’s not a straight line. Market bottoms frequently occur in October, and this year will be no exception. Therefore, today I’m adding more growth to the portfolio in the form of a mid-cap name that’s little known to the masses but is essentially the Google search engine for big corporations. It’s a new recommendation from Cabot Early Opportunities Chief Analyst Tyler Laundon.

Enjoy!

As value investors in a remarkably robust (exuberant) stock market, full valuation impels us to want to sell a stock. Such is the case with General Motors. On most conventional metrics, the stock is fairly priced. Through the courtesy of several friends, we’ve seen some of the math that Wall Street analysts use to justify prices well over $100/share and find them laughable, at best. As GM shares burst again through our price target, we were on the razor’s edge of selling.