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As financial markets begin to thaw, global leaders build consensus on how to address this pandemic, options of potential interim treatments for Covid-19 surface and the framework of economic relief starts to firm up (even though it won’t be enough), the stock market may be showing early signs of stability (a relative term).

Despite a Chinese economy that has grown three times faster than America’s every year over the past three decades, it has been a bit of a challenge to consistently make money in Chinese stocks.

Just wanted to start with a quick word of optimism about the future of the stock market, and the potential for making money in the months and years to come. I was pleased to attend the Contrary Opinion Forum in Vermont last weekend with Timothy Lutts--Tim’s been going for 22 years straight, while this is my fourth or fifth visit since I came to Cabot back in 1999--and it’s always a treat.

Shifting into academic/environment/energy mode, I recently read an article in The New York Times that claimed we’d save more fuel as a country if we stopped measuring miles-per-gallon and began measuring gallons per 10,000 miles. On the surface, it doesn’t seem to make sense, and I assume that’s because we’ve been brainwashed (conditioned) into thinking m.p.g. is the gold standard. So I opened up a spreadsheet and tried some scenarios, and here’s what I found. It’s absolutely true.

It’s earnings season so most investors are focused on individual stocks. And with the S&P 500 and Nasdaq hitting new all-time highs this week, the big picture is looking pretty good too!

We could see some funky trading action next week since the Wednesday Fourth of July holiday will mean a lot of people out of the office. But then the market will start looking forward to Q2 earnings reports, which will begin to come out in late July and early August. Stay the course as the volatility probably isn’t over hasn’t yet translated to lowered growth expectations.

Explorer recommendations were pretty flat this week but demonstrated some strength as well. JPMorgan led the banks, reporting a first quarter with a net profit of $8 billion on over $32 billion of revenue. Keep your perspective and play defense and offense. Emerging markets offer you both and we will be adding to the portfolio selectively. This week I highlight a defensive healthcare play of the highest quality.

Small caps paused this week to digest a few wild weeks. The S&P 600 Small Cap Index is essentially unchanged since I last wrote, which I think is a victory at this point.

Short selling stocks is controversial–and not appropriate for all investors–so if you’re considering the practice, here’s everything you need to know.

This week’s note includes our comments on earnings from Walgreens Boots Alliance (WBA) and Wells Fargo & Co (WFC). Next Thursday, we get earnings from Nokia (NOK). The deluge starts the following week with eight companies scheduled to report.

In today’s note, we discuss the recent earnings reports from Walgreens Boots Alliance (WBA). Our note also includes the monthly Catalyst Report and a summary of the January edition of the Cabot Turnaround Letter, which was published a week ago Wednesday.

With August in the rear-view window, it’s time for Wall Street to get back to full-time work. At present, trends continue to look good (but not great). Still, there are plenty of candidates to choose from, and this week’s comes from an emerging market that is not China; I think you’ll like it.

The good news is that fears of China tariffs have passed, and our Chinese stocks look better. The bad news is that formerly leading growth stocks are now being sold, while new leadership, like juggernaut Citigroup (C), comes to the fore. And additional good news is that all our Cabot market-timing indicators are once again positive, telling us the wind is at our back.
Bad news. Good news. The important thing is to watch each of your stocks carefully, nourish the ones that are doing what you hired them to do and fire the ones who don’t measure up.
This week, thanks to the big shifts in the market, we have an unusual number of rating changes, six! Details in the issue.

The market looks great today. The correction is over and buyers are back in control, so I recommend heavy investment in stocks that meet your portfolio’s goals.
Last week I made a slew of ratings changes to our portfolio to get back in synch with the market, but today all looks well so there are no changes at all—though of course that will change!
As for this week’s recommendation, it’s a bit unusual, in that it’s a recent IPO that got very little notice (unlike giant Uber for example), but it has a good growth story, and could even thrive in the next recession.

The last two market-driving events of 2022 arrive this week with the latest CPI data (Tuesday) and the Fed’s latest interest rate hike (Wednesday). How those numbers look versus expectations will largely determine how this week, and the rest of December, goes. To have all our bases covered, we continue to add a blend of investment types and sectors. And this week we add something we don’t currently have in the Stock of the Week portfolio: a biotech, recommended by our resident growth investing expert, Mike Cintolo.

The market’s rebound continues and our stocks, as a whole, continue to perform well. Someday, however, a correction will begin and it will pay to be alert—and to react—when it does.

In the meantime, I will keep recommending the best stocks, a system that has worked quite well in recent weeks. This week, we continue to diversify with a recommendation of a marijuana stock, a group that went through a two-plus year correction and in the process got relatively cheap.



As for the rest of the portfolio, it’s acting well and thus the only change today is a downgrade of one stock from buy to hold.



Full details in the issue.

Market volatility remains high, and the good news is that since the bottom three weeks ago, most of the volatility has been to the upside. But don’t get complacent; conditions remain ripe for a substantial pullback as the market works to raise the fear level among investors.
In the meantime, the action of the best growth stocks remains impressive, and one of the leaders, with a great story about internet security, is today’s recommendation.


As for the rest of the portfolio, it’s acting well (with a couple of very strong stocks in the mix), and thus I have no changes today.



Full details in the issue.

This has been one of the wildest earnings seasons we’ve ever seen. Plenty of leading stocks, including a few in this week’s Top Ten, have reacted strongly to their quarterly reports … but there have been a large number of stinkers, too. All these cross currents tell us one thing: Not everyone is rowing in the same direction, and there’s no need for you to take unnecessary risks until that changes. The good news about such a volatile market is that you can easily spot what stocks are resisting the sellers; should the market resume its uptrend, these are the issues that are likely to put on a spectacular show. For now, you should be holding a little cash on the sideline, while making a couple of purchases here and there during weakness. Our favorite stock of this week’s bunch is MasterCard (MA), which, admittedly, has become well known since coming public eighteen months ago. But last week’s huge earnings-related breakout bodes well, and with the market favoring big-cap, liquid stocks, MA should attract plenty of money.

Stock Name	Price	Buy Range	Loss Limit
APOL (APOL)	0.00	70-78	-
CBI (CBI)	0.00	46-50	-
IBN (IBN)	0.00	61-65	-
KGC (KGC)	0.00	17-19	-
MA (MA)	0.00	170-180	-
MOS (MOS)	0.00	63-68	-
SWN (SWN)	0.00	51-55	-
SYNA (SYNA)	0.00	54-58	-
UTHR (UTHR)	0.00	90-100	-
WG (WG)	0.00	36-40	-

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.