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Datadog (DDOG) Drops After Q2 Results

The selloff has put a fork in our brief Cabot Tides buy signal from earlier this week, telling us the correction that began in late January isn’t over. The recent bout of weakness isn’t totally surprising given the market’s V-shaped recovery.

Alexion Pharmaceuticals (ALXN) reported positive results in a Phase 3 clinical study of ALXN1210 this morning, for treatment of Paroxysmal Nocturnal Hemoglobinuria (PNH).

It’s a very unique market environment right now. When looking at the overall market, the intermediate-term trend is basically neutral now, with most indexes a bit above their 50-day lines but firmly in the middle of their six-week ranges. That could change next week if the major indexes hold their recent gains.

Given the mixed evidence, we think the Model Portfolio is in a proper stance, with about one-third in cash, but also holding onto a bunch of attractive stocks that could be leaders of the next upturn.

2018 banking regulatory reform will lead to 2019 earnings boosts, benefiting four of our stocks.

The recent rally has been enough to turn our Cabot Tides positive, as three of the five indexes we track are clearly above their 50-day lines. That’s certainly a positive and tells us to put some money back to work.

Jacob explains how insurance stocks’ behavior when a hurricane is approaching and after it has past is similar to how earnings or drug announcements can cause big moves in other stocks.

Aerospace and oilfield service supply company KLX Inc. (KLXI) reported a strong fourth-quarter 2018 earnings beat this week (January year-end). Non-GAAP earnings per share (EPS) were $1.00 vs. the expected $0.88.

The major indexes have traded lower this week—in fact, the S&P 500 is threatening to close lower all five days this week, which would be the first time it’s done that since before the November 2016 Presidential election. Even so, the losses have been modest, in the range of 1% or a bit more.

Many of our stocks appear to be advancing this week. There are a few that I’ll be selling soon due to either valuation or upside price resistance, yet they remain excellent longer-term investments, including Alphabet (GOOGL).

Our position hasn’t changed much since the start of the week. We’re relatively cautious (though not outright defensive) and stepping lightly as we wait for the market to confirm a new uptrend for leadership to take shape.

Two of our stocks reported their latest quarterly results yesterday and both disappointed; one is now rated Sell.

The iShares EM Fund (EEM) bounced strongly in early March, which returns the Emerging Markets Timer to a positive reading. Granted, it’s not the strongest signal we’ve ever seen, but it counts. Quarterly reports are winding up, and we’ll take the Timer’s advice and return one stock to a Buy rating.

The most basic version of a bullish risk reversal is selling an out-of-the-money put and buying an out-of-the-money call. However, you can execute this type of trade with in-the money, or at-the-money options as well.

Cabot analyst Tyler Laundon writes the introduction to this week’s update. Unsurprisingly, it related to small-cap stocks, which is Tyler’s focus in Cabot Small-Cap Confidential. One rating change.

Three of our stocks reported fourth-quarter 2017 results this morning.

I spent a good portion of this past week working on my 2018 Small-Cap Outlook. We’ll be publishing that soon, but I wanted to share a few thoughts from it today, starting with my year-end target for the S&P 600 Small Cap Index.

The iShares EM Fund (EEM) is well on top of its moving averages, which keeps the Emerging Markets Timer remains firmly positive. We have one change tonight.

The stock market remains hot, and while a pullback is always possible, the trend is firmly up. A lot of stocks are overextended short-term though, including some in our portfolio, so don’t be afraid to take partial profits where you have them, and be selective on the buy side.