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Current Market Outlook


With the broad market zooming, finding strong stocks is easy these days. But while buying any strong stock might work, your best odds will come from buying strong stocks that have set up well. That means they have a base, where supply and demand have stabilized for a while, or they have a breakout, which can kick off a new advance, or other supportive patterns. What you don’t want to do in a market this strong is buy (or own) laggards. Make hay while the sun shines! (And take advantage of what are traditionally the two last months in the market’s favorable November-April season.)

Our Top Pick this week is WABCO Holdings (WBC), a global supplier of technology systems for commercial trucks, buses and trailers. Business is booming and the stock has great and growing sponsorship.

Stock Name	Price	Buy Range	Loss Limit
WABCO Holdings (WBC)	0.00	116-118	103-105
Norwegian Cruise Lines (NCLH)	0.00	47.5-49.5	43-43.5
IntercontinentalExchange, Inc. (ICE)	0.00	230-236	220-222
Hilton Worldwide Holdings (HLT)	0.00	28-29	26-26.5
Salesforce.com (CRM)	0.00	68-70	60-62
Cracker Barrel Old Country Store (CBRL)	0.00	149-152	133-136
Cavium (CAVM)	0.00	68-70	62-64
Acuity Brands (AYI)	0.00	155-160	144-146
Akorn (AKRX)	0.00	51-53	46-48
Agrium (AGU)	0.00	110-114	104-106

Current Market Outlook


Along with heaps of snow in the Northeast, February has brought a marked change in character for the general market—the major indexes have moved into new high ground (led by the growth-oriented Nasdaq Composite), and individual stocks have done the same. In the short-term, we have seen a little giddiness take hold, which could easily lead to some potholes and shakeouts. But there’s no doubt that the intermediate-term evidence remains bullish, so we believe dips will present good buying opportunities.

This week’s list has an interesting mix of volatile glamour stocks and bigger-cap companies that are under accumulation. There are many attractive charts, but our Top Pick is CommScope (COMM), a telecom play that’s super-strong after a recent, game-changing acquisition.

Stock Name	Price	Buy Range	Loss Limit
Zillow (Z)	76.64	115-122	106-109
VeriSign (VRSN)	190.71	62-64	58.5-59.5
Vipshop Holdings (VIPS)	14.25	24.5-26	22.5-23.5
Ultimate Software (ULTI)	0.00	162-166	152-154
Sony Corp. (SNE)	0.00	25.5-27	23-24
Molina Healthcare (MOH)	0.00	60-63	55-57
Marathon Petroleum Corporation (MPC)	0.00	100-104	92-93
FireEye (FEYE)	0.00	41-43.5	37.5-38
CommScope (COMM)	0.00	28.5-30.5	26-26.5
Berry Global (BERY)	64.22	33-34.5	30-31

Current Market Outlook


The market has been shaking and baking during the past three weeks on lots of headline (mainly currency-related) news, but while there has been some damage, the major indexes are holding key support and relatively few stocks have fallen apart. Of course the evidence can change at any time, and if the market really breaks down, we’ll turn cautious. But, despite the whippy day-to-day action, we’re sticking to our bullish stance, and believe holding your best performers, and even doing a little buying at opportune times, will prove fruitful.

This week’s list is once again heavy on the medical and retail sectors, though there are a few other tempting ideas out there, too. Our Top Pick is Urban Outfitters (URBN), which has come back to life after a long period out of the limelight.

Stock Name	Price	Buy Range	Loss Limit
WisdomTree (WETF)	0.00	20-21	18-19
Vulcan Materials Company (VMC)	137.10	80-83	75.5-76
United Therapeutics (UTHR)	0.00	164-168	158-160
Urban Outfitters (URBN)	0.00	43.5-45	38-39
SunEdison (SUNE)	0.00	22.5-24	20.5-21
IPG Photonics (IPGP)	0.00	96-99	87-89
Horizon Therapeutics (HZNP)	49.89	21-23	19-19.5
GrubHub (GRUB)	140.03	42-44	39-39.5
Foot Locker (FL)	0.00	59-62	56.5-57
American Eagle (AEO)	0.00	16.5-17.5	15-15.5

Current Market Outlook


Most major indexes have recouped a bit more than half of what they lost in the recent two-week plunge and are now standing above or just below their 50-day moving averages—so what happens from here will be vital. A continued rally would turn the intermediate-term trend positive and tell us to become more aggressive, but renewed weakness would be a sign that the sellers are still lurking. Meanwhile, it’s hard not to be encouraged by the action of leading stocks, many of which have rebounded nicely, with some (including a few in this issue) pushing to all-time highs. We’re nudging our Market Monitor back to neutral, and will take our cues from the market and leading stocks in the days ahead.

This week’s list is the second straight that’s featured a bunch of resilient growth stocks, which tells you where big investors are putting money to work. Our Top Pick is Weibo (WB), the Chinese social media giant that broke out to new highs last week.

Stock Name	Price	Buy Range	Loss Limit
HubSpot (HUBS)	582.89	102-106	93-96
Okta, Inc. (OKTA)	148.41	32-34.5	30-31
Paycom Software (PAYC)	0.00	90-95	83-86
Sangamo BioSciences (SGMO)	0.00	21.5-23.5	18.5-20
Shopify (SHOP)	585.00	130-138	117-123
SolarEdge Technologies Inc. (SEDG)	124.37	42-45	39-40.5
Steel Dynamics (STLD)	0.00	47-49	43-44
Weibo (WB)	98.16	130-135	112-117
Workday (WDAY)	194.88	119-124	110-113
Yandex (YNDX)	0.00	40-41.5	36.5-38

Tom Hutchinson, Chief Analyst of Cabot Dividend Investor, Cabot Income Advisor and Cabot Retirement Club discusses investing for retirement.

Current Market Outlook


If we came down from another planet and looked at the state of the market, we would conclude that there are more things for the bulls to be excited about than not—few stocks have broken down, the indexes are above their 50-day lines and the major trends are still up.

But we’ve been around for the past month, and we know there’s clearly been an increase in distribution as investors fret over the reverberations of the oil price plunge. At the very least, not a lot of money has been made since mid-November. And that’s the reason we’re taking our foot off the gas; if the market and most stocks hold support, we’ll be quick to return to a more bullish stance, but for now, we think it’s best to do some watching and waiting, and possibly sell your weakest stock or two (and take partial profits in a winner or two).

This week’s list is more growth oriented than in recent weeks as investors abandon all things commodity-related. Our Top Pick is Restoration Hardware (RH) which has a great growth story and just broke out to new highs last week.

Stock Name	Price	Buy Range	Loss Limit
United Continental Holdings (UAL)	96.76	62.5-64.5	58-59
Sierra Wireless (SWIR)	0.00	39-41	37-38
RH Inc. (RH)	252.93	91-95	84-85
Outerwall Inc, (OUTR)	0.00	70-73	63-64
Lululemon Athletica (LULU)	304.69	50-52	45-47
Fiesta Restaurants (FRGI)	0.00	61-63	58-59
Dollar Tree (DLTR)	0.00	66-68	60-62
Centene (CNC)	0.00	99-102	90-92
Buffalo Wild Wings (BWLD)	0.00	164-170	152-154
Adobe Inc. (ADBE)	315.23	73-75	66-68

Current Market Outlook


The market’s meltdown today cracked the intermediate-term uptrend that got going back in January, with all major indexes (and many leading stocks) closing well below their 50-day lines today. Big picture, we still see this as a bull market, so we’re still OK holding most of your shares in your strong, profitable stocks; encouragingly, despite taking on water, many stocks are still hanging in there. That said, you also shouldn’t be complacent—after four months with no meaningful pullbacks, it’s likely (not for sure, but likely) the market needs more than six trading days to consolidate the January-April advance. In a nutshell, you should keep tight stops in place on losers and laggards, give your profitable names a bit more rope and, on the buy side, be very selective and/or keep positions small. We’re moving our Market Monitor down to a level 5.

Interestingly, this week’s list is very heavy on growth-y names despite the market’s plunge. Our Top Pick is Match.com (MTCH), which has a great long-term story, and the stock has re-emerged after earnings.

Stock Name	Price	Buy Range	Loss Limit
Avalara (AVLR)	102.00	64.5-67.5	56-58
HubSpot (HUBS)	582.89	170-175	157-160
Lithia Motors Inc. (LAD)	146.30	107-111	97-100
Match (MTCH)	0.00	66-69	58-60
PayPal (PYPL)	147.00	105-107.5	98-100
Roku, Inc. (ROKU)	150.46	74.5-77.5	64.5-66
Tandem Diabetes (TNDM)	74.77	60-63	54-55.5
Teradyne (TER)	82.83	44.5-46.5	42-43
TopBuild (BLD)	111.00	77.5-81	70-72
Woodward (WWD)	111.91	105-108	95-97

Current Market Outlook


The downtrend continues, with the major indexes extending their latest leg lower, with most reaching new lows this morning and some (like the S&P 600 SmallCap) falling more than 20% from their all-time peaks. We continue to keep a very open mind, especially given the horrific sentiment environment that’s emerged—various measures tell us investors are beginning to throw in the towel, which, combined with the fact that we still see many resilient growth stocks means it wouldn’t shock us to see another rally attempt unfold. But that’s speculation at this point—with the trends pointed down for the market and most stocks and sectors, you should remain in a defensive stance, with most of your portfolio in cash and, if you buy, buying just small positions.

This week’s list is another that’s full of stocks we think can do very well if the market can get going. Our Top Pick is Tableau Software (DATA), one of the strongest growth stocks in the market today as big investors buy into its transition to the cloud.

Stock Name	Price	Buy Range	Loss Limit
Ciena (CIEN)	44.25	32-33.5	29-30.5
Cree, Inc. (CREE)	67.96	42-44	39-40
CyberArk (CYBR)	111.74	68-71	63-64.5
Franco-Nevada (FNV)	125.51	69.5-72	63-64
MarketAxess (MKTX)	439.96	213-218	200-204
PayPal (PYPL)	147.00	82.5-85	77-78
Pinduoduo (PDD)	87.53	21-22.5	17.5-19
Tableau Software (DATA)	126.42	116.5-121	107-109
Twilio (TWLO)	183.39	85-89	75-77
Twitter (TWTR)	40.37	32-34	29-30.5

There’s little doubt the market’s evidence has worsened of late, with our Cabot Tides and Two-Second Indicator re-joining the Cabot Trend Lines on the bearish side of the fence; thankfully, we went slow on the buy side in July and early August, and today, stand with about 65% in cash. But we’re also not completely in the storm cellar, as we still see signs the market could be in a bottoming effort (and in-between phase between bear and bull), so we’re happy to hold onto some resilient stocks and aim to nibble on potential leaders if the market can find its footing.


In tonight’s issue, we dive further into our thoughts on the market, but spend most of the time writing about future leaders, including a few from one sector that’s clearly in pole position to do well if the bulls can step up to the plate

Thank you for subscribing to the Cabot Turnaround Letter. We hope you enjoy reading the November 2022 issue.

At it most basic, investing is a mental game supplemented by a calculator. Our articles use one or both aspects to find attractive investing ideas.

Our first group covers enduring companies with out-of-favor stocks with theses well supported by a calculator. Our other articles discuss companies with deeper issues but whose shares have been so heavily sold that their risk/return trade-offs are highly attractive, even if their theses rely less on a calculator and more on pure contrarian instincts.

Our feature recommendation this month is a high-quality, well-capitalized bank that emphasizes credit card loans

The bull market remains alive and well, and I continue to recommend that you be heavily invested in a diversified portfolio of stocks.

Last week’s recommendation was well-known Coca-Cola (a true value stock) while this week’s is a fast-growing company that’s never made a profit, but is expected to make bundles, someday. You know its name too!



As for our current portfolio, most trends are good, but we do need to sell one stock, just to keep the portfolio at twenty stocks. That’s a process that ensures we always own the best!

The evidence for the overall market continues to improve; over the past week, two blastoff indicators have turned green, which should bode well when looking out over the next few months. Growth stocks, however, remain in a consolidation phase following some huge runs, with many (not all) stocks sagging back during the past week or two. Overall, though, the pullbacks have been normal, so we remain optimistic, though we’re still stepping slowly and looking for decent entry points.

In tonight’s issue, we’re doing a touch more buying, filling out a position in one of our stocks, following the addition of a full position last week. That will leave us with around 18% in cash.

Current Market Outlook


Trend following is our preferred method of market timing for two major reasons: If you follow the system, you’re guaranteed never to remain heavily invested in serious downtrend, and you’re also guaranteed never to miss out on a major uptrend. We’ve seen that play out in recent months—our Market Monitor shifted to neutral in mid-November and to bearish at the start of January, and we continue to advise a defensive stance as the market remains under pressure. We do think stocks could snap back some in the short-term, partially because the broad market isn’t in nearly as bad shape as it was on January 20, when the indexes initially dipped to these levels. But, bounce or not, it’s best to stick with the system, which means remaining defensive until the intermediate-term trend turns up.

This week’s list is a hodgepodge of stocks and sectors, but we feel many can do well once the market finds its footing. Our Top Pick is Michael Kors (KORS), which, after a multi-month bottoming effort, reacted well to earnings last week as results weren’t as bad as feared. The stock is dirt cheap, too.

Stock Name	Price	Buy Range	Loss Limit
Vantiv (VNTV)	0.00	43.5-45.5	41-42
Vulcan Materials Company (VMC)	137.10	86.5-90	81-82
Super Micro Computer (SMCI)	0.00	29-31	26-27
PayPal (PYPL)	147.00	32-34	29-29.5
Universal Display (OLED)	187.54	40-43	37-38
Newmont Mining (NEM)	57.31	23.5-25	21.5-22
Mattel, Inc. (MAT)	0.00	30-31	28-28.5
Michael Kors Holdings Limited (KORS)	73.22	47.5-50.5	43-44
First Solar (FSLR)	83.74	62-64	57.5-58
Agnico Eagle Mines (AEM)	79.05	31-33	28-28.5

Current Market Outlook


First, the good news: By last week’s end, the major indexes had extended their bounce, with many recouping about 45% or more of their December 29-January 20 meltdowns. And this bounce probably has further to run, especially as earnings season has helped a few stocks show excellent strength. All of that said, the onus remains on the bulls to prove this bounce can morph into a sustained rally—the intermediate- and longer-term trends are still pointed down for all indexes and the vast majority of stocks, and to this point, most of the “action” has been in defensive and interest rate-sensitive sectors (utilities, REITs, tobacco, etc.). That can always change, and we hope it does, but right now it’s best to remain defensive and allow the market to prove itself on the upside.

This week’s list contains some turnaround situations, but we’re encouraged to see some real growth stocks as well. And the Top Pick this week is the flag-bearer for all growth stocks—Facebook (FB) is well owned, but remains one of the best stories around, and last week’s earnings report revealed accelerating growth.

Stock Name	Price	Buy Range	Loss Limit
TAL Education (XRS)	0.00	45-47	41-42
Under Armour (UA)	0.00	80-83	74-76
T-Mobile US (TMUS)	0.00	38-40	35-36
SolarEdge Technologies Inc. (SEDG)	124.37	27-29	24-24.5
Facebook, Inc. (FB)	0.00	110-115	102-103
Diamondback Energy (FANG)	0.00	70-74	63-64
Dollar Tree (DLTR)	0.00	78-81	72-73
Cirrus Logic Inc. (CRUS)	0.00	33-35	30-30.5
Align Technology (ALGN)	316.20	64-67	61-61.5
Barrick Gold (ABX)	0.00	9.5-10	8-8.5

Current Market Outlook


The market bounced back nicely last week, though the major indexes are still in no-man’s land, sitting in the middle of their two-month ranges, and with many stocks still hovering just south of new highs as earnings season gets underway. We have seen a couple of rays of light (growth stocks are showing a hint of outperformance this month, which is a good thing), but overall, the environment remains on the edge—decisive upmoves by the indexes and breakouts from leading stocks would be bullish, while a move below support and a bunch of downside earnings gaps would be bearish. For now, we’re keeping our Market Monitor neutral, but we’ll let you know if we see a sustained trend getting underway.

This week’s list contains a couple of recent earnings winners, as well as a couple of others that shot to new highs on big volume last week. Because of the market environment, our Top Pick will be a slower, but surer, play—Starbucks (SBUX) isn’t going to double, but it’s just the type of mega-cap name that institutions can pile into following a great quarterly report.

Stock Name	Price	Buy Range	Loss Limit
Zebra Technologies (ZBRA)	154.94	81-84	75-76
WisdomTree (WETF)	0.00	17-18	15.5-16.5
Ulta Beauty (ULTA)	331.95	132-137	122-124
United Continental Holdings (UAL)	96.76	68-71.5	61-62
Starbucks (SBUX)	64.49	85-88	77-78
Royal Gold, Inc. (RGLD)	129.66	72-74	65-67
Janus Capital (JNS)	0.00	17-18	14.5-15
Dexcom (DXCM)	421.36	58-61	54-55
Dollar Tree (DLTR)	0.00	68.5-70.5	64-65
Agrium (AGU)	0.00	101-105	94-95

Current Market Outlook


A lot has changed since our last issue two weeks ago! Most important of all is the “blast-off” or “volume thrust” signal that came from two consecutive days (December 17 of 18) of very broad and powerful upside market action. It was strong enough to erase any lingering negative technical action, setting the stage not only for a nice Christmas rally but also the traditionally solid start to January that we expect. Thus our Market Monitor is now solidly back in the green bullish zone. So what to buy? Not oil stocks; it’s better to focus on what’s going up! Today’s issue brings a diverse group of both big old companies and younger faster growers, and all of them have great potential, but our Top Pick is Freescale Semiconductor (FSL), a chip manufacturer that has great potential to benefit from the boom in machine-to-machine (MTM) communication.

Stock Name	Price	Buy Range	Loss Limit
Whirlpool (WHR)	0.00	184-193	173-175
Taser (TASR)	0.00	25-26.5	23-24
Swift Transportation (SWFT)	0.00	27.5-29	25-26.6
RockTenn (RKT)	0.00	59-61	55-56
Red Hat (RHT)	0.00	69-71	66-67
ServiceNow (NOW)	341.86	67-70	62-63
Hawaiian Holdings Inc. (HA)	0.00	22.5-24	19-20
Freescale Semiconductor (FSL)	0.00	24-25	21-22
Bluebird Bio (BLUE)	0.00	83-87	75-77
Broadcom Limited (AVGO)	266.26	98-101	93-94

Current Market Outlook


Not much changed with the market last week, as the major indexes finished up a fraction of a percent, remaining in the trading range of the past three months. That said, there’s no doubt that individual stocks are acting better, especially the liquid leaders that are generally a good barometer of institutional sentiment. Not only are most well-traded growth stocks holding firm, some have actually emerged to new highs on earnings. We’re not ready to change our Market Monitor yet (the intermediate-term trend remains slightly negative and there are tons of earnings reports this week), so it’s best to pick your spots on the buy side, hold some cash and practice patience with your resilient performers.

This week’s list has a bunch of good-looking charts from a variety of industries. For our Top Pick, we’ll go one of the liquid leaders that’s just emerged.PayPal (PYPL) exploded out of a 15-month base last Friday on its heaviest volume since the day of its IPO. We think it’s buyable here or on dips.

Stock Name	Price	Buy Range	Loss Limit
Copa Holdings (CPA)	0.00	93-89	85-84
Domino’s Pizza (DPZ)	339.47	165-160	151-148
FMC Technologies, Inc. (FTI)	0.00	32.5-31	29.5-29
HDFC Bank Limited (HDB)	0.00	75-72	68-67
ICON plc (ICLR)	0.00	84-82	77-76
Match (MTCH)	0.00	19.5-18.5	17-16.5
Netflix, Inc. (NFLX)	423.92	127-123	112-110
PayPal (PYPL)	147.00	44-42	40.5-39.5
Steel Dynamics (STLD)	0.00	26.5-25.5	23.5-23
Zayo Group (ZAYO)	0.00	31.5-30.5	29-28.5

Current Market Outlook


After a hot and heavy few weeks, the growth stock sellers came out of the woodwork during the past two days, driving many down sharply to support. What happens from here will tell the tale in our view—if most growth stocks hold up in this vicinity or push nicely higher, then the odds will favor this being another shakeout. But should we see a weak bounce (or, worse, no bounce), then it’s likely growth stocks will be entering a longer consolidation following their heady runs. We’ll see how it goes, but right now, you should honor your stops and maybe even take a couple of partial profits if you haven’t recently. As for buying, we’re OK with it, but look for stocks near support and keep new positions small.

This week’s list has far more non-growth ideas, which have found some buying in recent days. Our Top Pick is Penn National Gaming (PENN), which is part of a strong group and looks relatively early in its overall advance.

Stock Name	Price	Buy Range	Loss Limit
Abiomed (ABMD)	0.00	136-139	128-131
Berry Global (BERY)	64.22	56.5-58	52-53
CBOE Holdings (CBOE)	0.00	87-90	81-83
Grand Canyon Education (LOPE)	121.03	77-80	70-72
Hancock Holding (HBHC)	0.00	49-51	45-46
ILG Inc. (ILG)	0.00	24.5-26	22-23
Penn National Gaming (PENN)	45.38	20.3-21.3	18.7-19.4
Sherwin-Williams (SHW)	526.09	340-350	320-325
Terex (TEX)	0.00	35.5-37	32.5-33.5
Workday (WDAY)	194.88	94-98	87-90

The market still has many of the same issues that have been hanging around for weeks, including an extreme narrowness, with the vast majority of the market struggling while mega-cap indexes do pretty well. Even so, we do think the evidence has taken a step in the right direction -- the AI boomlet is a positive sign, and many non-AI leaders acted well in May and have rested normally since. We’re not flooring the accelerator, but given our monstrous cash position, we’re dropping a couple more lines in the water tonight, adding two half-sized stakes in old favorites.

Elsewhere in tonight’s issue, we give our thoughts (and some ideas) within the AI advance, write about a long-term growth area that could be re-emerging and, as always, go over our stocks, an expanded watch list and some other new ideas to chew on.

It’s turning out to be a typical volatile January, with last week’s harsh selling among leading stocks leading to this week’s strong snapback that’s seen many leaders (including a few names we own) roar back to new high ground. That’s not to say the wobbles are over--in fact, we’d half-expect some more wiggles given earnings season is just getting started. But overall, things are volatile, but still bullish, so while we’re not flooring the accelerator, we are staying positive.


Last week, we sold half of one stock and placed another on Hold, but tonight, we’re going to start a new half-sized position in an old (from last year) favorite that we think got derailed mostly by the market environment last summer and fall--and now looks poised to do well if the market holds together.