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While the Cabot Emerging Markets Timer remains technically positive, there’s no doubt that all EM stocks, including many of our own holdings, have been under pressure in recent weeks. We’re taking steps today to lower our exposure by trimming a couple of stocks, but we also have a strong Korean stock to add to the portfolio.

Current Market Outlook


Today saw another rotation day, with strong selling showing up among leading growth stocks while the broad market was relatively flat and some areas (financials, energy) perking up. As usual, we’ll see if today is the start of something more pronounced; the Nasdaq bumped up against its early June highs this morning, so if the selling continues, we could be looking at an intermediate-term top. However, it’s too early to conclude that—most major indexes remain in clear uptrends, as do the vast majority of leading stocks despite a few bouts of selling in recent weeks. Thus, we remain mostly bullish, holding our winners and looking to hop on new leadership that’s emerging.

This week’s list has another batch of strong growth-oriented stocks, and encouragingly, many are new names from sectors that have recently come to life. Our Top Pick is Celgene (CELG), which looks like a big-cap leader of the new uptrend in biotech stocks.

Stock Name	Price	Buy Range	Loss Limit
Autohome (ATHM)	98.65	43.5-45.5	40-41
Celgene (CELG)	0.00	130-134	122-124
Clovis Oncology (CLVS)	0.00	88-93	82-83
Paycom Software (PAYC)	0.00	69-72	63-66
Planet Fitness (PLNT)	0.00	22.7-23.7	21.2-21.8
Red Hat (RHT)	0.00	96-100	89-91
Tesla, Inc. (TSLA)	818.87	355-375	326-330
Trivago (TRVG)	0.00	19.5-21	17-18
U.S. Concrete (USCR)	0.00	74-78	67-69
XPO Logistics (XPO)	0.00	59-62	53.5-55.5

Current Market Outlook


There are a still a couple of flies in the market’s ointment, but the past week or two has seen the market broaden out—the Nasdaq and growth stocks are still leading the way, but the S&P 500 and NYSE Composite have joined them in new high ground, and even the lagging small- and mid-cap indexes have perked up. Market-wise, then, the evidence has improved, so we’re nudging up our Market Monitor to a level 9. Just as important, though, is handling your stocks correctly—right now, many are extended to the upside, though some are just emerging while others look like great buys on any dips. Long story short, you should remain bullish, but honor your stops and continue to pick your spots on the buy side.

This week’s list has another batch of strong growth stocks. Our Top Pick is JD.com (JD), which catapulted to all-time highs a month ago on earnings and has calmly consolidated since.

Stock Name	Price	Buy Range	Loss Limit
Autodesk (ADSK)	229.00	107-112	99-102
Bob Evans Farms (BOBE)	0.00	67-70	62-63.5
Broadcom Limited (AVGO)	266.26	245-255	227-232
Graco Inc (GGG)	0.00	109-113	101-103
JD.com (JD)	39.58	38-40	35-36.5
Lumentum (LITE)	87.00	56-58	51-52.5
Marriott Vacations (VAC)	0.00	116-120	105-108
Marvell Technology Group (MRVL)	36.88	16.8-17.5	15.8-16.2
ServiceNow (NOW)	341.86	102-105.5	95.5-97.5
Weibo (WB)	98.16	73-76	66-68

The market seems to be lending itself to more bullish price action in June, and I’m looking forward to making money this month! Today’s issue brings you one new stock, and one rating changes.

The market’s main trend remains up, though there is certainly some rotation going on, with technology stocks pulling back and financials and medical stocks surging. My advice is to react slowly to these shifts, taking things on a stock by stock basis according to what the stocks are actually doing—and not assuming anything.

We’re restoring Buy ratings on a couple of stocks, and averaging up in one of them as it has begun to emerge from a multi-month rest period. That said, we’re still holding about 14% in cash given the iffy broad market and the many divergences in the market.

Today’s recommendation is a stock that you may never have heard of, and there are pros and cons to that. But it will certainly bring diversification to the portfolio, and I leave it to you to decide if the stock is right for your portfolio as well.

Despite the sting of today’s pullback that included just about the entire market, the Cabot Emerging Markets Timer is holding on to its buy signal. We’re watching the big Party Congress in Beijing and are paying attention to the flat performance of a few of our stocks over the past few months. But with good profits in many of our stocks, we’re willing to be patient as we head into earnings season.

Despite some nervous-making weakness last week, the Cabot Emerging Markets Timer has bounced back to regain its green-light status. And with our stocks acting well, the situation looks excellent, although we’re issuing the usual bull-market warnings that this can’t go on forever.