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There were a lot of positives that built up for the market during February and early March, but that multi-week stretch of improving evidence has certainly run into a wall—the market has taken it on the chin during the past couple of weeks, with the major indexes giving up a big chunk of their gains (the brief intermediate-term trend all-clear is gone), and more worrisome to us, nearly every stock that has run into resistance has at least stalled out, if not come unglued. We don’t believe all of the good vibes built up are out the window; this recent action could easily be part of a longer bottoming process for the market. But we never advise ignoring the evidence in front of us, so we’re pulling our Market Monitor down to a level 5.



This week’s list is heavy on some cyclicals but also some dependable growth outfits. Our Top Pick looks to be one of those, a medical firm with a few good-selling drugs on the market and sold earnings growth projections.

The market did a decent job during the prior three weeks of getting in position to flash an intermediate-term green light, but it was a case of close but no cigar, and now the sellers are back at it, with stocks essentially having a mini-crash since last Thursday. It’s vital to remain focused on the evidence, which obviously remains negative, and to honor your stops for things that are falling out of bed. Looking ahead, there’s certainly enough panic and some positives in the broad market to put in a low, but of course we have to see the buyers step up and take control before putting much capital in harm’s way.

This week’s list has a collection of decent-looking stocks—nothing is really great here, but these names are either in overall uptrends or have shown recent buying power. Our Top Pick is from the latter camp, with shares miles above their prior low and recently reacted well to earnings.

The story remains mostly the same: When it comes to rubber-meets-the-road evidence, nothing has changed—the intermediate-term trend of the major indexes remains down, and growth funds and individual stocks are in the same boat. Until some of that changes, it’s telling you the bulls are swimming upstream, so it’s best to be defensive. However, we also don’t want to ignore many secondary measures that are showing some encouraging action, including the indexes holding above their recent lows and increasingly negative sentiment. The pieces are in place for some sort of turnaround, but we’ll have to see it happen before taking action.


This week’s list is again heavy in commodity-type names, though a few other areas popped up as well. For our Top Pick, we’re going with a growth-y name that’s holding well—it’s probably the best-looking non-commodity stock in the market today.

The new bull market went into hyperdrive last week, fueled by lower-than-expected inflation and an encouraging start to earnings season. With another interest rate hike and weak Q2 earnings expectations looming in the back half of this month and beyond, there could be some speed bumps ahead. But for now, the good times are rolling, and that means taking more big swings. This week, we do so in a small-cap, Canada-based rare earths producer that is a brand new recommendation from Cabot Explorer Chief Analyst Carl Delfeld.

“Resilient” is not a word that would have described stocks in 2022, but through the first quarter of 2023, that’s precisely what they’ve been in the face of a bank meltdown, more interest rate hikes and still-high inflation. It bodes well for the back half of the year when perhaps some – maybe all? – of those worries subside. In the meantime, we have to say goodbye to a couple underperforming stocks today, while adding a growth play that lies outside U.S. borders. It’s a Mexican consumer products stock that takes advantage of Mexico’s cheap manufacturing costs – and the stock is up 22% year to date!

In our final issue of 2022, we have another Sell and three downgrades as the market ends its worst year in more than a decade with a fitting whimper. But better times are almost assuredly ahead in 2023, and with that in mind, we’re adding a mega-cap with mega-ambitions – tackling the world’s ever-expanding obesity epidemic. It’s a potentially $1.2 trillion market by 2025. And the stock has been one of the market’s few bright spots this year, up 19%. It’s a recent recommendation from Cabot Explorer Chief Analyst Carl Delfeld.

Here in mid-November, several themes are foremost in my mind. First is rotation; tech stocks are out and defense is in. Also in, as always, are underappreciated stocks, both big and small. Second is the traditional year-end selling of losers (for tax purposes) and year-end buying of winners (for window dressing purposes.) And third is the developing strength in international markets, which have been under pressure far longer than U.S. market and are thus riper to return to their uptrends.

Today, most major indexes have pulled back to nearly their early February lows, so short-term, a bounce from here would be quite normal, though longer-term, further weakness cannot be ruled out. But we don’t need to know where the market is going. We only need to know what it’s doing now—and watch carefully what our own stocks are doing—and react appropriately. Today that means selling two stocks, downgrading one to hold, and upgrading one to buy. Details inside.

The market remains in good health and trending higher, spurred on by some very impressive second quarter reports.

This week’s recommendation is a high-risk stock with high potential in the energy industry, and I’m trying to get in near a short-term low here.



As for the current portfolio, many of our stocks are hitting new highs today and there’s only one change—a downgrade of Columbia Sportswear (COLM) to hold.



Full details in the issue.

With the market under pressure because of the war in Ukraine (not to mention lurking inflationary influences), defense continues to be important.
Today the portfolio is selling two stocks and downgrading two to hold.


But there’s always something to buy, and today it’s energy stocks, as I add our third energy stock to the portfolio.


Details inside.

Welcome to the Inaugural Issue of Cabot Money Club Stock of The Month

Each month, in this advisory, we will be spotlighting a new recommendation from one of our Cabot experts. We will include an interview with the analyst and bring you his or her latest thoughts on the stock we pick as well as a summary of the analyst’s expertise and experience.

We will also include a brief market update, and a longer piece highlighting the macro industry—the pros and the cons—in which our stock pick resides.

And as is usual with our Cabot advisories, we will maintain a portfolio of our stock picks, to give you a one-shot picture of our holdings.

Welcome!

Remember the 3D printing stocks that were hot back in 2012 and 2013? 3D Systems (DDD) soared from 9 to 97, while Stratasys (SSYS) zoomed from 18 to 130. Some of the advance was certainly justified. Both companies had demonstrated their ability to grow earnings year after year, and in 2012 and 2013, both companies enjoyed many quarters when revenues boomed more than 50%. But look at the stocks today.

Markets continue to at best tread water. Yesterday, markets performed better as the Nasdaq Composite ended a seven-session streak of declines.

Kraken Robotics (KRKNF) shares were up 20% in their first week as an Explorer recommendation as the company signed a follow-on contract to supply additional KATFISH™ for the NATO Navy’s new mine hunting vessels.

This was a week to remember. The Explorer does not have any financial stocks, thankfully, though a couple of our small-cap ideas did not have a good week. Federal deposit insurance was introduced 90 years ago during the Great Depression. Ever since then, small depositors within the FDIC limit of coverage have escaped the fear of a bank failure.

It can pay to pay attention to what investment legends are doing to cope in these turbulent times.

Warren Buffett still has a knack for seeking value and a history of going to Japan to find it in times of volatility. Overall, Japan’s Topix index trades at 13.3 times expected earnings, according to S&P Global Market Intelligence. That compares with 18.9 times for the S&P 500.

Here some of the most common questions Mike Cintolo gets from the readers of Cabot Top Ten Trader.

After a very difficult September during which the S&P 600 SmallCap Index fell back to the May lows, things have finally stabilized in small-cap land over the last two weeks.

Energy stocks have been one of the main contributors lately, as have consumer staples and discretionary stocks. These guys have helped offset weakness in small-cap healthcare and tech.

The Canadian economy has outpaced America’s in recent quarters. As a result, these four Canadian small-cap stocks have been on a tear.

Over the weekend, the finance ministers of the eurozone decided on a bailout package for Cyprus. But why does this matter to us?

Here at Cabot we use indexes a lot; they’re central to our method of market timing.