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The market’s evidence remains mostly bullish, so we do, too, but it’s a selective advance—most indexes are doing just OK, but growth-oriented stocks and sectors have put on a great show. In the near-term, there are signs of exuberance, and while that doesn’t mean you should sell your strong stocks, it is a sign to keep your feet on the ground.

In the Model Portfolio, most of our stocks are performing well, but we’re standing pat for the moment, holding about 20% in cash as we look for solid entry points in fresh leading stocks.

In tonight’s issue, we review the market, all of our stocks and even write about one growth sector that’s showing extreme power of late—we already own two of the leaders in the group, but many look great. We also touch on the sentiment backdrop, while highlighting a few potential new buys if things settle down a bit.

With the MSCI Emerging Markets Index headed steeply down since June 13, we have been moving quickly to cut our exposure and kick losers out of our portfolio. It’s not pleasant, but it’s the only way to stay profitable in a volatile sector like emerging market stocks. Today’s bounce in the markets was a welcome relief from the selling pressure, but we will discount the good news until the Cabot Emerging Markets Timer gives us the all-clear.

When the market picture gets confusing, as it often does, it pays to have some reliable indicators to depend on—rather than the guy on the evening news. So today, after a couple of weeks of market correction that have done serious damage to some leading stocks and led many pundits to ask whether we’ve seen the market top, we turn to our indicators and ask whether the bull market is truly over, and here’s what they say...

We’ve seen a bit of turbulence in international emerging markets with speculation about trade talks and the perceived slower growth in China and Europe.

Apparently, institutional investors are underweighting Europe so we go against the grain for our new recommendation. This is a great brand that offers a nice combination of high quality, value price of entry, strong growth in emerging markets and a 7.8% dividend yield.

After a well-deserved pullback during the past two weeks, the strong action this week from most major indexes and leading stocks is a good sign. Short-term, further wobbles are certainly possible after the strong nine-week advance off the market’s major bottom, but big picture, we remain very bullish and heavily invested.
In tonight’s issue, we write about a couple of simple tips for handling some off-the-bottom names in last year’s high-fliers, as well as reviewing our nine stocks and a couple others that look tempting.

The past few weeks have been choppy and challenging for many growth stocks, but we’re happy to see some of the yellow flags from last week be addressed--our Cabot Tides, which were on the fence, are again positive, and most growth stocks that dipped to support have found buyers. Of course, there remain some worries (earnings season is coming up; relatively few stocks are hitting new highs), but most of the evidence remains bullish
Tonight, in fact, we’re putting some of our sidelined cash back to work by averaging up in one stock and starting with a half-sized position in another, which will leave us with 17% cash.
In tonight’s Cabot Growth Investor, we talk about all our current holdings, highlight one beaten-down sector we’re keeping a distant eye on for a new upturn, as well as look at some little-known names that are on our watch list.

The general trend in emerging market stocks has gone from bad to worse, and we have responded by moving heavily into cash. And although this isn’t as much fun as picking out the big winners from among a stampeding herd of strong stocks, it’s the price we have to pay to play profitably in a volatile market. Today we’re featuring a relatively conservative stock that sports strong fundamentals and a tidy dividend.

The market continues to make progress, despite the dramatic headlines gracing the front page every day (and popping up online throughout the day). Today I’m adding a well-known restaurant stock to the Dividend Growth tier of our portfolio, to take advantage of rising consumer spending and the strong American economy. I also have updates on all our stocks, most of which are rated Buy, and at the end of the issue I take a look at the importance of diversification.

Current Market Outlook


Not surprisingly, we saw some selling come into the market last week, as many stocks and indexes were stretched to the upside and some near-term sentiment measures (put-call ratios, etc.) showed complacency. In the short-term, such wobbles could easily continue, as we’re seeing some bigger names get hit on decent volume. Intermediate-term, though, we’ve seen very little abnormal action among individual stocks and the trends of the major indexes are pointed up. It’s still a good idea to go slow and look for solid entry points, and don’t forget to book some partial profits on the way up. But with the evidence still bullish, we’re remaining heavily invested.

This week’s list is centered on growth ideas, including a few that have emerged after nice rest periods. Our Top Pick is Okta (OKTA), an early-stage leader that just busted loose from a three-month zone on huge volume.

Stock Name	Price	Buy Range	Loss Limit
BJs Wholesale (BJ)	36.69	29-31	27-28
Glaukos Corp. (GKOS)	67.84	59-64	51-53.5
HubSpot (HUBS)	582.89	146-152	134-137
Match (MTCH)	0.00	50-52	45-46.5
NuVasive (NUVA)	66.00	67-69.5	61.5-63
Okta, Inc. (OKTA)	148.41	68-72	58-60
Palo Alto Networks (PANW)	236.92	229-236	210-214
Ulta Beauty (ULTA)	331.95	272-283	249-254
United Continental Holdings (UAL)	96.76	84-86	78-79
Yext Inc. (YEXT)	21.32	24.5-26	21.5-22.5

The world isn’t providing much good news for emerging market stocks to build on, but the stocks themselves are doing a good job of ignoring that. This doesn’t mean that we have a new buy signal, but there are a growing number of stocks that are putting in bottoming structures and even a few making some progress. With the market looking ahead, we could start to see new leaders emerge in the next few weeks or after EM companies report their quarterly results in a couple of months. There will be plenty of bargains when the turn comes, and we’re featuring an old friend that been in the doldrums for quite a while but boasts a huge story. Read on for all the details.

Current Market Outlook


For the first time in two months, last week saw some sellers stepping up to the plate, taking profits in leading names despite some good earnings reports. And today we saw very strong selling across the board, with leaders falling sharply across the board, including many that dipped toward support. In the short-term, given the prolonged run off the bottom, more consolidation is likely, so we’re fine taking a profit (or partial profit) here or there. Intermediate-term, though, we’re still optimistic—while some of the action looks iffy, very few (if any) leading stocks or indexes have broken down at this point, and these type of sharp, scary pullbacks (assuming they find support at logical levels) aren’t unusual during bull moves. We’re knocking our Market Monitor down a notch, thinking the near-term will be more challenging, but remain overall bullish.

This week’s list has a bunch of strong names that have recently emerged, so they shouldn’t have as much pent-up selling pressures. Our Top Pick is MercadoLibre (MELI), where business is reaccelerating and the stock just came out of a big consolidation.

Stock Name	Price	Buy Range	Loss Limit
Acacia Communications (ACIA)	51.83	53-56	47.5-49.5
CoStar Group (CSGP)	589.55	450-470	420-430
Cronos Group (CRON)	17.62	20-22	16.5-1705
DocuSign (DOCU)	107.98	52-54	46-47.5
Etsy (ETSY)	112.97	66.5-69.5	60-62
Euronet Worldwide (EEFT)	142.83	130-134	119-122
MercadoLibre, Inc. (MELI)	980.83	445-465	400-415
Novocure (NVCR)	0.00	50-53	45.5-47
Universal Display (OLED)	187.54	143-148	128-131
Zscaler (ZS)	126.22	55-58	49.5-51.5

The latest issue of Cabot Marijuana Investor is now available, with my current advice on the sixteen stocks in the portfolio.

The gains so far this year, in both the sector and the portfolio, have been absolutely spectacular, but they won’t continue. Already I detect signs of a rolling correction and there’s the possibility that short-term, it could get worse. So in this issue, I have some sell recommendations, for investors who are working to develop maximum gains.

For longer-term, more patient investors, however, doing nothing is fine. The long-term prospects for both the industry and the sector remain bright.

Emerging markets (EEM) stay in a confirmed uptrend with the support of generally upbeat earnings. Investors have piled about $86 billion into emerging-market stocks and bonds this year, more than in the last nine months of 2018 combined.

We have some earnings updates and a new recommendation that actually delivers the strong e-commerce growth—a leading consumer theme of emerging markets.