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Current Market Outlook


The big-cap indexes are looking better and better, with the S&P 500 and Nasdaq rocketing above their 200-day lines last week on the back of some bullish earnings reports. That said, not all is hunky dory—mid- and small-cap indexes continue to languish, the number of stocks hitting new 52-week lows is actually picking up and many stocks near their highs are still just biding their time. All in all, we’re still cautiously optimistic but we’re also sticking with our relatively neutral stance—it’s fine to take a shot at a few good set-ups, but honor your stops and keep some cash on the sideline until we see more leadership emerge, possibly on earnings during the next couple of weeks.

This week’s list has a wide array of stocks and sectors, including a few recent earnings winners. For our Top Pick, we’re going to go where the strength is—Delta Air (DAL) isn’t changing the world, but earnings are huge and the sector is acting very well.

Stock Name	Price	Buy Range	Loss Limit
Netgear Inc (NTGR)	0.00	38.5-41	35-36
Lennox International (LII)	270.56	124-128	113-114
General Motors Company (GM)	0.00	33.5-35	31.5-32
Facebook, Inc. (FB)	0.00	98-103	91-92
Euronet Worldwide (EEFT)	142.83	77-80	73-74
Delta Air Lines (DAL)	54.28	48-51	44.5-45
Cavium (CAVM)	0.00	69.5-72	63-64
Acuity Brands (AYI)	0.00	200-209	188-190
Athenahealth (ATHN)	0.00	145-153	135-137
Agnico Eagle Mines (AEM)	79.05	27-28.5	25-26

The most popular column I’ve written (judging by the volume of your responses) was published nearly three months ago (March 13). The topic was health care, a subject of increasing attention by President Barack Obama these days. So today I’m going to tackle it again--focusing on the cost of healthcare and what can be done about it in the future. I’m also including a couple more letters from readers that came in too late to be included in the original reader-response issue.

A sizzling summer for stocks has delivered some strong returns for investors, though not all sectors have enjoyed the ride. In fact, seven of the 11 S&P 500 sectors have underperformed the benchmark index’s 8% return so far this year. As a result, there’s plenty of value still out there. So today, we set our sights on of those underperforming sectors: consumer staples. While the sector hasn’t trailed the market as much as a few others, we’ve found a usually steady, reliable stock that just touched five-year lows despite reporting record sales. The company dates back to the 1800s, and is a brand everyone knows – and has likely been in your house, your parents’ house, your grandparents’ house and your great-grandparents’ house. And now it’s on sale.

Details inside.

One of the most encouraging signs I see in the market is the action of many potential leading stocks. There are more than a handful that are hanging in there despite the market’s woes. And there are a few that have actually broken out on the upside! A group that has broken free is one that I pointed out to you in my last Cabot Wealth Advisory (dated January 5)--education stocks.

Micro-cap stocks can sometimes be volatile due to lower trading volumes, but these three companies are built for the long term.

Creating a diversified retirement portfolio will help you save more money over the years while adding a layer of stability to your life.

What is a 529 plan? You can use this plan for creating a college fund for your child while saving money in the process.

The U.S.-China rivalry has massive global implications that will affect world politics and your portfolio for years to come, so it’s important to learn how you can profit from it.

Small-cap value stocks have underperformed both their growth peers and large-cap stocks for years. We don’t know if that will change going forward, but this value stock is intriguing regardless.

Small-cap value stocks have been an underperforming asset class for years, but a few individual names are worthy of closer looks.

Summer stasis has taken hold of the market as it often does this time of year, with the S&P 500 virtually unchanged (+0.3%) since the calendar flipped to July. Considering stocks entered the month at all-time highs despite a slew of existential threats (tariffs, high interest rates, two major overseas wars, etc.), holding the line counts as a victory.

Will it last? I’m guessing we’ll get a pullback of some kind – probably at least 5% – sometime in the next couple months, perhaps not until just after Labor Day, when institutional investors and hedge funder types return from their summer getaways in the Hamptons and Martha’s Vineyard and start selling out of their long-neglected weakest positions (a major reason why September is by far the worst month for stocks, historically).

Warren Buffett isn’t concerned about the market’s slow start this year. “What’s happened in the last 30, 45 days is really nothing,” the Oracle of Omaha said at Berkshire Hathaway’s annual shareholder meeting last weekend. In the grand scheme of market history, he’s right.

Few industries were more negatively impacted by Covid than the cruise industry. And few have come roaring back faster in Covid’s wake. And yet, share prices haven’t kept up with the record sales and passenger numbers. So today, we recommend a major cruise-industry stock that has the largest disparity between sales and earnings growth and share price growth. We also have updates on all our existing stocks as investors mercifully put a historically choppy April for the market in the rear-view mirror and flip the calendar to what will hopefully be a far more fruitful May.

Details inside. Enjoy!

The market’s tectonic plates are shifting.

Last week, I wrote that big tech – namely, the top 20 stocks in the S&P 500 by market cap – had led the way as the market emerged from a sharp late-March/early-April downturn and stretched to new all-time highs earlier this month. Now they’re retreating, with growth stocks – as measured by the Investors’ Business Daily 50 (FFTY) – off roughly 8% in the last week, with some big names (CRWV, -55%; PLTR, -22%; APP, -17%; SMCI, -31%, etc.) plummeting much further than that.

The bull market has become top-heavy again.

Since the early-April lows, the top 20 stocks in the S&P 500 by market cap – nearly all of which are in the technology sector, and fueled in some way by the artificial intelligence bonanza – are up an average of 40.6%, versus a net gain of 27.9% for the index itself in that time, according to DataTrek Research co-founder Jessica Rabe.

Remote work has disrupted the employment landscape and appears to be here to stay; it’s also reshaped real estate as more and more workers are now untethered from the office. This month, let’s dive into how to take advantage of better affordability by relocating, moving for your lifestyle and not your employer, and what states will actually pay you to relocate.