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There are a few yellow flags out there, from short-term sentiment measures to a weakening broad market (our Two-Second Indicator is again unhealthy), but the trend of the major indexes is firmly up, and the action of growth stocks has been terrific, including a bunch that have surged on earnings in recent weeks.

We’ve been writing for months that the market’s next big move was likely up, and it now looks like that upmove could be underway, with the major indexes in uptrends, our market timing indicators looking good and little selling pressure recently despite a good run. Short-term, a dip wouldn’t be shocking to see, but the path of least resistance finally appears to be up.

The market had a nice run in October, with the Dow Jones Industrial Average gaining 14% for the month.

The economy continues to look pretty good, with manufacturing steady, construction spending up, and employment still healthy, despite a 200-basis point increase in the unemployment rate, now 3.7%.

The Federal Reserve once again boosted the Fed Funds rate by 0.75% this month, which the markets had already built in. Right now, it looks like Fed Chair Jerome Powell may target rates even higher than the 4.5-4.75% initially projected, but the rate increases might come in smaller doses.

Stocks keep rising to new highs, though only a handful of sectors are truly participating in the rally. That will need to change if the market is to sustain its recent momentum, but for now, we’ll go with the tides and lean into one of the new-age subsectors that’s been attracting major sponsorship: GLP-1, a.k.a. weight-loss drugs. They’re all the rage these days and have driven portfolio holdings Eli Lilly (LLY) and Novo Nordisk (NVO) to great heights. And today, we add a more under-the-radar, indirect play on the trend in the form of a mid-cap health food upstart that was recently recommended by Tyler Laundon to his Cabot Early Opportunities audience.

Details inside.

A few days ago, I reviewed the price charts on the 59 stocks in my “Waiting in the Wings” list – a list of undervalued growth stocks that I might add to these portfolios at some point. What really struck me was that less than 15% of them have attractive price charts right now.

Current Market Outlook


After two weeks of dreadful action, the perfect storm crashed down on Wall Street this morning, with imploding oil prices and more virus/economic fears causing a panic, though the damage was limited after the open. Short-term, today brought many truly extreme readings (more than 2,800 stocks hit new lows on the NYSE and Nasdaq combined!), so short-term, some sort of bounce or relief rally is possible (even probable). That said, (a) the nature of this decline has been breaking some rules, so there are no sure things, and (b) our focus remains on the intermediate-term, where the trends of just about everything are pointed down. Thus, while we’re keeping our eyes open, we’re focusing mostly on capital preservation and hunting for the potential big winners for the next uptrend.

This week’s list is a great place to start, whether you’re building a watch list or looking to nibble. Our Top Pick is Vipshop (VIPS), which is one of many Chinese stocks that is acting very well.

Stock Name	Price	Buy Range	Loss Limit
eHealth (EHTH)	122.74	125-133	105-108
Etsy (ETSY)	112.97	54.5-57	48.5-50.5
Everbridge (EVBG)	107.90	102-107	91-93
GSX Techedu (GSX)	97.59	38-41	32-34
iRhythm Technologies (IRTC)	51.15	86-89	78-80
Newmont Mining (NEM)	57.31	46-48	42.5-44
Teladoc, Inc. (TDOC)	127.95	123-130	105-108
Tradeweb Markets (TW)	51.44	45.5-47	42-43
Vipshop Holdings (VIPS)	14.25	16-17.5	13-14
ZTO Express (ZTO)	28.84	25.5-26.5	23-23.5

Current Market Outlook


The market continues to gyrate wildly, gapping up or down based on the news of the day. In the short-term, the indexes (and most stocks) have etched out a little trading range, and that could continue for a while longer. But the main trend remains down, so you should be using these bounces as a chance to unload any broken stocks and raise cash if you’ve yet to do so. On the buy side, we are starting to see the wheat separate from the chaff, but it remains too early to put any big money to work; a couple of small positions is fine, but we suggest focusing mostly on preserving capital for the next sustained run—that’s when the big money will be made.

This week’s list includes with some recently strong themes (medical, construction and retail), including a couple of recent IPOs. Our Top Pick is one of those newly-public firms—Planet Fitness (PLNT) has a good story and the stock has shown solid relative strength since coming public.

Stock Name	Price	Buy Range	Loss Limit
Signet Jewelers (SIG)	0.00	135-140	125-127
Post Holdings (POST)	0.00	63-65	59-60
Planet Fitness (PLNT)	0.00	17-19	15-16
PDC Energy (PDCE)	0.00	53-56	48-49
Medicines Company (MDCO)	56.98	38-41	34.5-36
Lululemon Athletica (LULU)	304.69	64-66	60-62
JetBlue Airways Corporation (JBLU)	0.00	23-24	21-21.5
TopBuild (BLD)	111.00	32-34	29.5-30
Anacor Pharmaceuticals (ANAC)	0.00	125-132	118-120
AMN Healthcare (AHS)	0.00	33-35	31.5-32

The election is over. The biggest risk, a disputed outcome, has been avoided. The new President is being viewed by markets as generally good for business and stocks. The market is thrilled today and rallying substantially.

The options market can tell you a lot about what to expect during earnings season. Here’s what it’s saying about these three upcoming reports.

Current Market Outlook


First off, a heads up: Our offices will be closed Thursday and Friday, and next week is one of the two scheduled weeks that we take a break from Top Ten all year. We’re likely to send a brief update this Wednesday with updated stops, but after that, your next update will come Friday, December 4. Have a great long weekend!

As for the market, there remain a couple of flies in the ointment (the Nasdaq still hasn’t reached a new high; sentiment is a bit bubbly), but it’s fair to say the recent action has been constructive, with leading stocks avoiding another bout of selling so far and more individual names perking up. You should still go slow, but we’re increasingly optimistic.

This week’s list has a wide variety of names (big, small, growth, cyclical) that are all finding strength, another good sign for the market. Our Top Pick is Halozyme (HALO), which acts powerfully and has terrific metrics. Try to buy on dips.

Stock Name	Price	Buy Range	Loss Limit
Alcoa (AA)	19.82	18.3-19.7	15.2-16.2
Bilibili (BILI)	63.31	57.5-60.5	51-53
Celsius Holdings (CELH)	33.73	31.5-34	25.5-27.5
Halozyme Therapeutics (HALO)	40.00	38.5-41	33.5-35
Huazhu Group (HTHT)	51.33	49.5-51	44.5-45.5
II-VI Incorporated (IIVI)	66.45	61-64	54-56
Inspire Medical Systems (INSP)	183.30	172-182	150-155
Moderna (MRNA)	100.92	95-98	84-86
Omnicell (OMCL)	106.80	100-104	90-92
Sonos (SONO)	21.41	20.5-22	17-18

“Jacob, thanks for the great steering advice you give. I have been very happy with your service and look forward to a long and prosperous relationship. Keep up the good work.”

J. Adams, Lubbock, Texas

Fourth quarter 2019 earnings season began yesterday with a few large banks reporting very strong results.

In this month’s issue of Cabot Turnaround Letter, I recommend a company I’ve been fond of all the way back to 7th grade. It’s a household name, but one that’s perhaps been forgotten on Wall Street in recent years. But now, it looks primed for a turnaround.

Details inside.

Another interest rate hike and negative second-quarter earnings growth have done little to slow the bull market rally or investor confidence, so this week we add a “Bull Market Stock” to take advantage of the strength. It’s a term coined by our Mike Cintolo, so naturally, today we add Mike’s favorite Bull Market Stock, one he recently recommended to his Cabot Top Ten Trader audience, a company that benefits directly anytime there’s a bull market and the big institutions are buying stocks hand over fist.

The market has gotten a lot bumpier in November, though the major indexes haven’t given up much ground. That’s because even as the air comes out of the (perhaps overinflated) artificial intelligence balloon of late, investors are instead rotating into the many under-loved names in other sectors. Today, we add a stock in one of those underappreciated sectors. It’s an educational company that Carl Delfeld recommended to his Cabot Explorer audience last month. And the stock is having a solid year.

Details inside.

Current Market Outlook


There’s not much negative to say about the market if you’re looking at the major indexes—all remain in solid intermediate-term uptrends, and longer-term, there are many bullish signposts for the overall market. But it’s also a fact that this rally has become awfully thin—the number of stocks hitting new highs is half (or less) of what we saw earlier this month, and the rotation between extended growth (those that got going back in April/May), fresher growth (those that got going in the past month or so) and cyclicals is becoming more frequent and intense. Once again, none of this necessarily portends doom, but there’s little doubt that making money has become tougher, so factor that into your plan—possibly buying smaller positions, entering on weakness, and focusing on what’s attracting buyers.

That’s just what our screens do, and this week’s list has another batch of in-favor stocks. For our Top Pick, we’ll go with JD.com (JD), a well-traded name that just reacted positively to earnings, and whose group (China) is picking up steam.

Stock Name	Price	Buy Range	Loss Limit
The AZEK Company (AZEK)	39.88	37-38.5	33.5-35
Big Lots (BIG)	53.65	48.5-51	42.5-43.5
DaQo New Energy Corp (DQ)	124.59	119-125	101-104
Elastic (ESTC)	103.35	99-103	89-91
Emergent BioSolutions, Inc. (EBS)	125.55	120-125	105-108
Etsy (ETSY)	128.74	121-125	106-108
JD.com (JD)	76.18	72.5-75	65-66.5
Natera (NTRA)	65.49	60-63	52-53.5
Trade Desk (TTD)	466.66	445-467	395-410
Whirlpool (WHR)	181.38	171-176	153-156