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The market has been wild in recent days, giving investors very mixed messages—on one hand, many leading growth stocks have broken down, but on the other, the broad market is strengthening, with our Cabot Tides actually flashing a new green light. Given the crosscurrents, we’re taking things on a stock-by-stock basis, selling stocks that are cracking support and looking for new buys among fresh leadership.

The good news is that fears of China tariffs have passed, and our Chinese stocks look better. The bad news is that formerly leading growth stocks are now being sold, while new leadership, like juggernaut Citigroup (C), comes to the fore. And additional good news is that all our Cabot market-timing indicators are once again positive, telling us the wind is at our back.
Bad news. Good news. The important thing is to watch each of your stocks carefully, nourish the ones that are doing what you hired them to do and fire the ones who don’t measure up.
This week, thanks to the big shifts in the market, we have an unusual number of rating changes, six! Details in the issue.

Current Market Outlook


Sometimes the simplest analysis is the best, and that continues to be the case for the current market—the intermediate-term trend is down for the major indexes and most stocks (we even saw the resilient software sector finally come under pressure today), so until that changes, you should remain cautious, holding a good-sized chunk of cash, limiting new buying and honoring stops. To be fair, there are many signs that the market might be close to a bounce—emotions are beginning to run high, many measures of breadth and sentiment are “oversold” and we still see a fair number of stocks building normal launching pads—but until the buyers actually step up to the plate, those don’t really mean much. (Indeed, today was the Nasdaq’s fifth heavy-volume down day of the past seven sessions.) Our Market Monitor falls to 4 this week.

None of that, though, tells you to stick your head in the sand. This week’s list is again full of solid charts and stories from a variety of sectors. Our Top Pick is Guardant Health (GH), which isn’t tearing up the charts but is in the middle of a nice, tight consolidation.

Stock Name	Price	Buy Range	Loss Limit
Advanced Micro Devices (AMD)	82.24	26.5-28	23.5-24.5
Anaplan (PLAN)	47.52	40-42	35-36.5
Beyond Meat (BYND)	132.87	87-94	72-76
Dynamic Materials (BOOM)	60.21	67.5-71	61-63.5
Guardant Health (GH)	88.34	75-79	65-67.5
Heico (HEI)	134.84	115-119	105-108
Novocure (NVCR)	0.00	50.5-53	45.5-47.5
Paycom Software (PAYC)	0.00	193-198	180-183
Smartsheet (SMAR)	44.12	41-43.5	37-38
Snap Inc. (SNAP)	16.68	11-12	9.6-10.2

The market remains healthy, with all major indexes in uptrends and no major signs of divergence, and thus I continue to recommend heavy investment in stocks that meet your portfolio’s goals.

This week’s recommendation is an American apparel company whose stock is cheap and thus has great capital gains potential. Plus it pays a 5.8% dividend!

As for the current portfolio, most of our stocks are performing fine; a few are hitting record highs; and one or two stocks have become worrisome, but not enough to cause me to take action.

The market looks great today. The correction is over and buyers are back in control, so I recommend heavy investment in stocks that meet your portfolio’s goals.
Last week I made a slew of ratings changes to our portfolio to get back in synch with the market, but today all looks well so there are no changes at all—though of course that will change!
As for this week’s recommendation, it’s a bit unusual, in that it’s a recent IPO that got very little notice (unlike giant Uber for example), but it has a good growth story, and could even thrive in the next recession.

The market remains in good health, though selectivity remains important.
For today’s recommendation we swing back to the more conservative side of the market with a very big, very well known company whose stock has just begun a new uptrend.
As for the current portfolio, we have five stocks hitting new highs in recent days, and none doing poorly, so overall, progress is being made! There are no sells today. Details in the issue.

The market remains in good health, and all Cabot’s market timing indicators are positive, telling us the odds are that the market will be higher in the months ahead.
For today’s recommendation we move outside the U.S. to a Chinese company targeting a mass market, a mass market that is virtually guaranteed to grow in the years ahead. It’s a stock that not known to most U.S. investors, and I think it’s a good buy here.
As for the current portfolio, some stocks are hitting new highs and many are close to it, while our value-based selections and Heritage stocks still show long-term potential.

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.

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.