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In this week’s video, Mike looks at the new leadership that has emerged on earnings and points out the stocks that are forming solid bases.

Here are 10 tips for growth investors that should be helpful to use once growth stocks turn decisively up.

Yesterday was a bloodbath for growth stocks as concerns of rising rates and high valuations continue to put pressure on these types of stocks. Earnings season has also been a disaster for many growth stocks as “sell the news” has been the trend. Part of me thinks there is programmatic trading going on here as a negative reaction has just become too consistent. But still, overall, the positive momentum from April has been wiped out here in May for many players.

The big news of last week was inflation data came in well above expectations on Thursday as the consumer price index (CPI) rose 7.5% year over year. This was the largest increase since 1982.
Shortly after, rumors of an emergency rate hike made the rounds on trading desks as the 10-year Treasury yield pierced the 2% mark for the first time in three years. Following this development, rate-sensitive sectors and growth stocks underperformed.

Cabot Market Letter Editor Mike Cintolo shares his favorite investment maxims and advises how to implement them.

We are in the midst of a rally that has continued for about two months. This market seems to want to go higher. While the rally has slowed significantly from the initial bounce off the lows in March, the overall market is still in an uptrend.

News of the spread from China of a brand new virus roiled markets earlier this week. Although the market has bounced back somewhat, I don’t think we’re out of the woods yet by a darn sight.

Aside from AI, a few other big-picture themes came into sharper focus for me this week.

All are positive for small caps.

First, economists and analysts are reducing their recession risk outlooks as the economy continues to hold up reasonably well. That’s good for small caps as they are more economically sensitive than mid and large caps.

Stocks have been very resilient. The market has proven a lot of naysayers wrong. But prices are high, and uncertainty abounds.

Tariffs won’t be a disaster, but there will still be more headlines and uncertainty in the months ahead. The economy is okay, but it’s not great. Interest rates are still stubbornly high. And now the Iran conflict is thrown into the mix along with the tariffs and the economy. Meanwhile, the market indexes are hovering near the high and most stocks are pricey.

Several portfolio positions have had strong rallies in the recovery and are generating high call premiums. The high strike prices guarantee a strong total return if the stocks are called. The high premiums provide a great way to lock in the recent market good fortune by generating a high income from call premiums.

Let’s take what the market is giving. Right now, it’s giving a high income. Tomorrow, who knows? In this issue, I highlight a covered call in Qualcomm (QCOM). It is the sixth call sold on the position since the stock was added to the portfolio four years ago. It’s a great time to prime the pump for income once again.

Market leadership appears to be shifting. It’s interesting to note that utilities have been the top performing market sector over the past month and week.

Looking at the broad market we see that the S&P 500 is just 4% off its recent high, has thus far held above support around 2,800 and remains above its long-term (200-day) moving average line. The Nasdaq dipped to its May 13 low near 7,627, but it too is above its long-term moving average line.

It’s all about the Fed today. The woefully behind-the-curve Central Bank will announce another Fed Funds rate hike today. The increase is widely expected to be another 0.75%. But some worry it could be 1.00%.

The market’s hopes were dashed when August inflation was worse than expected. That means the Fed will have to continue to be hawkish and for a while longer. Plus, after four rate hikes so far, two straight quarters of GDP contraction, and a bear market; inflation isn’t budging yet.

Dividend growth is an income investor’s dream. Here are the 10 best dividend-paying stocks for dividend growth investors.