Search

Current Market Outlook


After a straight-up move in February, the market has hit some rough waters, with the major indexes and lots of growth stocks taking hits. There’s always the chance that the market is beginning a major correction after a strong but relatively brief (in this case, four weeks) advance, but we like to go with the evidence. So far, all of the indexes are holding above their 50-day lines, and very few stocks have shown any abnormal selling. Thus, while we’re not fully invested, we are sticking with a bullish outlook and believe holding your best performers, and even buying a little on this dip, makes sense.

This week’s list is again heavy on the chip and medical (mainly biotech) sectors, with a smattering of retail. Our Top Pick is Biogen (BIIB), a blue-chip leader of the biotech group. The stock lifted out of a 10-month base in January and has acted well since, and it’s now approaching a solid entry point after pulling back.

Stock Name	Price	Buy Range	Loss Limit
WhiteWave Foods (WWAV)	0.00	39.5-41	37-38
Tesoro (TSO)	0.00	86-89	80-81
Skyworks Solutions (SWKS)	0.00	90-92	80-82
NXP Semiconductors (NXPI)	0.00	95-100	87-89
Mallinckrodt (MNK)	0.00	117-121	108-110
Jack in the Box (JACK)	0.00	92-95	87-88
HDFC Bank Limited (HDB)	0.00	59-61	56-57
Centene (CNC)	0.00	61-62.5	57-58
Burlington Stores (BURL)	193.95	54-56	50-51
Biogen (BIIB)	0.00	405-415	370-380

Current Market Outlook


The Nasdaq poked above the 5,000 level for the third time in six weeks today, and most other indexes aren’t far behind. To us, what’s distinctive about the recent upmove is a complete lack of selling—very few stocks are hitting new lows, and even bad news has failed to attract the bears. Now, to be fair, buyers aren’t exactly flexing their muscle, either; not many stocks are hitting new highs and volume’s been generally light. Overall, we’re going to keep our Market Monitor where it is because the sideways trend of the market is still intact, but we do think there’s a good chance the third time could be the charm as the Nasdaq tests new high ground.

This week’s list has a bunch of good prospects, including some from unexpected areas (energy and yieldcos!). But our Top Pick is Valeant Pharmaceuticals (VRX), a steady grower in the drug field that should see earnings accelerate thanks to its recent acquisition of Salix.

Stock Name	Price	Buy Range	Loss Limit
Valeant Pharmaceuticals (VRX)	0.00	200-210	188-190
Terraform Power (TERP)	0.00	38-40	35-35.5
Sabre Corp. (SABR)	0.00	24.5-25.5	22-22.5
PDC Energy (PDCE)	0.00	53-55	49-50
Orbital ATK (OA)	0.00	74-76	67-69
JD.com (JD)	39.58	33-34.5	30-31
Intercept Pharmaceuticals (ICPT)	0.00	270-285	245-250
Harman International Industries, Inc. (HAR)	0.00	134-139	124-126
Canadian Solar (CSIQ)	0.00	34-36	30.5-31
Autohome (ATHM)	98.65	46.5-49.5	42-43

Current Market Outlook


It’s not perfect, but from a top-down perspective, the market remains in good shape—today’s stretch toward new highs for many indexes (the S&P 500 made it, though most others didn’t) keeps the intermediate- and longer-term trends pointed up. That said, under the surface, things are a bit disjointed, with selling on strength seen in some extended growth leaders and buying picking up in names that are either cyclical (oils, financials) or fresher (those that haven’t had huge runs). That doesn’t mean you should chase every stock and sector that’s moving and ditch those that are wobbling, but it is important to avoid complacency with your winners (honor stops and take partial profits when offered) and, on the buy side, focus on stocks showing outstanding accumulation in recent weeks.
Those are just the type of charts we’re honing in on these days, and this week’s list has another batch of (mostly) newer names showing excellent action. Our Top Pick is Anaplan (PLAN), which looks like a new leader in the software space.

Stock Name	Price	Buy Range	Loss Limit
AGCO Corporation (AGCO)	76.24	75.5-78	69-70.5
Anaplan (PLAN)	47.52	47.5-50.5	42-43.5
eHealth (EHTH)	122.74	80-84	71-73
Inphi (IPHI)	120.16	51.5-53.5	46-47.5
Kratos Defense (KTOS)	24.08	21-23	18.8-19.8
Novocure (NVCR)	0.00	58-61	51.5-53.5
Roku, Inc. (ROKU)	150.46	88-92.5	77-80
Shake Shack (SHAK)	92.08	66-68	61-62
Smartsheet (SMAR)	44.12	47-49.5	42-43.5
Snap Inc. (SNAP)	16.68	13.7-14.7	12.2-12.6

Hopefully, you took some profits last week as I advised. It’s been a rough week since then, but it wasn’t unexpected. The well-publicized legalization day in Canada was exactly the type of event that often accompanies market tops.

Of course, it’s not just the marijuana stocks that have been sinking; the broad stock market is trending down as well.

But have no fear! The key to successful investing in this sector is to hold cash when the environment is against you, and to invest in great growth companies when trends are positive, and to take partial profits—as we did last week—when stocks get frothy.

I’m adding a 31-year dividend payer to the Safe Income Tier, and cover all our stocks that have reported earnings so far. You’ll also find some important information on REITs at the end of the issue which you should find valuable if you bought last month’s High Yield Tier addition.

U.S. stocks markets are now continuing their rebound from the horrendous fourth-quarter 2018 market action. The S&P 500 and NASDAQ indexes look quite bullish, while the Dow Jones Industrial Average (DJIA) lags a bit.

A year ago, college kids laid out the case for a Trump’s victory. And they did it with a mess of disparate data in just 20 hours, using a data prep platform by the little-known company that I’m recommending today.

Here are a few tips I use to find really big stocks, and specifically, how they applied to the discovery of Tesla Motors (TSLA).

Current Market Outlook


The major indexes and (to a greater extent) leading stocks hit a pothole late last week, but while we see smatterings of abnormal action here and there, the vast majority of stocks are simply undergoing normal rests after what’s been a solid five weeks. Of course, this week has plenty of events on the schedule, including the Singapore Summit Tuesday and the Fed’s likely interest rate hike (and accompanying statement) on Wednesday, both of which could result in some news-driven moves. But we’re just going with the evidence today; the trends of the market and most stocks are up, so we advise sticking with a bullish stance.

As for this week’s list, it’s interesting in that we see a handful of turnaround-type plays that were left for dead until a few weeks ago. A good example is our Top Pick this week: Twitter (TWTR), which just emerged from its first proper launching pad since coming public.

Stock Name	Price	Buy Range	Loss Limit
Advanced Micro Devices (AMD)	82.24	14.2-15.5	12.5-13.2
Coupa Software (COUP)	262.20	57-60	51-53
G-III Apparel (GIII)	45.25	45.5-48.5	41.5-43.5
Kohl’s (KSS)	70.62	74-77.5	67-69.5
Momo Inc. (MOMO)	44.65	49-52	43-45
MongoDB (MDB)	156.56	49-52	43.5-46
Peabody Energy Corporation (BTU)	43.32	44.5-46	40.5-41.5
PTC Therapeutics (PTCT)	0.00	35-37.5	31-32.5
Twitter (TWTR)	40.37	39-41	35.5-36.5
Williams-Sonoma (WSM)	64.96	59-61.5	54.5-56

Tonight, we’re going to sell Amazon (AMZN), which doesn’t look awful but hasn’t been able to get going during the past couple of months. We’ll sell at about breakeven and hold the cash. We’ll also place Abiomed (ABMD) on Hold

A letter from Cabot’s President & Publisher on the swirling uncertainty in the market, remaining bullish, and strategies you can deploy now to generate solid returns even if volatility rises.

After surging to new highs in late March, today’s recommendation has pulled back quietly but steadily throughout April and my goal is for readers to get on board somewhere near the bottom of the current correction.

JPMorgan (JPM) is due to report results Friday, kicking off bank earnings season. Lately, the market seems to be more focused on earnings than Fed interest rates, and this is a good thing.

As markets move towards the “Great Rebalance”, looking to diversify portfolios with different asset classes and international stocks, the Explorer and I are headed to Europe, Asia, and Latin America during the next year. But today, stick to the U.S. and add a very familiar face to the portfolio.

Bank stocks such as Morgan Stanley (MS) and Goldman Sachs (GS) had strong earnings while tech is starting to show signs of weakness. ASML (ASML) reported sharply lower quarterly sales and giant Samsung Electronics’ share price (listed on the Korea Exchange) has fallen almost 30% over the past six months as it struggles to catch up with SK Hynix and Micron in supplying the most advanced AI chips.

Still, everyone is waiting for Nvidia’s (NVDA) earnings as capital spending in AI remains robust.

We need to begin with some bad news. Super Micro Computer (SMCI) stock tumbled 32% yesterday after its audit firm, Ernst & Young, resigned. The auditor said it had recently learned of information “which has led us to no longer be able to rely on management’s and the audit committee’s representations, and to be unwilling to be associated with the financial statements prepared by management.”

This week has brought several news items on the Green front, including a speech by President Barack Obama where he said, “We’re on the cusp of this new energy future.” Find out how you can take advantage of it ...

As we move into the third quarter, analysts at Goldman Sachs write that their baseline forecast is for the S&P 500 to gain 5% in the second half of the year. In their “vaccine upside” scenario, stocks rise by 14% from here; in the “virus downside” scenario, they drop 30%.

From the start of October through the tail end of November, growth stocks (and, more generally, high relative strength stocks) were the dog’s dinner, flailing around even as the major indexes advanced. Now, though, with many stocks having etched two-month launching pads, the tone has improved—money is slowly (emphasis on slowly) coming out of defensive names and into faster movers. A bit more improvement and we’ll shift our Market Monitor into bullish territory, but for now, we’ll stick with our general “lean bullish” stance.

Another good sign is that, in this week’s list, we see many stocks that have shown recent power and are trading relatively tightly, a good sign of accumulation. Our favorite of the week is Harman International (HAR), a well-situated audio firm with very solid sales and earnings growth. The stock looks like it’s at a good entry around here.

Stock Name	Price	Buy Range	Loss Limit
Perrigo (PRGO)	0.00	151-154	140-142
Las Vegas Sands Corp. (LVS)	0.00	74-77	68-69
Illumina Inc. (ILMN)	289.74	97-101	90-91
Harman International Industries, Inc. (HAR)	0.00	78-80	70-71
Financial Engines (FNGN)	0.00	65-68.5	59-60
Deckers Outdoor Corp. (DECK)	141.68	83-85	70-71
Conn’s Inc. (CONN)	0.00	69-73	63-64
Baidu (BIDU)	0.00	165-170	140-145
AOL, Inc. (AOL)	0.00	42.5-45	39-40
Ambarella (AMBA)	52.79	23-24.5	20.5-21.5

Willdan Group (WLDN) Delivers Q3

Amazon.com (AMZN) and Apple (AAPL) both have successful e-readers on the market.