Search

Current Market Outlook


We could recap all of the market’s ups and downs of the past few days, or couple of weeks … or past few months, for that matter. But the bottom line is that, right now, the main trend of the major indexes is sideways until proven otherwise. As for individual stocks and sectors, it’s all about being selective—there are pockets of strength, but stock selection and timing your buys is important in this choppy environment. We’re knocking our Market Monitor down one more notch, not because we’re feeling terribly bearish but more to reflect the overall market’s neutral position.


The good news is that Top Ten automatically hones in on the market’s strongest stocks, and despite the usual batch of earnings potholes, most are still in good shape. Our Top Pick this week is SunEdison (SUNE), which is leading the new recovery in solar stocks thanks to its huge pipeline and yieldco strategy.

Stock Name	Price	Buy Range	Loss Limit
XPO Logistics (XPO)	0.00	47-50	43-44
SunEdison (SUNE)	0.00	27-28.5	24.5-25
Qunar (QUNR)	0.00	48-50	44-46
Norwegian Cruise Lines (NCLH)	0.00	53-55	50-51
Martin Marietta Materials (MLM)	261.52	150-153	141-142
Global Payments Inc. (GPN)	0.00	100-102	94-95
Tableau Software (DATA)	126.42	107-110	97-98
Carter’s (CRI)	0.00	97.5-100.5	94-95
Celanese (CE)	0.00	65.5-67.5	62-63
AMAG Pharm. (AMAG)	0.00	58-61	53-54

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.

Despite some heavy selling pressures early last week, the market rallied to close the week following Nvidia’s (NVDA) blowout earnings report that highlighted the growth potential of AI. By week’s end the S&P 500 had gained 1.2%, while the Dow rose marginally and the Nasdaq fell slightly.

Wright Investors’ Service is a leading independent international investment management and advisory firm with over 40 years of experience. Wright manages over $2 billion of assets in equity and fixed income portfolios of all sizes and styles as well as a family of mutual funds. Wright developed Worldscope, one of...

It has been a great market for most of the last two years. But the bull run will be severely tested over the next couple of weeks.

The S&P 500 is within a whisker of the all-time high after rallying 22% YTD and over 60% in the past two years. The recent investor perception is that the Fed has begun a rate-cutting cycle that will last for two years, and the economy is still solid. That view will be put to the test this week.

After five consecutive up months for the market, April has been a bummer. Is this just an overdue end to the recent rally or something worse?

The S&P 500 is down 3.6% so far in April. But the more interest rate-sensitive sectors have faired far worse. Sure, the rally was long in the tooth anyway. But the narrative has also changed for the worse.

The market is going from wobbly to ominous. As of Tuesday’s close, the S&P is negative for the month of July after having been up 3.5% in the first few weeks of the month.


It’s technology. The weakness in the sector that began in the middle of July is continuing. The worry started with the report of AI chip export restrictions to China and has grown into fears of sector overvaluation and slowing growth. But it’s the heart of earnings season. And earnings will confirm or deny those fears.

Emerging market stocks in general strengthened this week, keeping our Cabot Emerging Markets Timer firmly on the positive side. Our new stock is an express delivery company with a China-wide network that covers 96% of China cities and towns. We have ratings changes on two of our stocks.

The underperformance of the formerly dominant Mag. 7 has lately earned those stocks the dismissive moniker of the “Lag 7,” but are they too cheap to pass up?

After a rough year, Alibaba stock appears primed for a breakout. What will it take for this promising Chinese stock to get going?

How would you like to own shares in a company that sends you a check every month, regular as Social Security? You can do so, with monthly dividend stocks.

Most of the world is comprised of emerging markets, and yet very little of the global stock market is. That will soon change - invest now before it does!

Heads up: Because of MLK Day, next week’s issue will be published next Tuesday (January 16) after the close.

As for the market, we don’t want to repeat ourselves, but early January is known for sharp moves, and that might be playing out now. We’re not ignoring the short-term gyrations, especially if a stock really cracks key support, and, frankly, we’d expect some more tossing and turning, but we advise focusing more on the intermediate term—and on that front, the vast majority of evidence remains in the bull camp. We’re going to nudge our Market Monitor down to a level 7 to respect the wobbles we’ve seen, but overall we’re leaning bullish until the evidence changes.

This week’s list is an interesting one, with a batch of proven performers along with some off-the-bottom and more speculative situations. Our Top Pick is a name that was left for dead during the bear phase but has the makings of a powerful turnaround as revenue growth accelerates from modest levels and some newer offerings take root.

Current Market Outlook


From a top-down perspective, there’s not much to complain about when it comes to the current market—the intermediate-term trend of the major indexes is firmly pointed up, and the broad market has come alive in a big way, with two major blastoff indicators turning green in the past two weeks. Thus, for the overall market, the outlook is mostly sunny, though there’s always the chance of a passing shower. However, leading growth stocks are now on the run a little bit; it’s been two weeks of on-and-off selling, and many are beginning to approach key support areas. As we’ve written lately, the good news is that breakdowns have been few and far between; the pullbacks have been normal thus far, but the next few days should be telling to see if growth names are in for a deeper retreat or whether everything can get in gear with the broad market on the upside.

As you’d expect, this week’s list is heavier in names that have more recently come to life, including a few cyclical-related names. Our Top Pick is Autodesk (ADSK), a growth-y name that should also get a boost from the economic recovery, and the stock has leapt nicely to new highs.

Stock Name	Price	Buy Range	Loss Limit
ASML Holding (ASML)	350.01	330-340	300-305
Autodesk (ADSK)	229.00	220-230	198-203
Carrier Global Corporation (CARR)	26.23	21.5-23	18.5-19.5
Datadog (DDOG)	81.52	72.5-77	62-64.5
Elastic (ESTC)	86.17	78.5-82.5	70.5-72.5
Marvell Technology Group (MRVL)	36.88	32.5-34	28.5-29.5
Square, Inc. (SQ)	91.04	85-89	74-76
Thor Industries (THO)	104.76	101-106	89-92
Trade Desk (TTD)	468.02	338-358	298-308
Trex Company (TREX)	117.56	117-122	103-105