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A strong earnings season has propelled the broad market to fresh highs, and as we enter mid-August, “rotation” has become the buzzword of the moment.

We’ll respect this action by not pressing too hard on the gas today. But at the same time, with a number of attractive setups floating across my screen, we’re not going to be wildly conservative.

We step up to the plate and take a swing at three new positions today.

In the October Issue of Cabot Early Opportunities, we go deeper down the software rabbit hole, jump into a new grocery chain stock I suspect you’ve never heard of, dabble with a hot AI semiconductor stock and consider the potential of an EV stock that’s exploded on news of a big DOE loan.

As always, there should be something for everyone!

The market is hitting new highs, thanks to Nvidia (NVDA). And while blowout earnings from the artificial intelligence leader were good for the many AI-related plays we have in the Stock of the Week portfolio, we have more than our share of non-AI stocks that are thriving as well (see American Eagle Outfitters (AEO) and Aviva (AVVIY)). Today, however, we add a hiding-in-plain-sight all-star, a company so mainstream and obvious that it may already be in your portfolio … or it’s possible you sold out of it along with many other institutional investors during a brutal stretch in 2022. Now, it’s fully back – and yet the shares still trade well below their 2021 peak. It’s a new recommendation from Tyler Laundon in his Cabot Early Opportunities advisory.

Details inside.

The market is at all-time highs, and so are many of our Cabot Stock of the Week stocks. Sure, there are potential landmines out there – inflation, the Fed, this Wednesday’s Nvidia (NVDA) earnings report if it fails to meet lofty expectations, etc. – but right now, Wall Street is buying, so we will too. Today, we add one of the market’s best growth stocks so far this year. It’s been sitting in Carl Delfeld’s Cabot Explorer portfolio since late last year – he has a huge gain on it already – and we were reluctant to add it to the Stock of the Week portfolio until it pulled back a bit. Now it’s done so – the stock peaked in mid-March – but it’s building momentum again. It’s one of the best AI plays not named Nvidia or Microsoft.

Details inside.

Tariffs are here, and the market doesn’t like them. But how long are they here for? As this morning’s deal with Mexico to delay them by a month reveals, it’s possible tariffs are being used as more of a scare tactic than a permanent penalty. If so, that would be good for stocks. But the best thing to do with tariffs as an investor is to ignore them and focus on stocks that are performing well. And today, we do just that, adding a promising biotech that caught the attention of Cabot Top Ten Trader Chief Analyst Mike Cintolo.

Details inside.

Jerome Powell went full Grinch last week, sparking a brief market selloff after saying the Fed would cut rates at a slower pace than expected in 2025. Prior to that, there were some obvious cracks beneath the market’s surface, so Powell’s downer of a press conference served more to expand the selling than cause it. But the nice rebound in the last two trading days shows the bulls are still mostly in charge, which means it’s a good time to add a mid-cap water stock that Tyler Laundon just introduced to his Cabot Early Opportunities audience.

Details inside. Happy Holidays!

Current Market Outlook


While the day to day volatility remains extreme, the market’s intermediate-term trend has turned up (according to our measures), which argues for a more constructive stance toward stocks. Of course, that doesn’t mean you should dive in headfirst—there remain plenty of headwinds, including the fact that most stocks are still below their 50-day and 200-day moving averages (i.e., plenty of potential selling to chew through on the upside). But there’s no question the evidence has improved, so it’s a good idea to slowly put money to work, and then use the market for feedback; If you develop some solid profits, you can become more aggressive, but if the uptrend decisively cracks (would take a 6% to 7% drop from here), you want to hold off further buying and honor your stops.

This week’s list continues the trend we’ve seen of many high-potential stocks spiking back toward their old highs. Our Top Pick is Okta (OKTA), which has rejoined the leadership ranks after nine-months of correcting and consolidating.

Stock Name	Price	Buy Range	Loss Limit
ACADIA Pharmaceuticals (ACAD)	47.84	48-50.5	42-44
Advanced Micro Devices (AMD)	82.24	53-56	47-49
ASML Holding (ASML)	350.01	285-295	257-263
CrowdStrike (CRWD)	105.02	65-67.5	56-58
Franco-Nevada (FNV)	125.51	122-126	109-111
Immunomedics (IMMU)	34.23	20.5-22	16.5-17.5
Okta, Inc. (OKTA)	148.41	146-152	127-130
Sea Limited (SE)	132.86	51-53	46-47
Shopify (SHOP)	585.00	575-615	510-525
Tradeweb Markets (TW)	51.44	50-52	45-46

Current Market Outlook


The repeated bouts of heavy-volume selling have driven the major indexes below their key 50-day moving averages, and that’s a clear sign that the bulls are not in control. We’re moving our Market Monitor down to a level 5 and advise you to hold a good chunk of cash on the sideline, cut back on new buying (keep any new positions much smaller than normal) and honor your stops. None of this is to say that we’re bearish—it’s certainly possible the market snaps back, as there’s plenty of pessimism and many liquid leaders are holding up well. But after weeks of sloppy action and distribution, the odds favor further downside in the near-term, and we’ll need to see a few strong days before concluding the overall uptrend is resuming.

This week’s list, though, has a bunch of resilient growth-oriented names, which is encouraging. Our Top Pick is DXC Technology (DXC), which is the product of a recent merger and sports giant cash flow.

Stock Name	Price	Buy Range	Loss Limit
Abiomed (ABMD)	0.00	148-152	139-141
Alibaba (BABA)	254.81	156-166	145-150
DXC Technology (DXC)	0.00	82-84	76.5-78
Insulet (PODD)	175.69	52.5-54.5	48.5-50
Kite Pharma (KITE)	0.00	120-127	105-109
Realpage (RP)	0.00	40-42	37-38
Red Hat (RHT)	0.00	99-102	94.5-95.5
Salesforce.com (CRM)	0.00	89.5-92	84-85
Stamps.com (STMP)	0.00	198-210	177-184
Weibo (WB)	98.16	85-89	77-79

The market continues to thrive as we enter the final month of 2023 – and Cabot Stock of the Week stocks are thriving along with it! A pullback in the coming days and perhaps weeks would make sense on the heels of the market’s banner November, but the long- and intermediate-term trajectory appears up. The potential (likelihood?) that interest rates may have peaked is perhaps the biggest driving force behind the rally. And it’s a big catalyst propelling the stock that we’re adding today, a brand-new recommendation from Mike Cintolo in Cabot Growth Investor.

Details inside.

Thank goodness; the shutdown is over!

And that agreement (although not really agreeing on much!) has helped the markets to continue their upward momentum, albeit with a few hiccups. All eyes are on the Fed, as I write this, with expectations that it will once again lower rates by a quarter of a point.

In the October Issue of Cabot Early Opportunities, I dig into a group of software companies that have upside potential from AI, automation and security. I also feature a diversified bioprocessing and advanced materials company that’s drawing attention right now and go deeper into a very small industrial company that few investors have ever heard of.

As always, there’s something for everybody!

We wrap up a fruitful year with a December Issue of Cabot Early Opportunities highlighting five names spanning everything from bottled water to social media to bitcoin mining.

I like the diversity of this Issue, which has something for everyone.

The market continues to be on edge but having lightened up over the last two and a half months we’re in a decent position to add some exposure today.

This month’s issue offers fresh opportunities in the red-hot pharma space, as well as two little-known mid-cap industrial stories, one in radiation protection and the other in the oil and gas market. Wrapping things up is an introduction to what’s arguably the best play on utility-scale solar.

Enjoy!

We all want to find those rare gems that are disrupting big markets with new solutions.
Today’s company may be one such opportunity. It’s relatively unknown and has a software platform that can address $45 billion in annual enterprise spending right now. That’s a big pond.
It’s a story about big data, digital transformation and business intelligence (BI). These are more than buzzwords. They’re what every company in the digital age needs. And this little guy can give it to them.

The market finished solidly in the black thanks to a strong end to last week; interestingly, while the intermediate-term trend is still neutral overall, a couple of broad up days from here could kick it into the green. Even better is the action of leading stocks, with more names emerging and, importantly, more names holding their recent upmoves. To be clear, there’s still a lot of proving to do, but overall, we think the evidence has taken another step in the right direction—we’ll move up our Market Monitor to a level 6 and see what comes from here.

This week’s list has a ton of strong names and other good setups that could lift should the market continue to improve. Our Top Pick looks like the leader of the improving cybersecurity group, having lifted out of a long consolidation. Dips should be buyable.

For the first time in a while we started to see big investors floor the accelerator last week, with some names really letting loose on the upside. Moreover, even the “non-AI” nascent leaders that perked up earlier in May are acting fine, with most digesting gains in normal fashion. All of that is to the good—though the top-down flaws that we’ve written about are all still out there, too, with relatively few stocks hitting new highs, a good number of blowups each week and most areas of the market still struggling. Right now, we’re keeping our Market Monitor at a level 5, but we’re watching things closely—if more leaders emerge, it would certainly add to the bullish side of the ledger.

This week’s list has a bunch of solid growth and earnings-related plays from a variety of industries. Our Top Pick is practically a blue chip name from the software field that’s emerging from a solid launching pad.

For the big-cap indexes, last week was intriguing, with a sharp dip from resistance on Monday and Tuesday leading to an equally-sharp snapback—a possible shakeout of sorts. That said, the bullish action remains concentrated in a handful of names; the broad market is still meandering at best and there were more than a few air pockets last week among potential leaders. All in all, we’ll drop our Market Monitor to a level 4—that said, there are still tons of earnings reports on tap this week and next, so a bunch of gaps up (and broad market strength) could give us plenty to work with.

This week’s list has a bunch of recent earnings winners as well as a few that are set to report. Our Top Pick was an early leader off last year’s October lows and looks to be resuming its uptrend after a two-month rest.

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.

The primary evidence remains bullish, so we’re still thinking mostly positive, especially when looking at the big picture. But there’s no question things are getting more and more divergent: The broad market and even most big-cap stocks are flat to down so far this year, and more recently, as interest rates have backed up and financial stocks get hit, we’re seeing selling pressures start to spread. That doesn’t necessarily portend doom, but coming on the heels of a multi-month advance, this kind of action does raise the risk of a change in character; we’re going to pull our Market Monitor down a notch to level 7—still bullish, but holding a little cash, booking some partial profits on the way up and being more discerning on the buy side makes sense.

This week’s list has its share of hot stocks, and we’re impressed that we’re still seeing some strong earnings winners that are moving on very, very strong volume. For our Top Pick, we’ll go outside the tech space with a name that just lifted out of a multi-month base on earnings and could be leading a new group move. Try to buy on dips.

Current Market Outlook


During the last couple of weeks of August, more stocks, sectors and indexes were getting in gear, which was a change from the past few months of whippy crosscurrents. But as September has progressed, it looks like we’re still in the same overall environment—growth stocks, indexes and funds have again taken hits while some cyclical/value areas have perked up. That’s not necessarily a negative (at least to this point); as we wrote last week, some retrenchment among extended growth stocks was half-expected, and even if it wasn’t, the action is more a confirmation that the choppy environment is still intact, not that the sellers are truly taking control. Long story short, we’re still sticking with the same game plan as the evidence remains unchanged—we’re more bullish than not, but booking partial profits into strength, raising stops as things head higher and aiming to enter on dips is the right way to go.

This week’s list is lighter on growth stocks than in recent weeks, reflecting some of the dents they’re taking, but there are many other names that look to be resuming their advances. Our Top Pick is Antero Resources (AR), which looks like the best play in the natural gas space. Aim to enter on dips.

Stock Name	Price	Buy Range	Loss Limit
Antero Resources (AR)	17	15.4-16.1	13.8-14.2
Celsius Holdings (CELH)	87	84-88	73.5-75.5
DOCN (DOCN)	76	69-73	58-60
ICU Medical (ICUI)	240	233-243	215-220
Innovative Industrial Properties (IIPR)	228	222-230	209-212
MongoDB (MDB)	485	460-475	408-420
Pure Storage (PSTG)	26	25-26	22.5-23
SBLK (SBLK)	24	23-24.5	19.5-20.5
Teck Resources Limited (TECK)	25	23.5-24.5	21.5-22
Varonis Systems (VRNS)	68	65.5-68	59-60