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The market was already struggling after the Fed’s “higher for longer” comment about interest rates. Now it’s getting hit with ugly headlines regarding the situation in Israel.

Geopolitical risks are always out there, and they act up occasionally. Hopefully, this new Middle East situation won’t expand into a wider conflict. There is also the Ukraine conflict. These are risks that could develop into a much bigger problem. Even if they don’t, there is still the interest rate and inflation situation.

Last week was shaping up to be another chop-fest but the market took off on Thursday and Friday ... and for the first time, we saw some leading stocks rally and, importantly, build on those gains. (In recent weeks stocks were quickly sold after any strength.) It’s a good ray of light, though we haven’t seen enough power from the market and from potential leaders to switch our Market Monitor out of its neutral stance; we’re a bit more optimistic than last week but still need to see more bullish evidence before we put on our bullish hats. For now, then, stick with the strategy of buying on weakness, keeping some cash on the sidelines and watching your stops.

The good news is that last week’s action brought more stocks to the fore; we’re seeing many more good-looking launching pads, and we saw more breakouts on earnings, many of which are showcased in this week’s list. Our favorite of the group is IAC Corp. (IACI), a conglomerate of Internet businesses that has been in a steady uptrend for years and just blasted off on earnings last week.

Stock Name	Price	Buy Range	Loss Limit
3D Systems (DDD)	0.00	36-38	-
Align Technology (ALGN)	316.20	33-35	-
Equinix, Inc. (EQIX)	547.73	175-181	-
IACI (IACI)	0.00	51-53	-
NetSuite, Inc. (N)	0.00	54.5-56.5	-
Regeneron Pharmaceuticals (REGN)	512.96	132-136	-
SolarWinds (SWI)	0.00	48-52	-
Under Armour (UA)	0.00	52-54	-
WPI (WPI)	0.00	77-79	-
Western Digital Corporation (WDC)	0.00	37-40	-

A subscriber recently asked me if I keep a journal of my trades. Many traders keep journals so they can look back at their trades and evaluate what they did right and what they did wrong.

WHAT TO DO NOW: The market’s action of late is encouraging for sure, but there’s still more work to do with our Cabot Tides and growth funds. Today we’re going to sell our small remaining position in DoubleVerify (DV) and hold the cash—with an eye toward redeploying the funds in the near future should the market and individual stocks continue to firm up. Our cash level will now be around 45%.

Intapp (INTA) is down about 10% today (downside move wipes out January gain and puts stock at support near 40) after reporting Q2 fiscal 2024 results. I don’t love the reaction but think this will prove to be “noise” and that INTA remains a supremely compelling stock to own.

“The ProShares Ultra FTSE China 25 Fund (XPP) delivers twice the return of the FTSE China 25 Index. The FTSE China 25 is an index that follows the performance of the largest 25 Chinese stocks. [It’s] the Chinese equivalent of the Dow Jones Industrial Average, a measure designed...

Apple (AAPL) has several product upgrades and there are new details on the spin-off and merger for one of the portfolio stocks.

We do think many of this week’s pullbacks could develop into nice early-stage entries, though we’d prefer some of these names settle down for a few days.

Sprout Social (SPT) reported Q3 results yesterday that beat expectations. Revenue was up 46% to $49.1 million versus expected growth of 42%.

In JOANN’s second quarter as a public company, management has dealt with the Delta variant complicating social sewing events and supply chain challenges driving up costs. The net effect in Q2 was that revenue of $496.9 million missed by almost $36 million and adjusted EPS of -$0.20 missed by $0.06.

Cabot China & Emerging Markets Editor Paul Goodwin picked Baidu (BIDU) as a great way to play the hottest emerging market right now.

Additional thoughts on one portfolio stock after reporting

Over the long run, the S&P 500 has produced an average annual return of about 10% per year. Our aim at Cabot, through our various services, is to do better, and in the long run we do.

We are likely in a recession. Meanwhile, inflation continues to rage on. That means stocks will have to navigate an environment of both recession and inflation, at least for the rest of the year.
That’s tricky because few companies perform well with both. Commodity-based companies thrive in inflation but struggle in recession. Many defensive companies that shine in recession don’t like inflation.


In this month’s issue, I highlight a stock in one of the rare sectors that can successfully navigate both recession and rising prices at the same time – midstream energy. Strong operational performance, a low valuation, and a high and safe yield are perfect for the current situation.

You can still find sky-high yields.

Despite the recovery in the overall market, there are still lingering pockets of high yields. It reminds me of the years following the financial crisis. You could still find good stocks that paid a sky-high income relatively easily. But the situation didn’t last. Those high yields on quality stocks evaporated as investors realized the opportunity.



Some of the current high yields probably won’t last long either.



At the same time, it’s a great time for cyclical stocks. The economy is still booming. Plus, we are likely at the point in the economic cycle where such stocks tend to do best. We are likely still in the early stages of a bull market and recovery.



In this issue, I found a stock that benefits from both opportunities. It has a stratospheric 11.5% yield that likely won’t last. At the same time, the yield should be safe and growing as the company is highly cyclical.

In this week’s video, Tyler Laundon discusses one of the biggest tech IPO’s of the year in Slack Technologies (WORK).

In this week’s video, Mike says that he sees a still-healthy (though not robust) overall market, but some bifurcation among growth stocks.