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The market remains very challenging for high-growth stocks. While I have a list of innovative companies I’m excited to recommend (at some point), for now we’ll continue to diversify our portfolio with more value-oriented names.

This month’s new addition is a little-known supermarket chain I’ve been following for some time. The pitch is very straightforward – rising prices and an insulated business model should help the company post impressive growth in 2022 and 2023. Not to mention we have upside if/as the name spreads among investors that are increasingly looking for just this kind of stock.



Last but not least, the chart looks fantastic.

The market has been up and (mostly) down, but not much has changed with our thoughts: The primary evidence remains terrible, though we continue to see more than a few rays of light from some secondary indicators. For now, we’re remaining defensive (we sold two more half positions this week) and are patiently awaiting the bulls to return.



In tonight’s issue, we write about a couple of commodity-names that we’re watching closely, as well as go over some thoughts on handling big losers (it happens to the best of us) and some of those secondary indicators we’ve mentioned--you can cut the bearishness with a knife, so it’s best to at least stay alert to a positive change in the market’s character.

The market was hit hard again last week, so all trends are down, and increased caution is advised.
But I’m not selling any stocks this week, mainly because last week I sold four, and today so many of our stocks are sitting at their 200-day moving averages, thanks to last week’s broad selloff, that I see a good possibility for some bounces.


As for the new recommendation, it’s a well-known discount retailer whose stock is cheap.


Details inside.

There is no sugarcoating it: We are in the midst of a pretty nasty bear market, which unfortunately means we are going to be stopped out of our Cleveland-Cliffs (CLF) position today.

Today was another day of bloodletting, with the major indexes and many former leaders continuing to melt down. Short-term, there’s little doubt things are getting emotional—thus, it’s certainly possible we’re close to a low point, but of course you could have said that a few days ago as well. As always, you shouldn’t fight the tape—with most things cratering, you should be holding much more cash than stocks, though we’re still not opposed to a nibble here or there. When this maelstrom is over, there are going to be some great buying opportunities, but right now, you should remain defensive. Our Market Monitor is down to a level 2.



This week’s list is heavy on commodity names, which did get hit today but in general remain in uptrends. Our Top Pick is a refining name that has recently shown accelerating strength.

Stocks are turning distinctly more bearish in the near term as slower growth in China hits a market that was already teetering in anticipation of a more aggressive Fed.
But the selloff in the indexes doesn’t reflect all stocks. Some stocks have more downside left. Others will likely hold their own even if the market keeps falling. And still other stocks have already been oversold. These stocks should have less downside from here than the overall market, and recover much more quickly when the selling abates.


In this issue, I identify two oversold stocks in the portfolio. These are stocks that have already been crushed and sell at vastly reduced prices despite continuing strong earnings growth. While these stocks may fall further in the weeks ahead if the market gets uglier, I believe they both sell at deep discounts compared to where their prices are likely to be later in the year.

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.

Explorer recommendations were pretty flat this week but demonstrated some strength as well. JPMorgan led the banks, reporting a first quarter with a net profit of $8 billion on over $32 billion of revenue. Keep your perspective and play defense and offense. Emerging markets offer you both and we will be adding to the portfolio selectively. This week I highlight a defensive healthcare play of the highest quality.

Under the surface, there does remain some encouraging signs for the overall market, which is a good reason to keep your antennae up for a change in character. But at the end of the day, what counts most is the action of the market and potential leading growth stocks, and on that front, there’s no question the trends are down and the sellers are in control. Thus, we remain cautious, holding 60% of the Model Portfolio in cash, and while we’re not anxious to sell wholesale, we won’t hesitate to sell more if stocks continue to crack.


In tonight’s issue, we review some key measures that show just how severe this selling wave has been in recent months--and why, once it’s over, it should lead to a fresh bull market in growth stocks. We also highlight some new ideas in commodities and elsewhere while we continue to fine tune our watch list.

See-sawing—that’s what these markets bring to mind. And I think we can expect more of the same, due to three factors:

1. The war in Ukraine2. Rising inflation—up about 8.4% last month3. Increasing interest rates. Economists now expect the Federal Reserve to raise rates by one-half a percent, in both May and June

This week we will add an American energy company engaged in hydrocarbon exploration and pipeline transport, EQT Corp. (EQT).

While the majority of Mike Cintolo’s Top Ten Trader is focused on commodity stocks this week, we already have exposure to this group via CLF and MRO. Because of that exposure, I am going to add Box Inc. (BOX) which develops and markets cloud-based content management, collaboration, and file sharing tools for businesses.

The market’s evidence has clearly improved during the past couple of weeks, so much so that our Cabot (and Growth) Tides are now on the fence, while our old Two-Second Indicator is starting to pick up on a bullish change in character for the broad market. That said, it’s close, but we haven’t seen anything definitive yet--tonight, we have no changes, but if we see some green lights, we’ll be on the horn with two or three new additions most likely.



In the meantime, we continue to hone our watch list and put together our game plan should the evidence continue to improve; we’re not going to go whole hog right away, but after six months of punishing action, we’re remaining flexible and write about a few potential fresh leaders in tonight’s issue.

As has been the case for much of 2022, last week there were exciting rallies and nasty sell-offs. And while the S&P 500 fell 1.13%, the Dow lost 0.94%, and the Nasdaq declined 1%, big picture the market handled an avalanche of bad news last week very well. Maybe, just maybe, the market is in the digesting bad news stage.

This week we are adding a covered call in yet another earnings season winner that has emerged amidst the rubble of the retail sector.

This week, as we continue to keep the portfolio diversified, we are adding a biotech/pharma play that recently reported strong earnings.

Despite some optimism early last week, the sellers obliterated that hope Wednesday through Friday, as the indexes fell sharply, pushing the S&P 500 into an official bear market (down 20% from its highs).

The market remains quite weak, and thus ripe for a major rally at any time. But until we see real strength, continued caution is advised.


In the meantime, you may want to nibble on today’s innovative consumer footwear stock, especially if you’re a customer.


As for the portfolio, we’re selling two stocks, cutting losses short so they don’t grow larger.


Note: next week’s issue will be published on Tuesday, due to the Memorial Day holiday.

As Mike Cintolo, Chief Analyst of Cabot Growth Investor and Cabot Top Ten Trader always says, “you shouldn’t fight the tape.” The markets are battling it out these days, trying to find a bottom. The constant news cycle of Russia-Ukraine, rising rates (up 0.5% last week) and increasing inflation are causing a severe case of market indigestion and volatility.



What’s an investor to do? As I’ve been saying for the past 6 or so months, judicious investing is the key. While most sectors (except Energy and Utilities) and the majority of equities, are down for 2022, there are still pockets of ideas worth investigating, including some defensive moves.



With that being said, I think investors should be keeping some cash on the sidelines, as when this market shows signs of a long-term turn, there will be plentiful bargains to be had.