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Volatility is back, with the VIX spiking above 20 for the first time since early August and above 21 for the first time since June.

Tariffs are the reason. Specifically, escalating tariff rhetoric between the U.S. and China, which spooked the market into its worst one-day selloff since April last Friday, and has prompted wild intraday swings every trading session since. So far, the damage to the major indexes has been fairly limited (the S&P 500 is less than 2% off its highs, as of this writing), but under the surface, a few yellow flags have emerged, including the number of 52-week lows among NYSE-listed stocks topping the magic number of 40 (it’s up to 63) that typically precludes a more pronounced market pullback. We’ll see how much the just-underway third-quarter earnings season can act as a yin to tariffs’ yang and hopefully provide a relatively high floor for stocks in the coming weeks. As I wrote in this space last week, that may depend on whether companies can cross the relatively high bar of 8% earnings estimates.

The market is getting a little frothy.

The S&P 500 is up 5.5% in the five weeks since election day, though that’s a historically normal bump following an election. The bull/bear ratio topped 3.9 last week – just shy of the 4.0 “danger zone” that often precedes pullbacks, though it’s not the first time it’s been this high in recent months. And Bitcoin, an asset that thrives in bull markets and typically tops right before a major pullback, just crossed the $100,000 threshold for the first time and has more than doubled in the last three months.

The overriding question coming into last week was whether, after the V-bottom and strong rally for much of August, the market could keep going or would it fall back into a longer bottom-building process. After last week, it’s looking like stocks need more time to set up, as big investors returned from the long weekend and sold stocks basically every day. Of course, today saw a bounce, and a strong-volume rally with fresh breakouts among potential leaders would be very bullish -- but until we see that, we have to assume the market correction that began in mid July is still ongoing. Long story short, we continue to play things relatively cautiously, sticking with small positions and a chunk of cash on the sideline as we wait for more stocks to emerge on the upside. We’ll leave our Market Monitor at a level 6.

This week’s list has a lot of familiar names that are (or are close to) offering decent entry points. Our Top Pick is a consistent grower with a big story that’s trying to emerge from a three-plus-month rest.

Current Market Outlook


After establishing three bottoms in three months—with each bottom higher than the last—the broad market blasted higher last week, pushing our Market Monitor back into the green zone. But we’re not recommending indexes, we’re recommending stocks, and these stocks are not bouncing off bottoms, they’re breaking out to new highs! Furthermore, a lot of these market leaders are new names that are not familiar to investors—which means there is far more potential buying power than selling power in the stocks.

There are many great growth stories in the bunch, with many possibilities of huge long-term gains in revolutionary businesses, and our Top Pick is one of them; it’s Coupa Software (COUP), a small but fast-growing company whose spending-management software addresses a huge potential market.

Stock Name	Price	Buy Range	Loss Limit
AAXN (AAXN)	87.11	51-55	45-48
Coupa Software (COUP)	262.20	51-54	46.5-48.5
Green Dot (GDOT)	85.11	70-72	63-65
Guess (GES)	0.00	23-24.5	20.5-21.5
Petrobras (PBR)	14.78	15-16	13.8-14.8
Pure Storage (PSTG)	25.64	22-23.5	19.5-20
Teladoc, Inc. (TDOC)	127.95	44-49	39-41
Tenet Healthcare (THC)	0.00	30.5-32	28-29.5
Trade Desk (TTD)	468.02	71-76	65-68
Twilio (TWLO)	183.39	50.5-55	46.5-47.5

Current Market Outlook


After a punishing month, last week’s three-day bounce qualifies as a decent first step for the market and many individual stocks and sectors—most now have some breathing room above last week’s low points, and ideally, we’ll begin to see more potential leaders strut their stuff in the weeks ahead as the situation stabilizes. But a good first step is the best description we can give the bounce at this point given that the intermediate-term trends of just about everything (indexes, sectors, stocks) remain pointed down, and the odds favor plenty of volatility (at the very least) going forward. It’s not 2008 out there, but trends are negative, so until the bulls truly retake control, defense is the name of the game. We’re leaving our Market Monitor at a level 3.

The good news is that this week’s list has many recent earnings winners that could do well once a new uptrend gets underway. Our Top Pick is Exact Sciences (EXAS), a name we’re high on and that remains perched near its highs after another excellent quarterly report.

Stock Name	Price	Buy Range	Loss Limit
Bilibili (BILI)	28.71	13.3-14.5	11-12
Cooper Tire (CTB)	31.50	30.5-32.5	27.5-29
Deckers Outdoor Corp. (DECK)	141.68	126-131	114-117
Exact Sciences (EXAS)	116.91	70-74	63-65.6
HealthEquity, Inc. (HQY)	70.70	90-94	81-83.5
Keurig Dr Pepper (KDP)	25.35	25-26	22.5-23.5
Omnicell (OMCL)	81.03	66-69	61.5-62.5
Starbucks (SBUX)	64.49	62-64	56-57.5
Under Armour, Inc. (UAA)	26.82	22-23.5	20-20.9
VeriSign (VRSN)	190.71	157-162	145-149

Tom Hutchinson, Chief Analyst of Cabot Dividend Investor, Cabot Income Advisor and Cabot Retirement Club discusses investing for retirement.

Achieving your financial dreams has more to do with how you save and invest than where you start. These tips can help you embrace a “millionaire mindset” and reach your goals.

The story remains mostly the same in the market as it has for the past few weeks: The intermediate-term trend for nearly all major indexes and the vast majority of individual stocks is pointed down. That said, there also are a decent number of stocks holding up fairly well—and with earnings season starting in a major way this week, the potential is there for some leadership to develop if we see some strong upside gaps following reports. We’re all for it happening, but overall it’s best to remain cautious as the market attempts to turn the corner. Once again, we’ll leave our Market Monitor at a level 5.

This week’s list has a wide array of good-looking names, though for our Top Pick we’re going with a liquid leader that, while not in the first inning of its run, acts like it wants to go higher.

With weeks of churning action and complacent sentiment, the market was flirting with trouble for a while, and now it’s hit the intermediate-term tripwire. Thus, we mostly advise defense here—after a big run-up and the aforementioned churning, the odds favor more short-term downside testing and/or pain ahead. That said, the odds also favor a resumption of the longer-term uptrend down the road, so it’s best not to get too holed up in your bunker, either. Tonight, we’ll leave our Market Monitor at a level 6, and the main message is to hold a good chunk of cash, honor stops and be very selective on the buy side.

This week’s list is another broad mix of stocks, with something for everyone in terms of stories, sectors and setups. Our Top Pick is a reliable grower in the infrastructure area that’s pulling back toward support. Given the market, keep new buys on the small side.

The introduction features a few international trade issues, including disputes about international court systems within NAFTA and CETA, and a potential sunset clause in NAFTA. I’d go on to itemize which steel companies might benefit or be harmed by the latest round of steel tariffs, but I frankly believe that last week’s newest steel tariffs are simply a temporary negotiating ploy pertaining to NAFTA. Therefore, I thought it might be more useful to discuss what’s currently happening with NAFTA negotiations.

We’ve seen before how Trump’s shoot-from-the-hip approach to foreign policy has marked a significant departure from that of his predecessors. But clearly this latest exchange is different. Understandably, the market reacted negatively to the very mention of military conflict with North Korea.

We have a wonderful library of investing books here in the Cabot offices and refer to them very often. Here are some of our favorites.

Last Monday I published a column on medical insurance, health care, obesity and swimming ... and tried to wrap it all up in the mantle of “personal responsibility.” The quantity and quality of your feedback was impressive.

This week’s leading issue is the China virus, which is impacting markets.
We will need to keep an eye on this breaking issue. Still, Virgin Galactic jumped another 14% yesterday and is up over 80% in the last month.

Our emerging market timer is clearly positive and today’s recommendation is an emerging country that is the overlooked big winner from the two recent trade deals. It is in a nice uptrend and has fuel to burn going forward, backed by several positive trends.

The S&P 500 and Explorer stocks are in an uptrend in November as investors bet that the Federal Reserve’s interest rate hikes are done for now and that inflation will moderate without a recession. In addition, with most S&P 500 companies having reported third-quarter results, more than 80% have beaten analyst expectations.

With the investing climate improving, today we add two new positions to the portfolio. Enjoy, and Happy Thanksgiving!

Amid all the noise, you may have missed that Microsoft (MSFT) is investing $5.4 billion over the next two years to expand its existing data center capacity in Canada. The investment is primarily aimed at strengthening Canada’s AI and cloud infrastructure in Toronto and Quebec City.

Microsoft has pledged to keep Canadian data on Canadian soil and is launching a new “Threat Intelligence Hub” in Ottawa. This hub will allow experts to work closely with the Canadian government on cybersecurity threat monitoring.

This is a big win for Canada and is likely tied to one of the country’s secret weapons: cheap, dependable hydro power. This is where we go for this week’s new recommendation.

Short selling is complicated and risky, and we don’t recommend it for inexperienced investors, but those who consider it should keep the following strategies in mind.

“The whole world is under-followed relative to the Magnificent Seven…Whether you’re looking at a place like Japan… emerging markets… commodity sectors… there’s really a ton of opportunities that people just refuse to look at.”

-Richard Bernstein, CEO and CIO, RBAdvisors

In today’s note, we discuss pertinent developments for some of the stocks in the portfolio, including Centuri Holdings (CTRI), GE Aerospace (GE), Intel (INTC), Pan American Silver (PAAS) and Paramount Global (PARA).

Intel (INTC) is reportedly mulling a sales of its network and edge businesses as part of an ongoing focus on streamlining the company.

Pan American Silver (PAAS) stands to benefit from recent gold-to-silver ratio readings.

The market is a bit of a mess, but the selloff has created opportunities to pick up shares in high-growth small- cap names at what seems like extremely attractive prices.





Today’s recommendation is one of those names. It’s a marketplace company that is revolutionizing the outdated industrial manufacturing industry.





While the stock hasn’t been immune to bouts of market volatility it has been far more stable lately than most other high-growth names. It’s up over the last three weeks! And it offers investors exposure to an industry that is seen rebounding in 2022 and 2023.





Enjoy!