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The market’s main trend remains up, though there is certainly some rotation going on, with technology stocks pulling back and financials and medical stocks surging. My advice is to react slowly to these shifts, taking things on a stock by stock basis according to what the stocks are actually doing—and not assuming anything.

We’re restoring Buy ratings on a couple of stocks, and averaging up in one of them as it has begun to emerge from a multi-month rest period. That said, we’re still holding about 14% in cash given the iffy broad market and the many divergences in the market.

A few of our stocks have been taking a breather, but the Cabot Emerging Markets Timer remains resolutely positive. Investors have remained optimistic despite a truckload of negative news and the fundamentals are solid for the stocks in the portfolio. I also have an overlooked Indian stock to recommend that ties in with the recent improvement in commodity prices.

Today’s featured stocks include four companies that should benefit from the post-Hurricane Harvey rebuilding process.

Current Market Outlook


Last week was another constructive week, as the major indexes and leading stocks gave back just a smidgen of their prior two weeks of gains. Plus, of course, today’s action offered more encouragement, with the big-cap indexes spiking back toward all-time highs and many individual stocks notching good gains. We can’t conclude we’re completely out of the woods, especially as volume remains light (today’s volume on the Nasdaq was below average) and the broad market is still so-so (small- and mid-cap indexes are still in the middle of multi-month ranges). Still, the evidence has grown steadily more bullish recently, so we’re following along—we’re bumping our Market Monitor up to level 7 (out of 10), and continued strength would have us getting aggressively invested.

This week’s list is a mixed bag, with some special situations, many different sectors and a few recent breakouts. Our Top Pick is ST Microelectronics (STM), a fast-growing chip maker with a good story and chart. Try to buy on dips.

Stock Name	Price	Buy Range	Loss Limit
AbbVie Inc. (ABBV)	93.53	81-85	74-76
ASML Holding (ASML)	350.01	158-162	147-150
Guidewire (GWRE)	90.60	76-79	71-73
Ligand Pharmaceuticals (LGND)	267.14	131-134	121-124
Lumber Liquidators Holdings, Inc. (LL)	0.00	36-38.5	32.5-31.5
Owens Corning (OC)	0.00	71-74	67-68.5
Pure Storage (PSTG)	25.64	13.5-14.5	12.4-12.9
Barrick Gold (GOLD)	27.20	101-105	93-95
STMicroelectronics (STM)	30.09	17.5-19	16.3-16.8
Summit Materials (SUM)	0.00	29-30.5	27-28

Despite a hiccup in the past couple of days from Chinese stocks, the U.S. market and the emerging markets continue to outpace their moving averages by comfortable margins. In today\'s issue, I talk about how little profit taking in a couple of our strongest stocks can protect your portfolio while maintaining your exposure.

Our pick this week is a resilient stock with great growth, a reasonable valuation and is part of a sector that\'s holding up well. We think it offers both low risk and solid returns, especially once the market resumes its longer-term advance.

While U.S. indexes have been choppy-to-down during the past few weeks, emerging market stocks remain in good shape and our Emerging Markets Timer is positive. Our new recommendation tonight looks like one of the best ways to play the general boom in electric vehicle production in the years ahead.

Tonight’s Stock of the Week is little known among investors, but it has a national brand name and an excellent cookie cutter growth story. The stock recently reacted well to earnings and has tightened up a bit; we think the next big move is up.

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

The major indexes have been flopping around this week, with some ups and downs, though things are quieting down just a bit. Growth funds have been mostly in the same boat, choppy but up a smidge on the week. Not the worst, not the best.