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It’s that time of the year when economists and market mavens spill an abundance of ink making year-ahead stock forecasts and boom/bust warnings. As there seems to be an abnormal amount of recession predictions for the year ahead—including a few from some reputable sources—I think we should examine the question: Will the U.S. witness a major economic shock in 2026?

The title says it all—overall, the trend remains up for the major indexes and most stocks and sectors, and so our Market Monitor remains in bullish territory. But there’s also no question that the environment is whippy; big moves happen almost daily, and earnings season continues to bring a bunch of big moves in both directions. None of this is bad, per se, but it does mean you have to be more discerning with your buys and make sure your timing is right and your stops aren’t too tight.

This week’s list has yet another impressive crop of stocks with good stories and charts that have shown large recent buying power (usually on earnings). Our favorite is Yelp (YELP), a relatively recent IPO that has a great, sustainable story, rapid sales growth and a stock that just exploded higher on earnings.

Stock Name	Price	Buy Range	Loss Limit
Yelp (YELP)	41.30	29-31.5	26-27
Trulia (TRLA)	0.00	33-35	29.5-30.5
Seagate Technology (STX)	0.00	39.5-41.5	36-37
Parexel Corp. (PRXL)	0.00	42-44	39-40
IntercontinentalExchange, Inc. (ICE)	0.00	165-170	156-158
Hertz Global Holdings, Inc. (HTZ)	0.00	23-24.5	21-22
Hornbeck Offshore (HOS)	0.00	49-50.5	44-45
Guidewire (GWRE)	90.60	39.5-41	35-36
Gilead Sciences (GILD)	75.10	51-54	47-48
EQT Corporation (EQT)	0.00	73-75	67-69

All across America, but especially in the Northeast and the Midwest, Boomers will be putting their homes up for sale, and often leaving those areas for warmer climates.

Three of today’s featured companies seem most obviously ready to begin or continue run-ups in the coming days Yesterday’s earnings report made it clear that a fourth’s dividend is safe, with a current yield of 8.4%. Plus, energy stocks are acting well recently.

Current Market Outlook


Turkey’s currency crisis is the latest of what seems like a never-ending string of worries this year (volatility implosions, trade wars, rate hikes, etc.) that have hit the market to some extent. That said, we’re relatively encouraged by what we’ve seen during the past couple of weeks, with the major indexes holding and bouncing off important support, some new leadership emerging on earnings and other leading names forming solid bases. It’s still a tricky, narrow and choppy environment, which is a good reason to pick your spots, honor your stops and hold some cash. But we’re nudging our Market Monitor up another notch, as we see a healthy number of good-looking leading stocks and the market’s major trends remain up.

For the second week in a row, we have a growth-oriented list, a positive sign after the late-July selloff. Our Top Pick is Roku (ROKU), a very volatile name with a very big story. Keep it small, try to buy on dips and expect plenty of wiggles.

Stock Name	Price	Buy Range	Loss Limit
Alteryx (AYX)	132.78	51-54	44-46
Carvana (CVNA)	82.90	49-52	42-43.5
CF Industries (CF)	45.23	46.5-48.5	43-44
CyberArk (CYBR)	111.74	68-71	62-64
Match (MTCH)	0.00	47-49.5	43.5-45.5
Michael Kors Holdings Limited (KORS)	73.22	70-72.5	65-66.5
Roku, Inc. (ROKU)	150.46	53.5-56.5	47-49
Seattle Genetics (SGEN)	150.85	71-74	64.5-66.5
Teladoc, Inc. (TDOC)	127.95	67.5-71	59.5-62
Wingstop (WING)	121.52	58-60	53-54.5

The evidence has gotten a bit worse during the past week, with more misses than hits among leading growth stocks, and with the major indexes sagging a few days in a row. That said, early January is often tricky, with lots of crosscurrents, profit taking, repositioning and so on, so we’re hesitant to change our stance for the moment unless we see a decisive show of strength or weakness. The good news is that we are seeing more proper set-ups from many names that rested during the past six to 10 weeks; if a bunch of them emerge, it would give us some newer, fresher leadership to sink our teeth into.

This week’s list includes a bunch of smaller and less-well-known ideas, which we view as a good thing; most of the “obvious” stocks are either chopping around or suffering through some selling. Our Top Pick this week is YY Inc. (YY), which has had a huge run, but isn’t overly pricey and just surged out of a multi-week tight area. It’s very volatile but the potential is big.

Stock Name	Price	Buy Range	Loss Limit
YY Inc. (YY)	0.00	54-58	49-50
WisdomTree (WETF)	0.00	16-17	14.5-15
Western Digital Corporation (WDC)	0.00	80-83	75-76
Workday (WDAY)	194.88	81.5-85.5	77-78
Spirit AeroSystems (SPR)	92.54	32.5-34	30.5-31
NPS Pharmaceuticals (NPSP)	0.00	30.5-32	26-27
Jazz Pharmaceuticals (JAZZ)	0.00	120-127	112-113
Himax Technologies (HIMX)	0.00	12.5-14	11.5-12
E-House Holdings (EJ)	0.00	13.5-14.5	11-12
Canadian Solar (CSIQ)	0.00	33-35	28-29

The major indexes continue to act very well; today’s pop higher is par for the course. That said, the hot growth stocks of the past few weeks are starting to take a breather; there hasn’t been much abnormal selling, but new buying is being focused on some other groups. Moreover, investor sentiment has, by our measures, become elevated, which raises risk. Altogether, we’re leaving our Market Monitor where it has been. Continue to keep your feet on the ground and try to do your buying on weakness, or in stocks that are recently emerging from multi-week pauses.

This week’s list has a bunch of newer names to Top Ten, or at least stocks that haven’t appeared in a couple of months or longer. Our favorite is Five Below (FIVE), a small but exciting growth company whose stock just popped out of a long consolidation.

Stock Name	Price	Buy Range	Loss Limit
Swift Transportation (SWFT)	0.00	19-20	18-18.5
Qihoo 360 (QIHU)	0.00	79-84	68-69
Ocwen Financial (OCN)	0.00	54-56	49-50
Melco Crown (MPEL)	0.00	29-30.5	25-26
Cheniere Energy (LNG)	63.82	30-32	25-27
Gulfport Energy (GPOR)	0.00	60-63	53-55
Five Below (FIVE)	134.58	45-48	41-42
Dril-Quip (DRQ)	0.00	107-111	101-103
Concur Technologies (CNQR)	0.00	105-110	88-90
ACADIA Pharmaceuticals (ACAD)	47.84	22-23	19-20

From July 7 through July 17, we saw a harrowing decline among individual stocks and many major indexes. There was enough damage to suggest selling off a couple of your weaker holdings and possibly taking partial profits in a couple of winners. However, the market found some support last Friday, few stocks have broken down and the indexes have generally held support (though small-cap indexes look sick). Because of that, we remain overall bullish—you shouldn’t push the envelope here, but holding your best performers and keeping your eyes open for new leaders (possibly via earnings gaps) makes sense.

This week’s list surprised us (in a good way) by including a bunch of top-notch growth stories. Our Top Pick this week is Fairchild Semiconductor (FCS), a turnaround in the chip sector with huge projected growth. The stock just enjoyed a huge-volume, earnings-induced surge.

Stock Name	Price	Buy Range	Loss Limit
Weatherford International plc (WFT)	0.00	22-23	20.5-21
Vertex Pharmaceuticals (VRTX)	230.36	92-96	87-89
Vipshop Holdings (VIPS)	14.25	190-200	175-180
Newfield Exploration (NFX)	0.00	42-44	39-40
Cheniere Energy (LNG)	63.82	70-72	65-66
Keurig Green Mountain (GMCR)	0.00	117-122	110-112
Fairchild Semiconductor (FCS)	0.00	16-17	14.5-15
Blackstone Group (BX)	49.12	34-36	31-32
Applied Materials (AMAT)	0.00	22-23	20-21.5
Akorn (AKRX)	0.00	31-33	29-30

There are a decent number of warts on this market, including some lackluster action from the broad market, the fact that big-cap indexes have been chopping up and down for the past few weeks, and that small-cap indexes look sick. However, the major trends of the indexes remain up, and most leading stocks, while not tearing up the charts, are still in decent shape. (The many earnings reports last week brought a mixed bag of gaps up and down.) We have our antennae up, especially as more earnings reports push stocks this way and that, but right here the evidence continues to tell us to lean bullish and give our top performers a chance to keep rising.

This week’s list has a bunch of recent earnings winners; if the market is going to continue trending higher, most of these names should do well. Our Top Pick is Steel Dynamics (STLD). We’re usually not big fans of highly-cyclical steel stocks, but STLD just had a big quarter and an even bigger acquisition, with huge earnings forecasts for the next 18 months.

Stock Name	Price	Buy Range	Loss Limit
Under Armour (UA)	0.00	65-70	59-60
Steel Dynamics (STLD)	0.00	20.5-22	18.5-19
Silver Wheaton (SLW)	0.00	25-26	23-24
Royal Caribbean Cruises (RCL)	0.00	59-62	55-56
Patterson-UTI Energy (PTEN)	0.00	36-37	33-34
Polaris Industries (PII)	0.00	143-147	136-137
HCA Healthcare (HCA)	137.60	61-63	56-57
Canadian Pacific Railway (CP)	0.00	190-195	178-180
Cameron (CAM)	0.00	71-73	66-67
Apple (AAPL)	248.94	95-98	89-90

Current Market Outlook


The major indexes have been pulling back in recent days, and many are now back to their 50-day moving averages after a nice snapback for the second half of December. The question is whether the recent wobbles have more to do with year-end/start-of-year positioning (this portion of the calendar is notorious for crosscurrents creating volatility), or a renewed wave of selling that would basically be a continuation of what we saw in early December. We’re still optimistic, but we’re knocking our Market Monitor down a couple of notches today, and if all’s well, buyers should appear very soon as many stocks test support.

This week’s list has a larger-cap, steadier feel to it as the market favors “defensive growth” names most of all. Going along with that theme, our Top Pick is Whole Foods Market (WFM), whose stock is firmly in a turnaround phase.

Stock Name	Price	Buy Range	Loss Limit
Whole Foods (WFM)	0.00	48-50	44-46
Visa (V)	0.00	255-265	240-242
Virgin Airlines (VA)	0.00	40-43	36-37
PPG Industries (PPG)	0.00	219-230	209-211
O’Reilly Automotive (ORLY)	0.00	186-193	175-178
CarMax (KMX)	0.00	62-64	58-59
KLA Corp. (KLAC)	158.80	68-70	65-66
Jones Lang LaSalle (JLL)	0.00	145-149	139-141
Electronic Arts (EA)	0.00	45.5-47.5	43-44
Cirrus Logic Inc. (CRUS)	0.00	22-23.5	19.5-20

Each day brings something new. Some days every stock falls, other days they all surge, and some days, like Monday, undervalued stocks in the industrial, consumer and financial sectors jump (the Dow Jones Industrial Average gained 1%) while the Nasdaq slipped 2.4% - an enormous and historically unusual 3.4 percentage point gap, particularly as the indices went in opposite directions. Since February 12th, the Dow Jones Industrial Average has lifted by 1.1% while the Nasdaq has plunged by 10.5%, entering what the media call a correction.

While the market action has been somewhat exciting this week (though in the wrong direction), it was fairly dull for Cabot Undervalued Stocks Advisor recommended stocks in terms of news. This news drought will fade as five companies report later this week, with six more the following week.

Current Market Outlook


The market remains in very strong shape. Whether you’re looking at breadth, the trends of the indexes, the action of leading stocks, or sentiment among investors (mostly apathy with some disbelief thrown in), most of the evidence continues to point to higher prices ahead. Of course, that’s for the market as a whole—for individual stocks, earnings season is likely to rock the boat a bit, with some failing while others take the leadership mantle. You should remain heavily invested, but make sure you have your plan in place when it comes to handling your stocks during earnings season. As always, we’ll ditch any stocks that crack and hop on board new leadership that emerges.

This week’s list has a nice mix of sectors, including a few that have already reported earnings. Our Top Pick is Burlington Stores (BURL), a retailer that’s firing on all cylinders and recently pre-announced bullish earnings. Try to buy on minor weakness.

Stock Name	Price	Buy Range	Loss Limit
Yelp (YELP)	41.30	28.5-30	26-27
UFPI (UFPI)	0.00	100-104	91-92
PulteGroup (PHM)	45.93	20.5-21.5	19.5-20
Proofpoint (PFPT)	113.79	69-72	62-63
MSCI Inc. (MSCI)	0.00	80-82	76-77.5
MercadoLibre, Inc. (MELI)	980.83	145-150	138-139
Ligand Pharmaceuticals (LGND)	267.14	128.5-133	116-118
Ironwood Pharmaceuticals (IRWD)	0.00	13.5-14	12-12.5
New Oriental Education (EDU)	113.97	42-44	39-40
Burlington Stores (BURL)	193.95	71-73	66-67

The market took a hit last week, as Washington’s ineptitude continued to grab the headlines and cause investors to raise cash and book some profits. The action wasn’t pretty, for sure, but we can’t say it’s changed the big picture—the rally since the mid-November lows is still intact, and many of the stocks and sectors that had been performing well took last week’s dip in stride. Another day or two of big declines would change our outlook, but right here, you should continue to “lean bullish,” holding your better performers and putting some money to work as opportunities arise. You should, however, also hold a decent cash position until we see more power and decisiveness from the market.

This week’s list is almost evenly split between great growth companies and turnarounds, including a couple of well-known names that are looking good. We like many of the charts, but we’ll go with Qihoo 360 (QIHU) as our favorite of the week. The stock is a bucking bronco, but it has great growth and a big story.

Stock Name	Price	Buy Range	Loss Limit
Tenet Healthcare (THC)	0.00	30-31.5	-
Terex (TEX)	0.00	25-26.5	-
Rackspace (RAX)	0.00	69-72	-
Rackspace (RAX)	0.00	69-72	-
Qihoo 360 (QIHU)	0.00	26-28	-
Mohawk Industries (MHK)	0.00	87-89	-
General Motors Company (GM)	0.00	26-27	-
FLSR (FLSR)	0.00	28-30	-
Equinix, Inc. (EQIX)	547.73	198-205	-
3D Systems (DDD)	0.00	48-50	-
Bank of America (BAC)	0.00	10.8-11.4	-

Current Market Outlook


After lots of sloppy and weak action in June, July and the first half of August, the past two weeks have certainly been an improvement—the major indexes have popped higher, often in the face of bad news and uncertainties, and many of the resilient growth stocks did the same. We can’t conclude the market is out of the woods, as the broad market is still iffy, the intermediate-term trend is mostly sideways and relatively few stocks have actually broken out on good volume. Still, this is probably the best action by growth stocks (which have led the way higher this year) since June, so we’re not complaining. We’re moving our Market Monitor up one notch to a level 6 (out of 10); you can put a little more money to work, though we need more upside confirmation before getting bullish.

This week’s list contains a mix of familiar and newer names, all of which are showing great strength. For our Top Pick, we’re going with Match Group (MTCH), which has exploded to new highs; it’s a bit thin, but we like the overall growth story and the recent power. Try to buy on dips.

Stock Name	Price	Buy Range	Loss Limit
BeiGene (BGNE)	170.20	71-75	64-66
Catalent Inc (CTLT)	0.00	41-39	37-36
Franco-Nevada (FNV)	125.51	80-83	74-76
Match (MTCH)	0.00	21-22.5	19.5-20.5
Shopify (SHOP)	585.00	105-110	94-96
SolarEdge Technologies Inc. (SEDG)	124.37	25-27	23-24
TowerJazz (TSEM)	0.00	28-30	25.5-26.5
Universal Display (OLED)	187.54	123-129	113-116
Werner Enterprises (WERN)	0.00	31.5-33	29.5-30.5
Wynn Resorts (WYNN)	121.08	137-143	129-132

Current Market Outlook


The divergence continues, with the broad market looking increasingly weak. Even the rally last week couldn’t lift many stocks off their bottoms. So what comes next? Optimists may claim that low interest rates mean there are no attractive alternatives to stocks, but pessimists will note that divergences such as these seldom end well. Thus our market monitor remains unchanged—in slightly positive territory. You can still make money in this market, but more than ever, skillful stock-picking, combined with proper entry timing, is critical. So we urge you to study numerous individual stocks carefully. Try to buy on normal pullbacks. And above all, keep losses small if a stock doesn’t do what you hired it to do. Today’s roster includes some strong breakouts and a handful of set-ups, and our Editor’s Choice is Vantiv (VNTV), which vaulted out to new highs last week on a positive earnings report and is riding a fine trend of long-term growth.

Stock Name	Price	Buy Range	Loss Limit
Zoës Kitchen (ZOES)	0.00	43-45	39-39.5
WisdomTree (WETF)	0.00	24-26	21-22
Vertex Pharmaceuticals (VRTX)	230.36	135-137	121-123
Vantiv (VNTV)	0.00	42-45	39-40
ServiceNow (NOW)	341.86	76-78	72-73
Masco (MAS)	0.00	24.5-26	23-24
ICON plc (ICLR)	0.00	78-80.5	71-72
Equinix, Inc. (EQIX)	547.73	270-280	260-265
Buffalo Wild Wings (BWLD)	0.00	188-193	174-176
Anacor Pharmaceuticals (ANAC)	0.00	144-151	125-130

Current Market Outlook


The past week saw yet another round of rotation, but this one was the sharpest and most violent we’ve seen all year, with many leading growth stocks getting crunched while other areas of the market (especially those benefiting from likely lower corporate taxes) surged. Our advice, as usual, is to follow the plan—some growth stocks look very toppy after long, uninterrupted runs, and for those, selling (or partial selling) makes sense. But other growth stocks are pulling back normally, and some new leadership is emerging. It makes sense to pull in your horns a bit, possibly holding some cash until the market settles down; we’ve nudged our Market Monitor down to reflect that. Right now, we advise taking things on a stock-by-stock basis, holding your resilient/advancing issues, while honoring your stops and selling names that break down.

This week’s list is heavier on cyclical, building and retail stocks, all of which have caught huge updrafts during the past few days. Our Top Pick is Warrior Met Coal (HCC), a big turnaround play in the coal sector. Buy on dips.

Stock Name	Price	Buy Range	Loss Limit
Beacon Roofing (BECN)	0.00	60-63	55-56.6
CH Robinson (CHRW)	0.00	84-87	78-79.5
E*Trade Financial (ETFC)	0.00	48-50	44.5-46
Gardner Denver (GDI)	0.00	30-32	27.5-28.5
GrubHub (GRUB)	140.03	64-67	57.5-59.5
Michael Kors Holdings Limited (KORS)	73.22	55.5-57.5	51-52.5
Peabody Energy Corporation (BTU)	43.32	32.5-33.5	29.5-30.5
Tyson Foods (TSN)	0.00	80-83	74-76
USG Corp. (USG)	0.00	36.5-38	34-35
Warrior Met Coal (HCC)	0.00	21-22.5	17.5-18.5

Current Market Outlook


Last week didn’t see much net change in the major indexes, but volatility has surged, with big swings up and down based on the news of the day. Overall, not much has changed—some stocks and sectors are acting well, but many others are chopping around and some (like MLPs) are literally crashing. By our measures, the market’s trends are still pointed up, but it’s close. All in all, we’re sticking with a relatively neutral stance, meaning we’re holding our top performers, but also holding some cash and being very selective on the buy side. And if something breaks down or trips its stop, it should be jettisoned quickly.

This week’s list continues with the bigger-cap, growth-oriented theme that’s been present for the past few weeks. Our Top Pick is Ulta Beauty (ULTA), which just gapped up to new highs after three months of rest following a great earnings report. Try to buy on dips.

Stock Name	Price	Buy Range	Loss Limit
Weibo (WB)	98.16	18-19	16-17
Western Alliance (WAL)	0.00	36.5-38	34.5-35
Ulta Beauty (ULTA)	331.95	180-184	169-170
Palo Alto Networks (PANW)	236.92	188-193	172-174
Nevro Corp. (NVRO)	0.00	58-62	52-54
Netflix, Inc. (NFLX)	423.92	123-127	113-115
Southwest Airlines (LUV)	0.00	48-50	44-45
Jabil Inc. (JBL)	41.50	24.5-26	23-23.5
Alibaba (BABA)	254.81	82-85	76-77
Broadcom Limited (AVGO)	266.26	142-146	132-134

There continue to be lots of crosscurrents in the market, with many stocks chopping around, lots of big earnings moves (in both directions) and a few leaders from this summer coming under pressure. Overall, though, the bull market is intact, so the lesson from the action is to pick your spots and remain selective when doing new buying. As for your winners, you should give them a chance to breathe, but it’s also important to have mental stops in place—we’re still seeing plenty of rotation out of this summer’s highfliers and into other stocks and sectors.

This week’s list has few stocks that are on most investors’ radar screens, which we view as a good thing. Our favorite of the week is WisdomTree (WETF), a smaller Bull Market stock with a unique story and huge growth numbers.

Stock Name	Price	Buy Range	Loss Limit
United States Steel Corporation (X)	0.00	25-26.5	21-22
WisdomTree (WETF)	0.00	13-14	11.5-12
Trinity Industries (TRN)	0.00	50-52	47-48
Taser (TASR)	0.00	15.5-17	13-14
Las Vegas Sands Corp. (LVS)	0.00	68-70	62-64
Gilead Sciences (GILD)	75.10	68-71	63-64
CARBO Ceramics (CRR)	0.00	114-122	100-102
BE Aerospace (BEAV)	0.00	79-82	74-75
CR Bard Inc. (BCR)	0.00	133-136	126-127
Amazon.com (AMZN)	2.00	345-355	328-332

California is burning and the rest of the country is in a deep freeze. It seems like a metaphor for the mixed messages we’ve been getting from the market in recent weeks, with stocks running very hot and cold since the start of December as the major indexes have mostly held near their highs but the under-the-surface action has been wobbly at best. The last six weeks have been rough on small caps in particular. As both a value investor and a contrarian, that spells opportunity!

So today, we add one of the highest-profile, more beaten-down small-cap stocks out there to our Buy Low Opportunities Portfolio. The stock is miles from its Covid-era highs, but it’s starting to build momentum for the first time in years: shares have tripled since bottoming five months ago. And it’s a name virtually everyone knows.

Details inside.