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In twenty years of price forecasting, the most valuable lesson I have learned is that the rate of change tells us everything we need to know about the immediate future. When it accelerates, it tends to continue accelerating. When it decelerates, it tends to continue decelerating. And surprisingly, this tends to be the case no matter what metric we choose to examine.

The overall market continues to look very bullish whether looking at our core indicators or the many unusual signs of strength (that portend higher prices down the road). That said, there are some headwinds near-term, especially in many growth stocks, which have been doing more chopping than advancing in recent weeks. That’s no reason to be negative, but we’re following along with that growth stock evidence, trimming our sails a bit while looking to see what earnings season brings.

The big macro news this week is that the U.S. economy is doing well and there’s no really clear reason for the Fed to cut interest rates. Trade deals continue to be announced, and the U.S. should be bringing in a good deal more money due to tariffs than it has in the recent past.

Real GDP was just announced to have risen 3%, thanks to capex on hardware and software to build out data centers. Results from Microsoft (MSFT) and Meta (META) confirmed this trend.

Our plant-touching Cabot Cannabis Investor portfolio is up 29.2% since June 25. It is still down for the year. But it is performing better than the sector.

I believe it continues to make sense to stay long cannabis stocks, despite the big gains in the past month. Now, with the appointment of Terrance Cole to lead the Drug Enforcement Administration (DEA), cannabis investors are one step closer to learning how serious the Trump administration is about rescheduling cannabis.

WHAT TO DO NOW: The market is still singing a similar tune, with the big-cap indexes looking fine (and, now, some broader indexes looking better), but growth stocks remain tricky, with many names marking time and more looking iffy. In a special bulletin yesterday, we took partial profits in GE Aerospace (GE), and tonight we are moving Rubrik (RBRK) back to Hold as it’s been unable to escape the weak sector action. That will leave us with 43% cash, which we’ll sit with for now, though we could put some to work in some of our strong performers if growth stocks can perk up.

Most of our cannabis companies reported earnings in the past week.

Here are some of the key sector insights, followed by company updates.

It has been called “Beijing’s missile fashion week” by news outlets, and it commanded a fair share of this week’s headlines. It’s also a reminder to investors why the defense sector is still in a leadership position from a relative strength standpoint, driven by ongoing military conflicts in Eastern Europe and the Middle East.

The major indexes continue to march higher, but trouble is brewing under the surface. That’s been reflected by the number of earnings blowups of late, including in many stocks of companies that beat estimates. Our portfolio was not immune to that phenomenon last week, and as a result, we’re doing some late-summer housecleaning this week, selling four positions that have been lagging and got worse after reporting earnings. Meanwhile, with technology stocks becoming a bit overcooked, today we add to our portfolio a manufacturing name that makes essential real-world products that are always in high demand. It’s a stock whose shares have been building momentum – enough to attract the attention of Cabot Top Ten Trader Chief Analyst Mike Cintolo.

Details inside.

Housing-related stocks have been one of the biggest underperformers in the last year. Can impending Fed rate cuts give them a boost? These three big-name homebuilder stocks stand the best chance.

It’s been a rough few years for the housing sector.

Ever since the Fed raised interest rates to multi-decade highs in 2022/2023, both housing starts and existing home sales have fallen off a cliff in the U.S. Housing starts peaked at 1.82 million in April 2022; they dipped as low as 1.28 million this May, a 30% dropoff. Existing home sales have fallen even further, from a 6.6-million-unit peak in January 2021 to a 3.9-million-unit nadir this June – a 41% haircut.

What a difference a few weeks can make. The S&P 500 has moved up 15% from the low of October. Have we turned the corner on this bear market?

The main catalyst is a slower-than-expected inflation report. While still unacceptably high, inflation showed real signs of slowing in October. That means the Fed could be done hiking rates sooner. The chief cause of this bear market, rising inflation and a hawkish Fed, show signs of abatement.