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Sell a Quarter of Centuri Holdings (CTRI)

The November pullback has highlighted the market’s new AI leaders—stocks that smart money was eager to buy once the market started bouncing. Here are a few we like now.

Today we’re jumping into an emerging precision oncology company that is on the cusp of a major Phase 3 data release for a potential best-in-class treatment for rare eye cancers.

The company also has a stacked pipeline of other potential assets and has teamed up with some of the best in the business as it looks to transition from a clinical-stage company to a full-on commercial success.

Suffice it to say, the risks are somewhat higher with a stock like this, given that FDA approval, or denial, will have a major short-term impact on share price performance.

All the details are inside the December Issue of Cabot Small-Cap Confidential.

Thank goodness; the shutdown is over!

And that agreement (although not really agreeing on much!) has helped the markets to continue their upward momentum, albeit with a few hiccups. All eyes are on the Fed, as I write this, with expectations that it will once again lower rates by a quarter of a point.

The market is close to the high, and all eyes are on the Fed.

The market has priced in a 0.25% fed funds rate cut already. It could get ugly if the Fed doesn’t cut the rate on Wednesday. But that is unlikely. The rally in interest rate-sensitive stocks took place over the past few weeks. Now, those stocks are pulling back as investors fret over what the Chairman might say about future rate cuts in the minutes following the rate cut announcement.

Despite a quiet tone for much of last week, markets ended on a modestly upbeat note as interest rate-cut optimism firmed. Tech and growth names helped push the market higher on hopes the Federal Reserve will ease soon, while small caps and cyclicals got a lift on improving sentiment.

Things tend to regress to the mean, and recent history suggests that bodes well for consumer staples and housing, this year’s two weakest sectors.

The number of companies coming public continues to pick up, and the table is being set for some massive AI IPOs in the next 12 to 18 months.

Last week we talked about the split tape and said that, while sticking with our stance due to some positives (including some fresh breakouts from growth stocks), our antennae were up should we see a change in character. And this week was a step in that direction, as all the indexes are sporting losses, this time led by the big-cap indexes—as of this morning, the S&P and Nasdaq are off 2% or so, with smaller losses posted by other indexes.

WHAT TO DO NOW: Our Cabot Tides are now on the fence while our Two-Second Indicator is negative as the market is in the middle of another test of the uptrend. Meanwhile, growth stocks have bent but not too many have truly broken, and there are still a good number setups out there. We sold Arista (ANET) on a special bulletin this morning, leaving us with around 45% in cash; we’ll hold onto that tonight as we want to see how this pullback plays out. Details below.

Warrior Met Coal (HCC), Primo Brands (PRMB) and Millicom (TIGO) Report

The market’s momentum continued last week as a benign inflation print and another round of solid earnings backed up bullish sentiment—with virtually all of the major indexes moving higher. For the week the S&P 500 rose 0.7%, the Dow Jones Industrial Average advanced 0.8%, the Nasdaq Composite jumped 2.2%, but the Russell 2000 slipped 1.4%.

Hello from Senegal! While there is no regular Cabot Explorer issue this week as I am halfway around the world, I do have two new Sell alerts today.

Bitcoin tagged bear market territory intraday yesterday, but is it a sign of things to come or just part of a broader sell-off in more speculative assets?

It’s required patience to live with the ups and downs of owning Enovix (ENVX) for as long as we have. And the timeline here serves as another reminder that building a company to bring a new product to market is no small feat. In this case, the launch of high-volume sales keeps getting pushed out, which also pushes out performance of the stock. But we’re sticking with ENVX because those better days should still arrive. And when they do, I think the stock can capture investors’ imagination and push it to levels that will seem, at times, totally ridiculous. We have seen that time and time again with these types of stocks.