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A few weeks ago, we were optimistic that by this point the market would be in a full bore, all-out bull stampede. Instead, the market’s advance has turned into a choppy uptrend, especially among individual stocks and sectors, where a solid week or two of rising prices attracts profit-takers. Nevertheless, the good shouldn’t be the enemy of the perfect—most stocks are heading higher, and while volatility is elevated, there are plenty of winners to go around. Just remember to keep your feet on the ground, take a few chips off the table if your stock soars for a few days, and to cut all losses short. This week’s Top Ten contains a few names that are new to us, including one monster earnings winner last week. Our top pick is FMC Technologies (FTI), an oil service stock that is showing great price and volume action of late. It’s not as extended as some of its oil peers, but looks to be a great buy around here, or a little lower.

Stock Name	Price	Buy Range	Loss Limit
GTI (GTI)	0.00	18-22	-
JRCC (JRCC)	0.00	27-30	-
PXD (PXD)	0.00	60-65	-
SOL (SOL)	0.00	17-20	-
CRK (CRK)	0.00	51-55	-
CSIQ (CSIQ)	0.00	30-34	-
EAC (EAC)	0.00	49-52	-
ENER (ENER)	0.00	43-52	-
ERES (ERES)	0.00	14-16	-
FTI (FTI)	0.00	70-74	-

Last week has the potential to be a landscape-changing week for the market, as the major indexes performed well and, more importantly, leadership quality stocks displayed bullish action. That’s the main reason our Market Monitor above is tilted toward the bulls. Of course, it’s just one week, and nobody who studies the market can declare with certainty that the bear market is over. But it’s all about progress, and last week was a big step in the right direction. This week’s Top Ten remains heavy in energy and commodity stocks, but OptiMo (our screening system) turned up many more candidates than in weeks past; should the market continue higher, we expect many of the leaders to be featured right here in the weeks to come. Our favorite of the bunch is Exco Resources (XCO), a little known energy firm that’s showing tremendous accumulation as prices escalate. Try to buy on weakness.

Stock Name	Price	Buy Range	Loss Limit
FSLR (FSLR)	0.00	250-270	-
FST (FST)	0.00	52-56	-
LUK (LUK)	0.00	48-53	-
MEE (MEE)	0.00	44-47	-
MMR (MMR)	0.00	18-20	-
MOS (MOS)	0.00	112-120	-
RYL (RYL)	0.00	34-37	-
SCHN (SCHN)	0.00	75-79	-
XCO (XCO)	0.00	17-19	-
XEC (XEC)	0.00	53-57	-

The market’s action of two weeks ago gave evidence that the bulls were taking control…but last week’s volatility tells us the bears still have plenty of tricks up their sleeves. All told, this remains a tough market, so your best move is to keep some of your powder dry while focusing on specific stocks and sectors that are in their own, private bull markets. That means focusing on commodities, especially oil, as well as a few emerging growth-oriented leaders. Just remember that earnings season is beginning, so you should have a game plan in place on how you want to handle your stocks before they report. This week’s Top Ten is similar in structure to many of the past few weeks, but contains a couple of new names to consider. Our favorite of the week is Mechel (MTL), a company that has its hands in all the right cookie jars—steel, iron ore and coal. The stock powered ahead on big volume last week, and we think you can take a position now.

Stock Name	Price	Buy Range	Loss Limit
MTL (MTL)	0.00	130-150	-
NFLX (NFLX)	0.00	34-37	-
POT (POT)	0.00	165-175	-
XCO (XCO)	0.00	18-21	-
APA (APA)	0.00	123-129	-
CLR (CLR)	0.00	34-37	-
CSIQ (CSIQ)	0.00	22-25	-
FDG (FDG)	0.00	57-60	-
KEX (KEX)	0.00	53-56	-
MTH (MTH)	0.00	19-21	-

Last week we bemoaned the fact that the market had not yet decisively broken out to the upside, and indeed, most major indexes were below resistance and close to their longer-term 200-day moving averages. However, last week, leading stocks separated themselves from the pack—even during days the indexes were flat, the best stocks cranked out solid gains. We know that a pullback or correction could occur at a moment’s notice, yet we remain optimistic the best is yet to come. This week’s Top Ten reflects the broad bullish action among leading stocks last week, as we have a good mix of growth and commodity, big and small. Our favorite of the week is MasterCard (MA), a big-cap leader of this market advance that reacted very well to earnings last month, and has since quieted down beautifully. You can start a position in this area, and don’t worry about the high share price—just buy fewer shares.

Stock Name	Price	Buy Range	Loss Limit
ARG (ARG)	0.00	54-58	-
CLR (CLR)	0.00	47-52	-
EGLE (EGLE)	0.00	30-32	-
FLR (FLR)	0.00	185-195	-
GU (GU)	0.00	15-17	-
MA (MA)	0.00	270-290	-
MTL (MTL)	0.00	155-165	-
PXD (PXD)	0.00	64-68	-
UNT (UNT)	0.00	69-73	-
WTI (WTI)	0.00	46-50	-

The market’s growing volatility is a small area of concern on our mind today; if anything, it should cause you to manage your market exposure a little more carefully; buy low and keep losses small. On the other hand, there are still some very strong stocks out there, and as we all know, trends can persist far longer than expected. Four oil stocks anchor this issue of Cabot Top Ten Report, reflecting the fact that the sector is strong, that it held up extremely well in last Friday’s market dump, and that many mid-sized companies in the sector are attracting institutional investors’ money. As long as the trend continues—and we recognize that it may be overdone in the short-term—we like them all. But our Editors’ Choice is one of the two steel companies in the issue, Gerdau. Benefiting from the fast-growing Brazilian economy but diversified into the rest of South America and North America, it’s got a great track record of growth as well as a chart that’s been building a base for the past month.

Stock Name	Price	Buy Range	Loss Limit
BNI (BNI)	0.00	107-114	-
CXO (CXO)	0.00	35-38	-
ENER (ENER)	0.00	54-62	-
GGB (GGB)	0.00	48-53	-
MDU (MDU)	0.00	32-34	-
ME (ME)	0.00	32-34	-
MT (MT)	0.00	98-102	-
TAP (TAP)	0.00	57-59	-
WLL (WLL)	0.00	100-105	-
AGU (AGU)	0.00	88-93	-

We’ve studied the characteristics of bull and bear markets going back decades, and we know that bear phases often end with big selloffs caused by scary, headline-grabbing news. The Bear Stearns debacle certainly qualifies, and this financial panic could result in a sustainable low. So if you have a huge cash position (60% or more of your account), buying a few shares here or there could work out well. Just be sure to stick with what’s working–namely oil and natural gas stocks, as well as some steel names that are acting better–and remember to cut all losses short. Overall, you should stay in a mainly defensive posture until we see real signs of improvement. Our favorite stock this week is Steel Dynamics (STLD). The company raised its earnings guidance last week and the sector as a whole seems to be gaining sponsorship. We think you can buy a little on weakness.

Stock Name	Price	Buy Range	Loss Limit
DVN (DVN)	0.00	97 1/2 - 101 1/2	-
EAC (EAC)	0.00	35 1/2 - 38 1/2	-
HLF (HLF)	0.00	43-46	-
NFLX (NFLX)	0.00	31-33	-
NUE (NUE)	0.00	66-70	-
SLW (SLW)	0.00	17 1/2 - 18 1/2	-
STLD (STLD)	0.00	62-65	-
SWC (SWC)	0.00	15 1/2 - 18	-
SWN (SWN)	0.00	62-66	-
WDC (WDC)	0.00	29-31	-

The past couple of weeks have brought a distinct change in the market’s behavior. While the major indexes continue their mild advance, beneath the surface, we’re seeing more and more stocks acting in a healthy manner, including plenty that have gapped up on earnings. That tells us that big investors aren’t waiting patiently to build positions—they’re buying with both hands, driving the market’s leading stocks higher. There will be bumps in the road, of course, but you should be putting money to work in the market’s leading stocks at prudent buy points. This week’s Top Ten contains something for everyone—some commodity, some growth, some big, and some small. Our favorite of the week is Gafisa (GFA), a fast-growing Brazilian homebuilder that shot out of a nice, tight pattern last week. Earnings are due out tonight, but we think you can buy some around here.

Stock Name	Price	Buy Range	Loss Limit
CNQR (CNQR)	0.00	36-38	-
FEED (FEED)	0.00	17-20	-
FST (FST)	0.00	56-60	-
GFA (GFA)	0.00	42-46	-
KSU (KSU)	0.00	42-46	-
MA (MA)	0.00	260-280	-
MMR (MMR)	0.00	24-27	-
PWRD (PWRD)	0.00	29-32	-
WLT (WLT)	0.00	73-83	-
X (X)	0.00	155-165	-

Last week we opined that the headlines filled with bad news about Bear Stearns had the potential to mark a major low in the market’s bear phase. And this week, we’re more optimistic that’s the case – hence the Market Monitor above, which has shifted to neutral. Of course, the market is always a challenge, and last week brought rotation out of many commodity stocks, and into some other groups, such as financials and retail. In our view, the commodity stocks are a mixed bag (some are still fine, others, not so much), but the overall market action is encouraging, so you should be looking to put some—but not all—of your sidelined cash to work. This week’s list contains a mix of growth stocks, turnaround stories and some familiar faces; a few have broken out of good-looking basing patterns over the past few days. Our favorite of the week is Kirby (KEX), a shipping company that has staged an extremely powerful breakout in recent days, thanks to a great earnings report.

Stock Name	Price	Buy Range	Loss Limit
OFG (OFG)	0.00	20 - 22	-
PRGO (PRGO)	0.00	33 - 37	-
TUP (TUP)	0.00	36 - 39	-
URBN (URBN)	0.00	31 - 33	-
XEC (XEC)	0.00	47 - 52	-
CSX (CSX)	0.00	53 - 56	-
HCBK (HCBK)	0.00	16 - 18	-
JOE (JOE)	0.00	39 - 45	-
KEX (KEX)	0.00	52 - 55	-
MA (MA)	0.00	210 - 225	-

The sellers have dug in their heels during the past two weeks, and with the major indexes near their late-January lows, our Market Monitor above has moved back into bear territory. Growth stocks are still a mess, as they have been for weeks, and even some commodity stocks are now taking it on the chin. Still, the overall inflation theme is intact, and we believe putting a little money to work in the leading sectors (gold, oil, natural gas, coal) during this pullback could work out well. Just be sure not to go overboard; keep plenty of cash on the sideline until a real bull market begins, and keep commitments relatively small. This week’s Top Ten contains some familiar names, but also a couple of newer ones that have good potential. Our favorite of the week is Arch Coal (ACI), a well-positioned coal firm that’s pulled back to its 50-day line in recent days. Usually, the first 50-day test after a powerful breakout (like coal stocks have experienced) is successful, so you could buy a little right around here, and keep a stop in the low 40s.

Stock Name	Price	Buy Range	Loss Limit
ACI (ACI)	0.00	44-47	-
APA (APA)	0.00	112-120	-
AUY (AUY)	0.00	16-18	-
BUCY (BUCY)	0.00	95-102	-
EAC (EAC)	0.00	36-38	-
LKQX (LKQX)	0.00	21 1/2 - 23	-
MMR (MMR)	0.00	15 1/2 - 17	-
PGI (PGI)	0.00	14 - 15 1/2	-
SLW (SLW)	0.00	15-17	-
WMS (WMS)	0.00	35-39	-