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The big event last week for the market was that, by our measures, the intermediate-term trend of the major indexes and many growth funds turned up, which is enough for us to extend our line a bit—but, at this time, just a bit, as there remain many headwinds, including the longer-term trend and (very important) the lack of upside breakouts quite yet. That tells us to go slow and keep our eyes peeled for further upside confirmation—if we see that, we’ll continue to put more money to work in fresh leaders, but should the nascent rally hit a wall, we’ll hold off. For now, we’ve nudged our Market Monitor up to a level 4 and will take it day by day from here.


This week’s list has a bunch of names that have shown solid power of late, though most do report earnings within the next two or three weeks, so be sure to keep things small and aim for dips.. Our Top Pick is an innovative software firm whose stock is actually tightening up after a good-looking bottoming process.

Welcome to our TOP PICKS issue! For this issue, I asked the Cabot analysts to give me a couple of their top picks for 2024. I hope you will be pleased with the diversity—market-cap and sector-wise—that the analysts have offered.

But first, let’s talk about the market.

The story remains mostly the same: When it comes to rubber-meets-the-road evidence, nothing has changed—the intermediate-term trend of the major indexes remains down, and growth funds and individual stocks are in the same boat. Until some of that changes, it’s telling you the bulls are swimming upstream, so it’s best to be defensive. However, we also don’t want to ignore many secondary measures that are showing some encouraging action, including the indexes holding above their recent lows and increasingly negative sentiment. The pieces are in place for some sort of turnaround, but we’ll have to see it happen before taking action.


This week’s list is again heavy in commodity-type names, though a few other areas popped up as well. For our Top Pick, we’re going with a growth-y name that’s holding well—it’s probably the best-looking non-commodity stock in the market today.

This year has been about as choppy and tricky as we can remember, so nothing the market would throw at us from here would come as a surprise. That said, there’s no question the snapback of the past couple of weeks has been very encouraging—the major indexes have rebounded beautifully, with many regaining their 50-day lines, and individual stocks (especially growth stocks) have done great, with more and more moving back to (or out above) their prior highs. We also like that the bounce has been broad, with the on-again, off-again, rotational action taking a backseat to outright buying. Obviously, the market isn’t totally out of the woods, as most indexes are still range-bound and earnings season is upon us, which will often change the trajectory of things. But we always go with what we see, and the odds are increasing that the September/early October correction is over. We’re moving our Market Monitor back up to a level 7, and could go higher than that if the good vibes continues.

This week’s list represents the broad advance of late, with stocks of all different spots and stripes making the cut. Our Top Pick is Zscaler (ZS), which has lifted to new price and relative performance highs after a six-week pullback.

Stock Name	Price	Buy Range	Loss Limit
Atlassian (TEAM)	415	392-405	360-365
Cameco Corporation (CCJ)	26	25-27	21.5-22.5
Continental Resources (CLR)	52	49-51	42.5-43.5
Datadog (DDOG)	157	152-158	135-138
MGM Resorts (MGM)	48	47-48.5	42.5-43.5
Range Resources (RRC)	24	21.5-23	18.5-19
Snowflake (SNOW)	338	322-333	286-292
Tesla, Inc. (TSLA)	870	845-865	760-770
XENE (XENE)	31	29.5-31.5	25-26
Zscaler (ZS)	301	292-302	262-268

One common market saying is that rotation is the lifeblood of a bull market, but that’s only partly true: If the rotation sees leaders pull in normally while buying pressures broaden out, that is a good thing, giving the market a stronger foundation for future gains. But if the leaders crack intermediate-term support while money chases beaten-down titles, that can lead to trouble as the market (and those laggards) often end up following the leaders lower. Happily, so far, the rotation that began in late June and has carried on since has been more in the former camp. While we’ve pulled in our horns a bit, we remain overall bullish. We’ll move our Market Monitor to a level 7 and see how things go from here.

This week’s list definitely has a value and turnaround flavor, following along with some of the rotation seen in recent weeks. Our Top Pick reacted well to earnings last week (heaviest daily volume since 2020!) after management reinstated bullish guidance. Start small and add on the way up.

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