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Current Market Outlook


Once again, the major indexes tested new high ground last week, and once again, the sellers appeared and drove the indexes and many stocks lower. Day-to-day fluctuations aside, the story remains the same—the intermediate-term trend remains sideways, though below the surface, there are many stocks and sectors making good-sized multi-week moves. So the goal, of course, is to stick with what’s working (though taking partial profits on the way up makes sense) while jettisoning any stocks that break support. Keeping some cash on the sideline is also wise, at least until the market begins a sustained uptrend.

This week’s list has it all—some speculative stocks, some stocks that have pushed ahead on big news and some turnaround situations. Our Top Pick is Ligand Pharmaceuticals (LGND), partly because of the big story, and partly because of the lower-risk set-up in its chart.

Stock Name	Price	Buy Range	Loss Limit
T-Mobile US (TMUS)	0.00	36-38	33.5-34.5
NetEase, Inc. (NTES)	0.00	138-143	127-128
MercadoLibre, Inc. (MELI)	980.83	140-145	130-133
Louisiana-Pacific (LPX)	0.00	17.5-18.5	16-16.5
Ligand Pharmaceuticals (LGND)	267.14	83.5-87	79-80
Integrated Device Technology (IDTI)	0.00	23-24	21-22
Dunkin’ Brands Group, Inc. (DNKN)	0.00	52-53	49-50
Clovis Oncology (CLVS)	0.00	84.5-87.5	77-78
Ciena (CIEN)	44.25	23-24	20.5-21
Broadcom Limited (AVGO)	266.26	143-148	128-130

Current Market Outlook


The selling pressure that appeared two weeks ago carried through to last week, with many leading stocks breaking down and others falling back into consolidations. That said, it’s not the end of the world—many major indexes are now testing their 50-day lines, and a bunch of stocks are in the same boat. There’s no question that the evidence has worsened lately, which is why our Market Monitor is back down to a reading of 6 (out of 10), but we’re most interested in what happens from here, which will probably go a long way toward determining the market’s next intermediate-term move. All told, you should still hold your strong, profitable stocks, but we also think it’s best to cool your heels a bit, keeping new buys small and holding some cash as we wait to see the market show its hand.

In the meantime, we’re using this brief period of market weakness to identify the stocks unaffected by the selling, as those will likely do the best when the market resumes its major advance. This week’s list has plenty to choose from, and our Top Pick is Wayfair (W), which is unusually strong—keep positions small and try to buy on dips.

Stock Name	Price	Buy Range	Loss Limit
Five Below (FIVE)	134.58	93-97	83-85
Ligand Pharmaceuticals (LGND)	267.14	202-211	185-188
Netflix, Inc. (NFLX)	423.92	385-400	345-355
Oasis Petroleum (OAS)	12.57	12.1-12.9	11-11.3
Supernus Pharmaceuticals (SUPN)	52.50	54-57	49-51
Teladoc, Inc. (TDOC)	127.95	56-60	49-51
Ultragenyx Pharmaceutical Inc. (RARE)	87.63	74-78	66-68
Wayfair (W)	167.03	112-117	100-104
WellCare Health Plans, Inc. (WCG)	271.83	238-245	220-225
WPX Energy (WPX)	0.00	17.4-18.5	16-16.7

Current Market Outlook


The market was due for a pullback after three straight good weeks, and that’s what we’re seeing now as investors ponder 50-50 polls on Britain’s upcoming E.U. vote (a yes vote is generally considered bearish), the Fed’s meeting this week and Sunday’s horrible terrorist attack. The bottom line is that many indexes are approaching their 50-day lines, though few leading stocks have broken down. As always, you should play it by the book: By our measures, the market’s trends are still sideways-to-up, so we’re sticking with our overall bullish stance; dips following strong advances still look buyable. That said, you should also honor your stops and loss limits, jettisoning any stocks that break support. Further market weakness would have us turning cautious, but today we’ll keep our Market Monitor where it’s been.

Encouragingly, we had no problem finding some great-looking stocks. Our Top Pick is Dave & Buster’s (PLAY), which has a newer retail concept that’s working well, and the firm is on a solid expansion pace.

Stock Name	Price	Buy Range	Loss Limit
Dave & Buster’s (PLAY)	57.01	44.5-46.5	41-42
Penumbra Inc. (PEN)	173.25	57-59	53-54
Match (MTCH)	0.00	13.5-14.5	12-12.5
LLL (LLL)	0.00	142-146	132-134
Halliburton (HAL)	0.00	43-44.5	39.5-40
Cornerstone OnDemand (CSOD)	51.01	39.5-41.5	36.5-37
CDK (CDK)	0.00	54-56	51-52
Burlington Stores (BURL)	193.95	61-63	56-57
AMN Healthcare (AHS)	0.00	38-40	35-36
Agnico Eagle Mines (AEM)	79.05	49-51	45-46

Current Market Outlook


It’s been a frustrating past month in the market, with the major indexes chopping lower, the Nasdaq breaking its 50-day line, many stocks blowing up on earnings and most investors throwing up their hands in disgust. Yet, through it all, the evidence hasn’t deteriorated to a major degree—the intermediate-term uptrend hasn’t broken, and most strong, liquid stocks that weren’t maimed during earnings have held key support. Today was certainly encouraging, though it’s too soon to assume the pullback is over so we’ll keep our Market Monitor where it is today. However, the next few days should be telling—a decisive break lower from here will have us trimming our sails, but another good day or two would be a great sign that the post-February advance is resuming.

This week’s list is encouraging in that we see more true growth stories—or at least stocks with some major catalysts. Our Top Pick is Martin Marietta Materials (MLM), which is one of the big raw material suppliers for the construction industry. Buy on dips.

Stock Name	Price	Buy Range	Loss Limit
TransDigm (TDG)	599.41	244-250	230-233
NVIDIA Corporation (NVDA)	242.42	40-41.5	35-35.5
Newmont Mining (NEM)	57.31	33-34	29-30
Martin Marietta Materials (MLM)	261.52	179-184	164-166
Jacobs Engineering Group (JEC)	89.83	48-50	44.5-45
Electronic Arts (EA)	0.00	73-76	66-67
EBIX Inc. (EBIX)	0.00	45-47	41-41.5
Blue Buffalo Pet Products (BUFF)	0.00	25-26.5	23-23.5
B&G Foods (BGS)	0.00	41-43	37-38
Berry Global (BERY)	64.22	37-38	34.5-35

Current Market Outlook


The market began 2016 on a bearish note, with the major indexes plunging and even the market’s most resilient stocks getting hit very hard. The “reason” for the decline was supposedly a meltdown in China’s stock market overnight, but there’s no question the U.S. market’s underpinnings had been weak for a while (hence our cautious approach in recent weeks). From here, anything is possible—January is a notoriously volatile month full of crosscurrents, so yet another snapback is possible. But we’re moving our Market Monitor down a notch into bearish territory given the evidence; now’s the time to think more about capital preservation and work mostly on building a watch list, keeping new buys to very small positions.

This week’s list has many great ideas, stocks that should do well if the market does find strong support. Our Top Pick is SolarEdge (SEDG), which is aiming to be the Intel of the solar sector; the company and the sector as a whole are turning around after a big decline last year.

Stock Name	Price	Buy Range	Loss Limit
SolarEdge Technologies Inc. (SEDG)	124.37	25.5-27	22-22.5
Royal Caribbean Cruises (RCL)	0.00	96-99	91.5-92
Pacira Biosiences (PCRX)	54.85	72-75	66-67
Ophthotech (OPHT)	0.00	70-74	64-65
Universal Display (OLED)	187.54	51.5-54	47.5-48
Nevro Corp. (NVRO)	0.00	64-67	57-58
Neurocrine Biosciences (NBIX)	123.40	50-53	45-46
Dollar Tree (DLTR)	0.00	74.5-78	71.5-72
China Biologic Products (CBPO)	0.00	135-140	123-125
Acorda Therapeutics (ACOR)	0.00	39.5-41	37-38

Current Market Outlook


After five straight weeks on the upside, the major indexes have retreated mildly in recent days, keeping the intermediate-term uptrend firmly intact. Going forward, the key will be how the market handles itself during any further weakness—if dips are modest and lead to renewed upside (especially with growth stocks beginning to hit new highs), then a legitimate bull phase will likely be in place. If the selling pressures intensify and the major indexes sink, that would obviously tell you the opposite. Right now, given the evidence, we remain optimistic, but not fully bullish, until the longer-term trend and growth stocks kick into gear. We’ll be watching for it.

This week’s list is again heavier on commodity and turnaround ideas than true growth stories. Our Top Pick is Wynn Resorts (WYNN), which has bottomed out and begun a new advance, bolstered in part by a new resort opening in Macau later this year.

Stock Name	Price	Buy Range	Loss Limit
Wynn Resorts (WYNN)	121.08	87-91	79-80
Proto Labs (PRLB)	0.00	73.5-76.5	68-68.5
Parsley Energy (PE)	0.00	20-21	18-18.5
Nucor Corporation (NUE)	66.20	44.5-46	41.5-42
NCR Inc. (NCR)	0.00	27-28	24-24.5
Mellanox Technologies (MLNX)	92.00	52-54	47-48
Inphi (IPHI)	120.16	31.5-33	29-29.5
Barrick Gold (GOLD)	27.20	86-89	80-81
Finisar (FNSR)	0.00	17-18	15-15.5
FedEx (FDX)	0.00	156-160	146-148

Current Market Outlook


Last week brought the long-awaited breakout by the major indexes, but after a couple of days at new high ground, most sank back into their prior five-plus-week ranges today; small-cap indexes even broke their 50-day lines. With that said, most indexes remain in good shape, and the same can be said about the vast majority of stocks (a bunch of which have gapped up on earnings) and sectors—in other words, the evidence remains far more positive than not. Because of that, it’s fine to take a swing at some strong stocks on pullbacks, especially those that have recently shown great accumulation. However, we’re going to leave our Market Monitor at level 7 today given the lack of progress in the indexes, and we’ll keep our eyes open should today’s selling persist.

The good news is that this week’s list is chock-full of earnings winners that should find support on weakness. Many look enticing, but our Top Pick is Skyworks (SWKS), which is one of many super-strong chip stocks that just enjoyed a big earnings gap as investors anticipate better results ahead.

Stock Name	Price	Buy Range	Loss Limit
Allegheny Technologies (ATI)	27.78	20-22	17.5-18.5
Broadcom Limited (AVGO)	266.26	196-202	182-185
Cheniere Energy (LNG)	63.82	46-48	42.5-43.5
Citizens Financial Group (CFG)	0.00	35-37	32-33
Eagle Materials Inc. (EXP)	0.00	103-106	96-98
International Paper Company (IP)	0.00	55-57	51.5-52.5
Micron Technology, Inc. (MU)	43.31	22.5-24	20.5-21
Royal Caribbean Cruises (RCL)	0.00	92-96	85-87
Seagate Technology (STX)	0.00	42.5-45	38-40
Skyworks Solutions (SWKS)	0.00	88-92.5	82-84

Current Market Outlook


It’s the last week of August, and that means that many big investors (and more than a few small investors!) are at the beach and volume remains relatively light. Last week, though, was generally constructive for the market, but at this point, not much has really changed—the intermediate-term trend of the major indexes is sideways-to-down, the broad market is iffy and few stocks are pushing higher with any consistency. That’s not to say the bears are completely in control, either, but we continue to think a cautious stance makes sense—limiting new buying and holding some cash, but also giving your strong, profitable holdings a chance to catch their breath and resume their longer-term upmoves. We’re keeping the Market Monitor at a level 5 tonight.

Tonight’s list definitely has a more diverse feel to it, with a couple of materials stocks and some special situations. Our Top Pick is Alcoa (AA), which could morph into a leader if the recent strength in materials stocks is sustained. Shares just broke out from a nice base; try to buy on dips.

Stock Name	Price	Buy Range	Loss Limit
58.com (WUBA)	0.00	61-65	54-56
Alcoa (AA)	0.00	40-42.5	36.5-37.5
Alexion (ALXN)	0.00	134-139	125-128
Autodesk (ADSK)	229.00	109-113	103-105
CyrusOne Inc (CONE)	0.00	60-62.5	56-57.5
Live Nation Entertainment, Inc. (LYV)	0.00	38-40	35-36
Southern Copper (SCCO)	0.00	39.5-41.5	37-38
Supernus Pharmaceuticals (SUPN)	52.50	42-44.5	38.5-39.5
Westlake Chemical Corp. (WLK)	0.00	71.5-74	67-68.5
Yelp (YELP)	41.30	40-43	36.5-38

Thank you for subscribing to the Cabot Turnaround Letter. We hope you enjoy reading the September 2023 issue.

The attention of most investors, commentators and analysts has been on the winners, notably the Magnificent Seven, driving this year’s stock market rally. As contrarians, we are fine with letting a few overpriced trendy stocks capture the spotlight. One place that draws our attention is the other end of the spectrum – those with the worst performance. While most of these stocks fully deserve the market’s dour judgment, some have favorable changes underway. We look into four large and mid-cap stocks that fit this description and one that does not. We also discuss a tactic to help improve one’s success in investing in out-of-favor stocks.

Our feature recommendation this month is Advance Auto Parts (AAP), one of the four major auto parts retailers. The shares have fallen sharply out of favor, but a comprehensive and much-needed overhaul is now starting.

We also include our recent Sell recommendations: Toshiba (TOSYY), Holcim AG (HCMLY), First Horizon (FHN) and ESAB Corporation (ESAB), and our suspension of our rating of shares of Kopin Corporation (KOPN).

Back on October 13, I penned a CWA titled “Finding Your System” where I wrote about finding a system that fits you. It’s a topic that’s frequently on my mind - money management-type topics are always worth some thought - and I was reminded of it just a few days ago when I was re-reading parts of Reminiscences of a Stock Operator, the fictional biography of Jesse Livermore, and one of the best investment books ever written.

The market hates uncertainty and it is getting it by the bucket-full right now. If you need a simple explanation for this volatility, that’s it.

This has been a relatively quiet week for us in terms of quarterly reports as Repligen (RGEN), which reported this morning (details to follow), was the only portfolio company on the schedule.

We’re going to reel in a few profits during this post-election stock market surge in the event the honeymoon is short-lived. Along those lines, today I recommend you sell your remaining stake in Mitek (MITK), as well as sell half your position in LeMaitre Vascular (LMAT) and NanoString (NSTG).

Today, a whopping eight Profit Booster positions will expire. Most are “slam-dunk,” full-profit trades, while others will go down to the wire.

The big takeaway, before we dive in, is we are going to let the situation play itself out, and come Monday/Tuesday of next week we will revisit our profits, as well as how we will manage the remaining positions.

Sell Live Nation Entertainment (LYV) & ThredUp (TDUP)

WHAT TO DO NOW: The indexes continue to act fine, but individual growth stocks remain hit or miss based on the news of the day. Today we’re going to sell our position in MP Materials (MP), taking a tiny gain and holding the cash (which will now be around 35%). Details below.

WHAT TO DO NOW: Yesterday we took our tiny profit MP as that stock has continued to tumble, and now we’re going to sell our stake in GE Vernova (GEV), which reported a very solid quarter this morning—but investors took the opportunity to sell into the move, creating a breakdown from a big double top. We’ll sell and hold the cash, leaving us with around 43% on the sideline.

Today, a whopping eight Profit Booster positions will expire. Most are “slam-dunk,” full-profit trades, while others will go down to the wire.

The big takeaway, before we dive in, is we are going to let the situation play itself out, and come Monday/Tuesday of next week we will revisit our profits, as well as how we will manage the remaining positions.

GE Vernova (GEV) reported this morning, with revenue, EBITDA, margins and Free Cash Flow all coming in ahead of expectations, while GAAP EPS missed. Management reaffirmed full-year guidance and said its Power and Electrification segments continue to lead growth while Wind remains soft but is improving on an operational level. Orders and backlog hit records with 20 gas turbines sold in Q3. The company acquired the remaining 50% stake in Prolec GE for $5.275 billion (expected to close mid-2026).