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Current Market Outlook


The broad market continues to be challenging, with last week’s low having the potential to kick off a renewed market uptrend and at the same time holding the potential to establish a floor that—if it collapses—could bring a fresh round of pain. In short, the path ahead is foggy and continued caution is advised. But don’t put your head in the sand! Our OptiMo system continues to dig up top-performing stocks with the potential to bring you substantial profits, if you play your cards right—and one of the most promising characteristics of these stocks is that they tend to be under-owned, meaning far more institutional money could arrive to boost them higher over time.

Today’s roster includes some strong breakouts and a handful of set-ups, and our Top Pick is AMN Healthcare (AMN), which has a steadily growing business in the field of healthcare staffing.

Stock Name	Price	Buy Range	Loss Limit
AMN Healthcare Services Inc. (AMN)	0.00	62-67	57.5-60
Chipotle Mexican Grill (CMG)	773.32	405-420	375-385
Dexcom (DXCM)	421.36	71-74	64-67
Integra LifeSciences (IART)	0.00	57-62	52.5-54
Michael Kors Holdings Limited (KORS)	73.22	67-70	66-64
Novocure (NVCR)	0.00	25-27	23-24
Oil States International (OIS)	0.00	35-37	32-33
Phillips 66 (PSX)	0.00	107-111	99-102
SVB Financial Group (SIVB)	0.00	285-295	265-270
Transocean Ltd. (RIG)	0.00	11.7-12.5	10.2-10.6

Current Market Outlook


The market backed off late last week, but the overall picture hasn’t changed much—following a successful retest of the February lows, the major indexes are in a solid rally attempt, but that rally has yet to turn the intermediate-term trend up, either for the indexes or for the majority of leading stocks. There are many encouraging signs, and if the market rallies from here, the trend could turn up later this week; we’re ready and waiting for an all-clear signal should it come. But we learned long ago not to anticipate signals—right now, the trend is mostly sideways, few stocks are running away on the upside (most that have perked up fall back quickly) and most companies are set to report earnings over the next three weeks. Thus, we advise sticking with a cautious stance, which means holding some cash and keeping new positions on the small side.

This week’s list has a wide variety of stocks and sectors, all of which have shown great relative strength. Our Top Pick is Cheniere Energy (LNG), which has a unique story and a stock that’s built a great-looking base. Earnings are out soon, so start small.

Stock Name	Price	Buy Range	Loss Limit
Abercrombie & Fitch (ANF)	15.37	25-27	23-24
Autohome (ATHM)	98.65	92-95	85-87
Cheniere Energy (LNG)	63.82	56-58.5	51.5-53.5
E*Trade Financial (ETFC)	0.00	58-60	53.5-55
First Solar (FSLR)	83.74	72-75	66-68
InterXion (INXN)	0.00	63-65	58.5-60.5
Loxo Oncology (LOXO)	186.59	127-135	115-120
Netflix, Inc. (NFLX)	423.92	310-320	287-292
Pioneer Natural Resources (PXD)	0.00	190-195	177-180
TransUnion (TRU)	83.09	63-65	57.5-59

In today’s issue, we’re adding a reliable new stock to the Safe Income Tier. I also review why you might want to own preferred stock in today’s educational section, and provide updates on all our holdings.

Today’s featured stocks include two new additions to the portfolios and a stock that has ostensibly become a takeover target.

In today’s issue, I dig into the reasons behind this painful correction, finding an aggravating Chinese government regulatory shift that can account for a large part. Despite the turmoil, the Cabot Emerging Market Timer is still positive, and I have a fresh, young Chinese tech stock that has enormous potential as the development of the Chinese cloud continues.

Today’s selection is one of the big, fast-growing Chinese companies (you might call it the Google of China), which has just pulled back to offer us a lower-risk entry point.

There has been plenty of action in emerging markets recently, but today’s strong rally pushed the Cabot Emerging Markets Timer to a clear buy signal. Part of this may be the continuing effect of a great Singles’ Day splurge in China, and I write about that. We’re making some adjustments to the portfolio to put the spotlight on the winners and switch out of one laggard.

Emerging market stocks in general strengthened this week, keeping our Cabot Emerging Markets Timer firmly on the positive side. Our new stock is an express delivery company with a China-wide network that covers 96% of China cities and towns. We have ratings changes on two of our stocks.

Current Market Outlook


After a modest rise last week, the market’s story remains the same—the intermediate- and longer-term trends continue to point up, and leading stocks remain in favor, with a ton gapping up on earnings during the past three weeks. It’s not all good news, of course—the broad market has again turned iffy by a few measures, and the environment is a bit giddy right now as investors count their profits. Thus, we won’t rule out a healthy pullback in the major indexes or some rotation among various stocks and sectors. But at day’s end, we always go with the market’s primary evidence (trend, price/volume, etc.), and today that evidence is solidly bullish, so we are, too.

This week’s list is heavy on small- and mid-sized companies, though a variety of sectors are represented. Our Top Pick is Universal Display (OLED), a leading glamour stock that just soared on earnings after about five months of no progress. Try to buy on dips.

Stock Name	Price	Buy Range	Loss Limit
Axcelis Technologies (ACLS)	0.00	31.5-33.5	28.5-30
Conn’s Inc. (CONN)	0.00	29.5-31	26.5-27.5
EPAM Systems (EPAM)	188.24	96-98.5	90-92
Insulet (PODD)	175.69	66-69	60.5-62.5
Neurocrine Biosciences (NBIX)	123.40	70-73	63.5-65.5
Old Dominion Freight Line Inc. (ODFL)	221.91	115-119	106-108
PBF Energy (PBF)	38.93	30-31	27-28
Trex Company (TREX)	117.56	100-105	92-95
TRI Pointe Group Inc. (TPH)	0.00	16.5-17.2	15-15.4
Universal Display (OLED)	187.54	154-160	137-140

Current Market Outlook


After a straight-up move in recent weeks, the major indexes had a couple of wobbles during the past few days, which has done some damage to certain areas—small-cap indexes are standing right on top of their 50-day lines and many individual stocks and sectors have come back down to earth, even among large-cap stocks. Even so, the vast majority of major indexes and Top Ten stocks are still acting well, with more than a few racing up the charts following positive earnings reactions. We have our eyes open should the weak broad market “infect” leading stocks, but so far, the market’s recent rest looks normal to us. Thus, you should stick with a bullish stance, giving your strong stocks a chance to continue advancing, while looking for entry points as stocks pause.

This week’s list has something for everyone, with some healthcare, some energy (for the first time in a while) and some true growth stocks. Our Top Pick is Planet Fitness (PLNT), a great cookie-cutter story that just surged on earnings. Buying on some weakness is your best bet.

Stock Name	Price	Buy Range	Loss Limit
AbbVie Inc. (ABBV)	93.53	92-95	86-88
Alnylam Pharmaceuticals (ALNY)	143.58	129-134	117-119
Continental Resources (CLR)	66.19	43-45.5	39.5-41.5
Micron Technology, Inc. (MU)	43.31	43-45	39.5-40.5
NVIDIA Corporation (NVDA)	242.42	205-213	188-192
Planet Fitness (PLNT)	0.00	28.5-30.5	26.5-27.5
ProPetro (PUMP)	23.30	15.8-16.8	14.5-15
Red Hat (RHT)	0.00	120-124	111-113
ZTO Express (ZTO)	28.84	16.1-17.2	14.5-15
Zendesk (ZEN)	82.19	33-35	30.5-32