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Investors consider buying multi-family homes because these properties provide an affordable entrance into real estate investing.

One tool that we’ve long used is, after a big move (either up or down), if the market starts to get very volatile, it’s often a sign that the buyers and sellers are fighting it out—and could lead to a character change. That said, we’re mentioning that more as a heads up than as any major red flag—at day’s end, the trends of the major indexes and most leading stocks are up, and it’s possible that Nvidia’s (NVDA) quarterly report cleared the air last week. All told, we’re bullish but we also think the odds favor more tricky trading going ahead. We’ll leave our Market Monitor at a level 7 while keeping a close eye on the post-NVDA action.

This week’s list has some tech leaders, but it also has more than a few names outside of the AI field, both smaller and larger. For our Top Pick, we’re going with a liquid leader where we think investor perception has a lot farther to run on the upside.

Today, gold hovers around $1,268—about midway between its lows and highs for the year.

Any stock can be undervalued. It can be a company that’s underperforming and has been given a low valuation.

I think one such stock is VeriFone Holdings (PAY), which is benefiting from the same mega-trend as MasterCard (MA) - more people are paying with plastic instead of cash, especially in developing countries. Here’s what I wrote about the firm in Cabot Top Ten Report, where it earned a spot due to the stock’s powerful breakout…

Most traders know of buy-writes in terms of our recent XPO Logistics (XPO) trade. We bought stock and sold the May 45 Call. For every 100 shares purchased, we could sell one call.

Two weeks ago, we pointed out some developing divergences in the broad market, and in the short-term, those have caught up to the big-cap indexes and growth stocks, which have generally fallen off in recent days, including a couple of breakdowns. In the near-term, the outlook is still murky, so we advise stepping carefully, though big picture, we remain bullish and, hence, heavily invested.
In the Model Portfolio, we’ve placed some stocks on hold and, this week, sold one stock as it broke down on huge volume. We’re holding 18% cash now, though should the market and growth stocks firm up, we’ll be looking to put that to work in stronger leaders.
In tonight’s issue, we dive in deeper into all our thoughts on the market and our stocks, as well as look at prior environments after blastoff signals to see what’s normal and what’s not (hint: so far, we’re still in good shape).

In this month’s issue of Cabot Early Opportunities we serve up a diverse group of stocks with exposure to vastly different areas of the economy.

There’s some software and biotech, and plenty of IPOs, but also a few ways to play rising strength in cyclical stocks.

Enjoy!

Current Market Outlook


Last week’s issue was titled “Next Few Days Should be Key,” and we think they were—in a bullish way. The market’s strong snapback to new highs (in the indexes and many leaders) made the prior dip look like a shakeout, which generally bodes well. That said, the action didn’t erase all the yellow flags out there, either, as sentiment is bubbly, many stocks are extended in time and price and, most important, tons of names are set to report earnings in the days ahead, which will be key for the intermediate term. Don’t get us wrong, we’re encouraged, but we still think it’s best to pick your spots on the buy side and trail your stops (and book some partial profits here and there) as opportunities arise. We’ll move our Market Monitor back up a notch and see how things go from here.

This week’s list is brimming with strong names, including more than a few that reacted well to earnings last week. For our Top Pick, we’ll go with Dynatrace (DT), which has just gotten going from a multi-month structure and looks ready for a sustained advance.

Stock Name	Price	Buy Range	Loss Limit
Align Technology (ALGN)	602	585-605	525-540
Bill.com Holdings (BILL)	179	170-177	150-154
Canada Goose Holdings (GOOS)	42	40-42.5	35.5-37
Dynatrace (DT)	56	53-56	47.5-49
PayPal (PYPL)	282	267-277	240-246
Pinduoduo (PDD)	188	178-186	160-164
SM Energy (SM)	12	10-11	8-8.8
Snap Inc. (SNAP)	64	60.5-63.5	53-54.5
Tapestry, Inc. (TPR)	39	35-37	31.5-33
Zendesk (ZEN)	156	150-155	138-141

Your finances touch almost every aspect of your life in some way or another, and that can make tackling them feel overwhelming. This month, we’ll lay out a monthly “to-do” list that can help you save money on taxes, set aside more money, and plan for the future. Plus, the monthly breakdown will help make sure you won’t miss financial deadlines that you never saw coming.

Today we have important news on two of our stocks. I also comment on homebuilder stocks, and name several stocks that are looking good today.

After a messy end to 2018, small-cap stocks are poised for a big rebound in 2019. The most efficient way to play it through these small-cap funds.

In this week’s video, Mike is still seeing a ton of potential buying setups in a variety of industries.

There were a few pre-election wobbles in the market, but last week’s action looks decisive, with many major indexes that had been capped below their summertime peaks bursting to new highs, while leading stocks went bananas, including many out-of-this-world moves on earnings. Now, to be fair, we’re still seeing some earnings duds, and the action is very hot and heavy, which raises the risk of some sort of near-term rug pull. Thus, it’s important to keep your feet on the ground—but overall, there’s no question the evidence is bullish and the buyers are control. We’re moving our Market Monitor back to a level 8 and could go higher if the buying pressures remain intense.

This week’s list is has something for everyone, with a couple of cyclical names sprinkled in among a batch of strong growth titles. Our Top Pick is showing great growth and just staged a solid breakout from a very tight area last week.

The vast majority of our work is based on the trends of the major indexes and the action of leading stocks, and on those two fronts, things look very good; we’ve even seen the broad market perk up after a tough stretch, too, which helps the cause. About the only thing to worry about here is that ... there’s not much to worry about, and that many leading stocks are showing some near-term exhaustion patterns. Big picture, we’re moving our Market Monitor back to a level 8, but you should still keep your feet on the ground, looking for decent entry points in strong stocks.

This week’s list has a lot of stocks that not only have excellent overall charts but have either consolidated calmly for the past few weeks—or have shown outstanding buying volume in recent days. Our Top Pick is one of the latter, gapping up to new highs last week on earnings.

This note includes the Catalyst Report, a summary of the December edition of the Cabot Turnaround Letter, which was published on Wednesday, and earnings from Duluth Holdings (DLTH).

We can’t say much bad about the market’s rebound from its pre-Thanksgiving low area, but we wouldn’t say the rally has been decisive at this point. That’s not bearish, but simply a fact that the recovery needs to continue to progress—a bad two or three days from here could get iffy, though continued strength would likely bring a spate of breakouts. As always, we’ll just take it as it comes—right here, we’re encouraged and are extending our line, but are going slow until we see more stocks confirm on the upside. Our Market Monitor stands at a level 6.

This week’s list reflects some of the broadening out we see in the market, with names from many different nooks and crannies. Our Top Pick is a chipmaker that sat out the dance during the past year and a half but has recently emerged on big volume after earnings as growth accelerates. Try to buy on weakness.