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Humphrey B. Neill became famous in the late 20th century as “The Vermont Ruminator.” In the early 20th century Neill had a successful career at Wetsel Market Bureau, and in 1931 he wrote a popular book called Tape Reading and Market Tactics--The Three Steps to Successful Stock Trading. However, it was...

A potential Microsoft-TikTok blockbuster deal has been making front-page headlines. And that’s been great news for MSFT stock.

The recent problems at Toyota, combined with the stock’s collapse, have bargain-hunters asking if the stock is a good buy.

The tech sector is propping up this market, but there are plenty of cheap technology stocks still out there. And these two will lead a coming revolution.

Some retail-related stocks are poised to benefit from Black Friday and beyond.

A sure-fire method to find strong stocks is to ferret out high-quality stocks with low PEGnD ratio.

One of the trends that’s making headlines this earnings season is the success of companies that are adopting cloud-based technologies. While reading The Wall Street Journal on Monday, I noticed that Oracle (ORCL) CEO Mark Hurd spoke at the Oracle OpenWorld conference in San Francisco. Among his headline-worthy comments was the statement that Oracle now has virtually 100% of its portfolio rewritten, rebuilt and modernized for the cloud. That’s a big endorsement from a company with a $162 billion market cap. And Oracle isn’t exactly an outlier.

The new year is off to a good start, with many of the areas that took lumps during December (namely the broad market and growth stocks) showing strength through three days—and, just as important to us, many individual stocks have perked up, with some resilient names pushing to new highs and others that dipped to support bouncing. That’s a good thing, but we’re also keeping in mind the fact that early January is often tricky (lots of sharp moves in both directions), that the intermediate-term trend of most indexes and measures is still neutral-to-negative and that there remain lots of crosscurrents among individual stocks, with some selling off while others strengthen. As we wrote above, we are encouraged and will nudge our Market Monitor up to a level 6, but, while this is a good first step, we want to see the action continue to conclude that the December air pockets are a thing of the past.

For the third straight issue, this week’s list is heavy on growth stocks, which remains a sign that big investors aren’t hunting for safety. Our Top Pick is a name we love fundamentally and whose stock has held up relatively well in recent weeks despite a huge run. If you enter, use a loose stop given its volatility.

On balance, there’s little doubt the evidence worsened last week, and yet, most leaders didn’t crack, and the big-cap indexes didn’t either, so the question was whether a “real” correction was getting underway … or this would be yet another shakeout-type decline that gives way to higher prices. So far, of course, it’s looking like the latter. On Friday’s update, we dropped our Market Monitor to a level 6, but we’re going to quickly change course and go back to 7 today—and then stay flexible as we see whether a year-end run is getting underway or whether more volatility is coming.

This week’s list again has a growth tilt to it, which we find encouraging given the selling we saw in many areas of the market of late. Our Top Pick is a steadier leader in the AI (and solar) space and is testing its 10-week line for the first time—look to enter on strength and use a tight-ish percentage stop.

Today’s recommendation is a software and infrastructure company specializing in communications. It just reported Wednesday night, and results were better than expected, which is great for two reasons.
First, the latest numbers support my thesis that this company has what it takes to grow over the long haul.
And second, we don’t need to stress about the company reporting right after we buy in! We have the latest data. And it looks good.
All the details are inside this month’s Issue.

Two of our positions reported this week. One was up over 8% the day after reporting. And the other is up nicely in early trade today after reporting yesterday.

My five picks are the stocks of U.S. companies; all of the picks pay dividends, and all are selling at bargain prices.

With earnings season largely over most of our stocks are now moving based on news that affects the broad market, and less on company-specific trends, with a few exceptions.

The market remains under pressure in the short-term, for all the well-publicized reasons, but long-term, the market trend remains up, and many of our stocks are acting well. Today’s recommendation is a repeat, a stock we made money in last year that subsequently had a big correction and is now ready to run again. And it’s got a great story, too!

The market has been up, down and all over the place lately. So have our stocks. Oddly enough, from last Thursday’s close through yesterday’s close our portfolio is relatively unchanged—down just 2% using a simple average of each stock’s weekly return.

In today’s note, we discuss developments and institutional ratings upgrades for some of the stocks in the portfolio, including Agnico-Eagle Mines (AEM), Atlassian (TEAM), GE Aerospace (GE), SPDR S&P Retail ETF (XRT) and Starbucks (SBUX).

This week’s update is a day early, because the rest of the week is filled by the Cabot Wealth Summit, which brings all our analysts to Salem to meet subscribers face-to-face and fix all the world’s problems—or at least help them become better investors.

In the meantime, the market remains under pressure, with our intermediate-term market timing now negative. Thus I’m continuing to raise cash, by selling our worst performers, and you should too, so you’ll have ammunition to use on the new leaders when the market turns up again. This week that means selling four stocks.

As for the new recommendation, it’s a small-cap stock in the communications software industry that you probably haven’t heard of, but it’s shrugged off the market volatility lately, trending slowly higher, and its long-term prospects are great.

The market and most stocks remain in a solid uptrend, though earnings are beginning to have the anticipated push-pull effect on the market, with lots of gaps up and down to start the day. We think increased volatility is nearly a sure bet going forward, especially after such a great rebound. In the short-term, then, make sure you have a plan of how you want to deal with earnings season (we include any upcoming earnings dates of our recommendations in today’s issue), and be prepared for lots of action in both directions. Long-term, though, the path of least resistance remains up, so we favor using normal retreats as buying opportunities.

This week’s list is one of the more growth-oriented that we’ve seen this year; just about every stock has a real, sustainable growth story with solid numbers. Our favorite of the week is Proto Labs (PRLB), which has set up a nice risk-reward entry here after tightening up for a few weeks.

Stock Name	Price	Buy Range	Loss Limit
Zillow (Z)	76.64	67-69	59-60
Vipshop Holdings (VIPS)	14.25	34-36	30-31
Trulia (TRLA)	0.00	35.5-37	31-32
Santarus (SNTS)	0.00	23.5-24.5	20-21
Spirit Airlines (SAVE)	57.03	33-35	30-31
Proto Labs (PRLB)	0.00	63-65	56-58
Nu Skin Enterprises Inc. (NUS)	46.07	78-80	70-71
Nationstar Mortgage (NSM)	0.00	44-46	40.5-41.5
Generac Holdings (GNRC)	86.60	39.5-41	36-37
Ambarella (AMBA)	52.79	17.5-19	16-16.5

Coronavirus fears re-emerged in a big way over the weekend, causing today’s across-the-board selloff. As we look at the evidence, here’s what we see: The intermediate-term uptrend has been cracked, especially when you look at the broader major indexes, and given that this selling comes after a big run and more than a few yellow flags during the past month, it’s likely we’re in a correction that will take some time to play out. That said, it’s also very unlikely that this is the end of the overall bull market, as the longer-term trends and stance of the indexes and most leading stocks are positive; heck, many stocks look just fine (so far) on their charts. Put it together, and we think it’s time to play a little defense and build up some cash by cutting losers and laggards, though we’re also aiming to hold most of our resilient, profitable performers, giving them a chance to hold up and get going.

Encouragingly, this week’s list has a bunch of decent-looking growth-oriented names to consider. Our Top Pick is Zoom Video Communications (ZM), which has not only a very strong chart but also a growth story that appears to benefit from the spread of the coronavirus.

Stock Name	Price	Buy Range	Loss Limit
Advanced Micro Devices (AMD)	82.24	47-50	43-44.5
Carvana (CVNA)	82.90	102-106	91-94
Domino’s Pizza (DPZ)	339.47	353-365	320-327
Floor & Décor (FND)	68.03	55-57	50-51
HealthEquity, Inc. (HQY)	70.70	80-83	72-74
MercadoLibre, Inc. (MELI)	980.83	660-690	620-640
SiteOne Landscape Supply (SITE)	98.49	108-112	98-100
SolarEdge Technologies Inc. (SEDG)	124.37	132-137	116-119
Zillow (Z)	76.64	57.5-60	52-53.5
Zoom Communications (ZM)	155.83	100-105	86-89

Current Market Outlook


Last Thursday’s massive selloff was a shot across the market’s bow, and today saw the broad market take another punch to the gut. That said, the evidence remains mostly bullish at this point—the trends of the major indexes are up, nearly all institutional-quality leading growth stocks are still acting fine and many secondary indicators (such as the number of stocks hitting new lows, which remains microscopic) are also pointing higher. Of course, 2020 has been all about staying flexible, and right now isn’t a time for complacency; it’s always possible the 11-week advance is going to lead to a sharper correction or consolidation. Thus, you should be open to any possibility, but right now, the evidence remains bullish, so we advise remaining heavily invested.

This week’s list has a bunch of growth-oriented titles that are showing attractive setups. Our Top Pick is Lululemon (LULU), which could pull in further after earnings, but our guess is that this dip will give way to higher prices in the weeks ahead.

Stock Name	Price	Buy Range	Loss Limit
Argenx SE (ARGX)	222.54	208-215	187-191
Bandwidth Inc. (BAND)	129.19	117-121	102-105
Coupa Software (COUP)	262.20	225-231	198-201
CrowdStrike (CRWD)	105.02	93-97	84-86
DraftKings Inc. (DKNG)	38.26	37-41	30-33
Fiverr (FVRR)	71.41	60-64	51.5-53.5
Lululemon Athletica (LULU)	304.69	291-301	264-269
Novavax, Inc. (NVAX)	65.95	47-50.5	39-41
Peloton (PTON)	53.03	47-50	40-41.5
Redfin (RDFN)	40.40	30.5-32.5	25.5-27