The market’s evidence continues to improve, with our core market timing indicators returning to the bullish side of the fence. That’s obviously a good thing and has us optimistic -- though upside follow through from here will be key, as many growth measures are still lagging behind, though we are seeing more setups, especially from areas that sat around for much of the past year (see the issue for much more on that). All told, we are doign some new buying tonight, and will have more to come if the market continues to act well.

Thank goodness; the shutdown is over!

And that agreement (although not really agreeing on much!) has helped the markets to continue their upward momentum, albeit with a few hiccups. All eyes are on the Fed, as I write this, with expectations that it will once again lower rates by a quarter of a point.

Artificial intelligence is the biggest thing in the market these days. But AI doesn’t work without energy.

The world doesn’t run on technology. It runs on energy. Energy is the respiratory system of the modern world that can’t function without it. Technology doesn’t work without electricity powering its systems.

Sure, clean energy is the future, but not yet. In fact, the U.S. and the rest of the world still rely on fossil fuels (oil, natural gas, coal) for more than 80% of energy needs and will likely continue to do so for decades to come. But fossil fuel consumption is changing. A new king is emerging – natural gas.

Natural gas is by far the fastest-growing fossil fuel. It is the number one fuel source by far to generate electricity in the U.S. and much of the rest of the world. There are also powerful trends adding to the already growing demand.

U.S. electricity demand is growing at breakneck speed because of data centers, electric vehicles, and increased onshoring of manufacturing. U.S. natural gas exports, in the form of natural gas liquids (NGLs), are soaring. This country is already the largest exporter, and the growth is staggering. U.S. NGL liquid exports over this past year have grown a whopping 67% over the prior year.

Natural gas was already the fastest-growing fossil fuel. The addition of soaring electricity demand and exploding U.S. exports accelerates that growth. The fuel is shaping up to be a dominant theme in 2026. In this issue, I highlight the country’s largest producer of natural gas.

Despite a quiet tone for much of last week, markets ended on a modestly upbeat note as interest rate-cut optimism firmed. Tech and growth names helped push the market higher on hopes the Federal Reserve will ease soon, while small caps and cyclicals got a lift on improving sentiment.

By week’s end, the S&P 500 had risen +0.3%, the Dow Jones Industrial Average had gained +0.5%, the Nasdaq Composite had climbed +0.9%, and the Russell 2000 had advanced +0.8%.

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.

The market rally that materialized over Thanksgiving week is on temporary hold as investors wait to see if the Fed will, in fact, cut interest rates by another 25 basis points as anticipated this week. If it happens, there’s a good chance the risk-on mood will resume, and the major indexes could reach new all-time highs by Christmas. While I’m not big on predicting what’s going to happen with the Fed, the odds heavily (87%) favor investors getting their wish, so let’s play those odds today by adding a speculative mid-cap software stock recently recommended by Mike Cintolo in Cabot Top Ten Trader.

Details inside.

Despite a quiet tone for much of last week, markets ended on a modestly upbeat note as interest rate-cut optimism firmed. Tech and growth names helped push the market higher on hopes the Federal Reserve will ease soon, while small caps and cyclicals got a lift on improving sentiment.

Despite a quiet tone for much of last week, markets ended on a modestly upbeat note as interest rate-cut optimism firmed. Tech and growth names helped push the market higher on hopes the Federal Reserve will ease soon, while small caps and cyclicals got a lift on improving sentiment.

Today we’re jumping into an emerging precision oncology company that is on the cusp of a major Phase 3 data release for a potential best-in-class treatment for rare eye cancers.

The company also has a stacked pipeline of other potential assets and has teamed up with some of the best in the business as it looks to transition from a clinical-stage company to a full-on commercial success.

Suffice it to say, the risks are somewhat higher with a stock like this, given that FDA approval, or denial, will have a major short-term impact on share price performance.

All the details are inside the December Issue of Cabot Small-Cap Confidential.

Stocks spent the holiday-shortened Thanksgiving week getting well and are again knocking on the door of all-time highs after a sharp pullback through most of November. Value stocks never retreated the way growth titles did, though, and are appearing more in favor by the day. That includes consumer staples, which are still undervalued despite recent momentum. In this month’s Cabot Value Investor issue, we add a once-prominent name from that group that trades at less than half its early-2025 highs – and yet the company never stopped growing. In fact, its sales are accelerating, making it a prime buy-low candidate.

Details inside.

In China, the competition in its EV market is particularly brutal with over 100 companies in the game. Some of those automakers are also working on flying cars to take safety and speed to another level. This is where we go today for a new Explorer recommendation.

Details inside.

Nothing like a little holiday cheer to brighten a grumpy market’s spirits! Salvaging what had theretofore been a miserable November, last week’s Thanksgiving-shortened week brought four straight trading days of buying, nudging the indexes right back to within bad-breath distance of their late-October highs. Is it a sign of things to come in December? Perhaps. If so, now is a good time to pounce on a more speculative biotech play that’s been in favor all year. It’s a name recommended by Tyler Laundon in the November issue of his Cabot Early Opportunities newsletter. Today, we add it to the Stock of the Week portfolio.

Details inside.

It’s no secret that a conspicuous presence of activist investors in an ailing company has proven to be one of the most powerful, and reliable, catalysts for a successful turnaround. For that reason, I’m always on the lookout for companies that have recently become the target of activism.

But if the Trump Administration gets its way, the activist investor catalyst could soon be of diminished importance.

This week was all about the Fed. But those of us watching small caps noticed some major news too – the S&P 600 has broken out to its highest level in just over a year.

The catalyst was the Fed’s fully expected 25 bps cut yesterday. It was less of a hawkish cut than expected and included a commitment to buy $40 billion in short-term Treasuries to ease money-market strains that emerged after halting balance-sheet runoff.

Prior to that announcement, the index was toying with a breakout, but afterward it shot up and closed 2.4% higher on the day.

As expected, the Fed cut interest rates for the third time this year on Wednesday, but officials remain divided over the future and signaled that cuts next year are likely to be limited.

Two Explorer stocks stand out. Those are Banco Santander (SAN), up 153% so far this year so I recommend taking partial profits if you have not already done so. And there’s Coeur Mining (CDE), whose shares that are now up 179% so far in 2025.

The law of averages is a powerful thing … especially when it comes to investing.

Stocks and sectors that outperform for an extended period of time often regress to the mean, sometimes violently, when people least expect it. On the flip side, stocks and sectors that have underperformed for months or even years start to get noticed by bargain hunters and play catch-up, even if it’s a bit more gradual.

Circle December 15 on your calendar. That’s the day the Supreme Court will likely let us know whether it decides to hear a major cannabis lawsuit. If it says yes, cannabis stocks will rally hard. Cannabis stocks may well even rally in the run-up to that date.

The suit challenges federal jurisdiction over cannabis in states where it is legal. We still won’t know the final outcome if the court decides to take up the case. So, any rally might be sellable for very short-term traders. Personally, I will continue to hold through, because the timing of any rescheduling news is uncertain.

The market is close to the high, and all eyes are on the Fed.

The market has priced in a 0.25% fed funds rate cut already. It could get ugly if the Fed doesn’t cut the rate on Wednesday. But that is unlikely. The rally in interest rate-sensitive stocks took place over the past few weeks. Now, those stocks are pulling back as investors fret over what the Chairman might say about future rate cuts in the minutes following the rate cut announcement.

It’s that time of the year when economists and market mavens spill an abundance of ink making year-ahead stock forecasts and boom/bust warnings. As there seems to be an abnormal amount of recession predictions for the year ahead—including a few from some reputable sources—I think we should examine the question: Will the U.S. witness a major economic shock in 2026?

WHAT TO DO NOW: The evidence has improved of late, though we haven’t seen many decisive green lights from our indicators. Still, with so much cash, we’ll dip a couple of toes in tonight and then follow up … if the good vibes continue. Tonight, we’ll add half-sized positions (5% of the account) in Eli Lilly (LLY) and JFrog (FROG), leaving us with a still-big 55% cash hoard. Details below.

The resilient market forges on. After the biggest market dip since April in the middle of last month, the S&P has gained it all back in the last couple of weeks.

Stocks weakened last month as investors worried that tech stock valuations were too high, as the artificial intelligence trade may be overdone. They also worried that the Fed would not cut rates in December. But stocks were rejuvenated after some positive statements by Fed members greatly increased the odds of a December fed funds rate cut.

This is one confusing market. It’s doom and gloom one day and then optimism the next. Investors can’t seem to make up their minds about whether the world is going to Hell in a handbag or it’s time to buy. What’s going on?

Last week was confounding to say the least. Two events promised to address the market’s chief concerns: the sustainability of the AI trade and the state of the economy. Last week’s earnings report from the ultimate AI bellwether Nvidia (NVDA) and the long-awaited jobs numbers could answer both questions. Both the earnings report and the jobs report were everything investors could have hoped for. Stocks tanked anyway.

Due to a short Thanksgiving week, rather than the usual stock-by-stock update, I will briefly highlight some significant moves by Explorer stocks. I’d also like to wish you and your family a great long Thanksgiving weekend.

Regrettably, Universal Technical Institute (UTI) has not worked out for us despite filling a crucial need and posting impressive earnings, as the stock was down sharply this week. I’m moving this to a sell. Coeur Mining (CDE) and International Business Machines (IBM) were both up about 6% this week, while Sea Limited (SE) was down 7%.

We’re going to continue with our strategy of locking in modest, but relatively quick, profits on some positions while they’re available.

Cannabis stocks were soaring Friday morning on a Washington Post report stating that President Donald Trump plans to go forward with rescheduling. The report cites six sources.

WHAT TO DO NOW: The market continues to act fairly well, though most of our timing indicators haven’t really kicked into gear. We’re OK extending our line, but we’re also going slow and honoring stops on what we own as there are still lots of crosscurrents out there. Today’s bulletin is about Alnylam Pharmaceuticals (ALNY), which we’re selling today after it’s come under pressure this week following no addition to the S&P 500. We’ll hold the cash for now (near 60%) but could redeploy later this week.

Shares of Argan (AGX) are trading down as of midday after the company missed revenue expectations in Q3 FY26 but beat on EPS. The pullback likely signals that AGX stock will be rangebound for a while – possibly in the 300 - 400 range – not that the run in shares is completely over.

CEO Special Bulletin: Position Updates

Sell a Quarter of Centuri Holdings (CTRI)

We’re going to continue to hold our position in Credo Tech (CRDO), which is now up over 145% (since June), following the company’s strong Q2 FY26 report.

We’re going to take a swing at Natural Grocers (NGVC) today by filling the second half of our position. It’s foolish to think you can time a “bottom” perfectly, but there’s enough evidence here to suggest we can buy the stock at a solid discount now and, hopefully, catch a significant updraft in the weeks and months ahead.

Our Cabot Top Ten Trader’s market timing system consists of two parts—one based on the action of three select, growth-oriented market indexes, and the other based on the action of the fast-moving stocks Cabot Top Ten features.