The market enjoyed a little bounce yesterday but is still working to find a level of support from which to mount an eventual recovery. This is a process, not an event. Nobody knows if we have reached that level yet.
We’ve been through these types of volatile markets many times in the past. While the drivers of the volatility are often different, one of the consistencies is that it is best to exercise patience and let new leaders show themselves. They always do.
In this case, the main drivers of the current market correction are Trump’s tariffs/trade war and massive disruptions in the federal government.
Trump himself has acknowledged that his administration’s agenda will require a period of “re-adjustment,” and he didn’t rule out a recession. That has not helped the market.
Trump has been turning up the dial on tariffs, which he says are needed to create a more fair environment for U.S. exporters and to force more companies to produce goods in the U.S. He believes things like aluminum, steel, semiconductors and pharmaceuticals should be produced here and that doing so is a matter of national security.
Trump also believes his tariff strategy will help to slow the flow of migrants and fentanyl over the northern and southern borders.
He has not backed down and appears to welcome a full-fledged trade war with Canada, Mexico, China and the E.U.
In response, other countries are increasing and/or imposing tariffs on the U.S. In the last couple of days the E.U. has threatened 50% import tariffs on American whiskey, motorcycles, motorboats, poultry, soybeans, chewing gum and other goods. Canada said it would impose a levy on an additional $20.6 billion on U.S. imported goods.
A full-fledged trade war was not the consensus expectation when stocks rallied upon Trump’s victory last November.
Most market observers, myself included, thought Trump would use tariffs as part of a negotiating strategy and would take stock market reactions into consideration.
It appears we were wrong.
Trump has indicated that the dial will turn further when reciprocal tariffs on many countries (including Europe and India) are announced on April 2.
In response to the Trump administration’s disruptive methods, recession odds have increased and the stock market has given up all of the Trump rally, and then some.
Since the market closed on November 5, 2024 (the day before Trump won the Presidential election), both the S&P 500 and the Nasdaq are down 3.1%. The S&P 600 SmallCap Index is down 11.2%.
Perhaps more alarming is the market’s decline in the last three weeks.
Since the S&P 500 hit a record high on February 19, the index is down 8.8% (1.2% from an “official” correction) and the Nasdaq is down 11.6%. The S&P 600 Index is down 11.2%.
Both the Nasdaq and small-cap index are in technical corrections.
How ironic that when the S&P 500 hit an all-time high a few weeks ago small caps were trading exactly where they were just prior to Trump’s election. They peaked early, on November 25, just a few weeks after Trump’s victory.
What do we need for this market to firm up?
We need less uncertainty. It’s not uncommon for there to be more uncertainty when a new president takes office as everybody adjusts to new policies. But this is next level.
More specifically, we need the Trump administration to find a way to end the tariff war, or at least establish a more measured back-and-forth negotiating style, find a way to more quietly shrink the federal workforce, and establish a less confrontational way of dealing with other foreign leaders.
The market hates the intense uncertainty of this erratic governing style. And for good reason. At any moment, some comment or headline can pop up that sounds like it could have a meaningful impact on a particular company’s revenue, profits, supply chain, etc. Or not.
Consumers are in a similar boat, not knowing which direction the wind will blow from one moment to the next.
This is a pretty drastic reversal from the economic optimism that quickly followed Trump’s victory, when tax cuts, a more efficient government and a market-friendly administration seemed like givens.
This all sounds pretty dire. But there are a few potential positives.
The 10-year yield has fallen back from 4.8% in mid-January and seems to be finding comfort around 4.3% over the last week.
Yesterday’s CPI inflation print was cooler than expected, as was this morning’s PPI inflation print.
The market is no longer trading at record highs, and the number of bulls out there has faded quickly. From a contrarian perspective, that’s good.
Some analysts, including strategists at JP Morgan, think the market has sold off enough that there is ample room for upside surprises moving forward.
There is still room for the Trump administration to fly at an altitude with less turbulence, which the market would likely respond positively to. But it’s not time to bet on that scenario just yet.
In short, it’s still time to be cautious out there.
Recent Changes
Weave Communications (WEAV) moves to HOLD
Updates
Alkami Technology (ALKT) fell sharply on Monday when the company launched a convertible senior note offering into a very bad market. The offering was not a surprise given management’s previously announced acquisition of account opening technology company MANTL. We averaged down into ALKT after the Q4 earnings event, a move that looks premature in hindsight, though at these levels, the stock looks like a steal. Analysts at Stephens agree. They just increased the stock to overweight from equal-weight and put a 40 price target on shares (about 65% above the current level). Keeping at buy, but note that the stock needs to hold support around this level. BUY
Artivion (AORT) has faded with the market over the last two weeks and is back to trading near our entry point. There is no news. Management will speak at an Oppenheimer conference next Tuesday, March 18. BUY
AvePoint (AVPT) has been relatively resilient over the last week and has held up above its 200-day line. No company-specific updates, and maintaining at hold, for now. HOLD
Axogen (AXGN) is our newest position after I added a half-sized stake last week. Shares have been very resilient in this crazy market and are trading right near our entry price of 17.8. Axogen is a MedTech company specializing in surgical solutions for peripheral nerve injuries, where management sees a $5 billion market opportunity. The company’s current focus is trauma and upper extremity-related nerve repair and it is making progress growing into oral maxillofacial (OMF), pain and breast reconstruction (fastest growing market). Management sees emerging opportunities in head and neck (H&N), corneal, prostate and podiatry, where there are a number of robotic and/or elective procedures. BUY HALF
Delcath (DCTH) seemed like it wanted to trade higher after reporting Q4 results last week but has been held back by the weak market. That’s my read on the stock this week as well. It’s off a little over the last three days but is far from broken and remains above its 200-day line. We will maintain a half-sized position. BUY HALF
Enovix (ENVX) is back to its December lows with no company-specific news since earnings. ENVX will likely continue to drift until production ramps up and orders pour in. BUY
FTAI Infrastructure (FIP) has flatlined right around the 5 level, slightly below where the stock was after reporting. There’s no doubt that FIP has greatly underperformed expectations so far. But could times be about to change? The stock is cheap and yields 2.4% at this price. I recently moved to hold and am watching closely. HOLD
Peloton (PTON) is flat over the last four days and there has been no news lately. We averaged down recently, and I’m watching the stock trade near its 200-day line as an important area of support. BUY
Perpetua Resources (PPTA) is a rarity in our portfolio these days, having traded higher over each of the last three weeks. The company’s gold and antimony resources are a good fit for this environment where precious metals are outperforming and trade wars limit U.S. access to antimony. BUY HALF
Weave (WEAV) is trading at roughly the same price it was a week ago and there has been no company-specific news. Moving to hold today more out of respect for the volatile market than anything wrong with the business. MOVE FROM BUY TO HOLD
That’s it for this week. Please email me at tyler@cabotwealth.com with any questions or comments about any of our stocks, or anything else on your mind.
Currently Open
| Ticker | Stock Name | Date Bought | Price Bought | 3/13/25 | Profit | Rating |
| ALKT | Alkami Technology | 1/8/25 & 2/28/25 | 32.3 | 24.9 | -23% | Buy |
| AORT | Artivion | 6/5/24 | 23.3 | 23.3 | 0% | Buy |
| AVPT | AvePoint | 9/5/24 | 11.6 | 13.8 | 19% | Hold |
| AXGN | Axogen | 3/5/25 | 17.8 | 17.1 | -4% | Buy Half |
| DCTH | Delcath Systems | 2/6/25 | 16.3 | 12 | -26% | Buy Half |
| ENVX | Enovix | 10/6/22 | 20.4 | 7.5 | -63% | Buy |
| FIP | FTAI Infrastructure | 8/1/24 | 10.2 | 4.9 | -52% | Hold |
| PTON | Peloton | 11/7/24 & 3/4/25 | 7.4 | 6 | -20% | Buy |
| PPTA | Perpetua Resources | 12/4/24 | 10.7 | 9.2 | -14% | Buy Half |
| WEAV | Weave Communications | 1/4/24 & 5/9/24 | 10.1 | 11.1 | 9% | Hold |
Copyright © 2025. All rights reserved. Copying or electronic transmission of this information without permission is a violation of copyright law. For the protection of our subscribers, copyright violations will result in immediate termination of all subscriptions without refund. Disclosures: Cabot Wealth Network exists to serve you, our readers. We derive 100% of our revenue, or close to it, from selling subscriptions to our publications. Neither Cabot Wealth Network nor our employees are compensated in any way by the companies whose stocks we recommend or providers of associated financial services. Employees of Cabot Wealth Network may own some of the stocks recommended by our advisory services. Disclaimer: Sources of information are believed to be reliable but they are not guaranteed to be complete or error-free. Recommendations, opinions or suggestions are given with the understanding that subscribers acting on information assume all risks involved. Buy/Sell Recommendations: are made in regular issues, updates, or alerts by email and on the private subscriber website. Subscribers agree to adhere to all terms and conditions which can be found on CabotWealth.com and are subject to change. Violations will result in termination of all subscriptions without refund in addition to any civil and criminal penalties available under the law.
