Cabot Top Ten Trader – Cabot Wealth Network

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Excellent Action

October 18, 2021

There’s no question the snapback of the past couple of weeks has been very encouraging—the major indexes have rebounded beautifully, with many regaining their 50-day lines, and individual stocks have done great, with more and more moving back to (or out above) their prior highs. Obviously, the market isn’t totally out of the woods, as most indexes are still range-bound and earnings season is upon us, which will often change the trajectory of things. But the odds are increasing that the September/early October correction is over. We’re moving our Market Monitor back up to a level 7.

This week’s list represents the broad advance of late, with stocks of all different spots and stripes making the cut. Our Top Pick is a cybersecurity name that’s emerging from a six-week rest.

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Next Few Days Should Be Telling

October 11, 2021

Just when the market looked ready to go over the falls last week the buyers stepped in, pushing the major indexes sharply higher. It’s certainly encouraging, but by our measures, we haven’t seen confirmation of a new intermediate-term uptrend, and while a few stocks have popped to new highs, most individual names are in the same no-man’s-land environment. Longer term, the strong, broad bounce is a good sign the overall bull market is alive and well, but near term, it’s still uncertain whether we’ll see another leg lower or more vicious rotation.

This week’s list is heavier on turnaround and commodity-related names, with many beginning to emerge from long rest periods. Our Top Pick is a classic Bull Market stock that’s just staged a fresh breakout.

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Onus is on the Bulls

October 4, 2021

For many weeks, we’ve been writing that there’s more good than bad in the market, but now the shoe is on the other foot. It’s not a complete disaster, and given the on-again, off-again environment of 2021, we’re not ruling anything out, but after a couple of rounds of sharp distribution and some breakdowns among leading stocks, we think it’s simplest to say the onus is on the bulls—we need to see at least a few days of constructive action to conclude the sellers are losing control. We’re leaving our Market Monitor at a level 5, and until proven otherwise, would play things cautiously.

This week’s list has an interesting crop of stocks, ranging from commodity to re-opening to legitimate growth outfits. Our Top Pick is more of a commodity play that’s shown tremendous upside power of late.

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Rotation Remains Fierce

September 27, 2021

After last Monday’s plunge, the initial rebound was very encouraging, but while many individual stocks are in decent shape, the wild rotation that has been a hallmark of 2021 has returned. We’re still sticking with a stock-by-stock approach, and most names, despite their wobbles, remain in fine shape. Plus, such action isn’t totally surprising—big breaks like last Monday’s usually have some reverberations, so we wouldn’t say the action is negative as much as it’s a sign we’re still in the tricky, choppy environment that has existed for some time. We’re going to leave the Market Monitor at a level 5 and see how things play out in the days ahead.

The good news is that this week’s list is full of names that have enjoyed outsized accumulation of late. Our Top Pick is what we think is a leader in the energy group, which itself appears to be breaking out of a few months of rest.

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A Change in Character

September 20, 2021

Our intermediate-term trend model has effectively been neutral for months, but today, the sellers got their act together, turning the intermediate-term trend down; now it’s time to step carefully and see how this plays out. As for positive tidings, the bad news out there (Chinese real estate) is obvious, and many growth titles are now holding up far better than the Dow or S&P 500. Thus, we’re still holding our resilient names and are OK doing a little buying as stocks pull in to support, but it’s not time to be a hero.

If you are aiming to put a little money to work, you want to look for names that have recently shown good-volume buying. Happily, this week’s list has many names in this club, and our Top Pick is one of those, holding well after its recent earnings gap.

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More Rotation

September 13, 2021

During the last couple of weeks of August, more stocks, sectors and indexes were getting in gear, but as September has progressed, it looks like we’re still in the same overall environment—growth stocks, indexes and funds have again taken hits while some cyclical/value areas have perked up. That’s not necessarily a negative (at least to this point); the action is more a confirmation that the choppy environment is still intact. Long story short, we’re more bullish than not, but booking partial profits into strength, raising stops as things head higher and aiming to enter on dips is the right way to go.

This week’s list is lighter on growth stocks than in recent weeks, but there are many other names that look to be resuming their advances. Our Top Pick is looks like the best play in the natural gas space.

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Pullback Wouldn’t be Surprising

September 7, 2021

Our screens over the weekend told a clear tale: While it’s not 1999 out there, many growth stocks and indexes have enjoyed good moves of late, and when you combine that with some signs of complacency, a retrenchment looks possible. This isn’t some grand market call, but our point is more to make sure you’re still sticking with great-looking stocks at decent entry points, as opposed to chasing things higher.

This week’s list has a bunch of strong names thanks to recent earnings reports and other news items. Our Top Pick is a unique play in the chip sector that just broke out.

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Let’s See if Strength is Sustained

August 30, 2021

First off, as a reminder, with Labor Day next Monday, your next Top Ten issue will be sent September 7 (Tuesday).

Last week was definitely a good one for the bulls, with the indexes acting well but also many individual growth stocks scoring some great gains. If this strength can be sustained, it’ll be time to get more aggressive, but to us, the market still has some proving to do, especially with the chop factor, We’re encouraged by what we see, but buying dips and starting small continue to mostly be your best bet.

This week’s list has a bunch of solid actors, including some that are putting the finishing touches on multi-month launching pads. But for our Top Pick, we’re going with an earnings winner from the strong cybersecurity group.

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Back and Forth

August 23, 2021

The selling in growth stocks spread to the rest of the market last week, but many growth stocks tested key support in recent days (50-day lines, etc.) and almost all held up, with Friday and today seeing some solid bounces. We remain more optimistic than not, and the past couple of days are certainly encouraging, but let’s see if some new and potential leaders lift off in classic fashion.

This week’s list is a mix of various different stocks, including a number of names we haven’t written up before. Our Top Pick is an energy infrastructure play that’s finally leaving behind a multi-month range.

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Growth Back to Important Levels

August 16, 2021

Last week was generally one of rotation back out of growth and into the broader market, and today, that trend accelerated. If a lot of stocks go down the drain, it’ll clearly be a sign of cut back on growth titles, though if we see a strong bounce from here, it could actually set up some decent pullback/resumption entry points. Right here, we’re not making any dramatic changes, but be sure to honor your stops. The next few days could be telling.

As for this week’s list, it definitely has more of a turnaround/cyclical feel to it as those stocks find buyers. Our Top Pick is a leader in what’s looking like a new group upmove.

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Same Story: More Good than Bad, but Plenty of Chop

August 9, 2021

We continue to see more good than bad in the market but there’s no question the chop factor is still real, as the vast majority of names that pop higher generally attract sellers for at least a couple of days, with more than a few sinking right back to where they started. Overall, we are encouraged by the rising level of leadership, but we still favor starting small and/or buying on dips or consolidations.

This week’s list is another chock-full of recent earnings winners and other names showing excellent action. Our Top Pick is a biotech name that could be leading a new uptrend in the sector.

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Top-Down vs. Bottoms-Up

August 2, 2021

From a top-down perspective, the issues that have surrounded the market are still hanging around, but from a bottoms-up perspective (looking at individual stocks), we’re seeing more to like—more multi-month setups from growth stocks and more big-volume breakouts or upmoves, often spurred on by earnings reports. We’re leaving our Market Monitor where it is today, but a good week of earnings reactions will have us extending our line.

This week’s list is chock-full of earnings winners from a variety of sectors, and our Top Pick is one of them— after some false starts, it’s finally emerged from an early-stage base.

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Still Crosscurrents, but Plenty of Opportunities

July 26, 2021

There are still some crosscurrents under the market’s surface despite record highs in the major indexes. Breadth is lagging by some indications and only around half of S&P stocks are above the 50-day line. That said, we’re still seeing lots of nice setups in growth stocks, and while we likely haven’t seen the end of earnings-related volatility, the latest earnings season has been mostly positive so far.

This week’s list includes a nice mix of sectors, including a few that have had spectacular earnings reactions. Our Top Pick is an HVAC company benefiting from the return-to-work trend.

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More Damage, but Some Names Find Support

July 19, 2021

The evidence has been steadily improving, but July has changed that, and today we saw the sellers really start to hit things left and right. On the positive side of things, many growth titles were resilient today, and we still see a good number of setups out there; given that there are renewed fears of the virus, it’s possible many growth titles could do well even if the market has a rough go of it. But right now, the onus is on the bulls as the market’s intermediate-term trend has turned down.

This week’s list is a mix of names, though some of the growth titles look like decent risk-reward situations on this dip. Our Top Pick is one of them, a chipmaker that’s pulled into some support after a persistent advance.

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Constant Crosscurrents, but Lots of Setups

July 12, 2021

The news-driven environment featuring incessant rotation and crosscurrents remains in effect; we think it’s best to continue going slow and aim to buy on weakness. That said, there are a growing number of good-looking growth stocks out there—while there have been bumps in the road, the sellers really haven’t been able to sink their teeth into them despite some recent strength. All in all, we’re more optimistic than not, but stock selection and solid entry points are key.

This week’s list has a variety of sectors represented, including a few that have avoided the market’s volatility. Our Top Pick is a networking play that’s in a smooth uptrend.

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Partly Sunny, Chance of Thunderstorms

July 6, 2021

It was a relatively quiet week, but there was still rotation evident, with growth stocks finally easing a bit while money sloshed into some other areas. Overall, we’re generally encouraged, and actually think further pullbacks in growth titles could provide some tempting entry points, though there remains plenty of tricky and narrow action so picking your stocks and buy points is important.

This week’s list has a nice collection of stocks from different sectors and themes that have all shown some good-volume accumulation of late. Our Top Pick is a big pandemic winner that’s trying to get going after six months of rest.

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Impressive Action

June 28, 2021

First off, a note: Your next issue will be sent next Tuesday (July 6), as our offices are closed Monday for Independence Day. Have a great long weekend!

Secondly, I also hope you’ll join me for the 9th Annual Smarter Investing, Greater Profits Online Conference, August 17-19. We have an incredible line-up of experts ready to share their best picks.

Just over a week ago, it looked like the market’s intermediate-term trend was going up in smoke but last week’s action was one of the more impressive few days we’ve seen in a while. We don’t think the market is out of the woods and believe picking your spots is important, but we’re seeing more good-looking patterns than we have in a while.

This week’s list features many of the names that have seen some persistency and power of late. Our Top Pick is one we’ve been stalking for many months that seems to finally to breaking out on the upside.

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Jell-O on a Plate

June 21, 2021

Growth stocks have continued their rally, with many “old” winners finally showing some power in both volume and price, which is a plus. That said, the overall action in the market remains hectic: Cyclical stocks have cascaded for the most part while growth has ramped, with most major indexes we track now below key support. All in all, the environment is like Jell-O wobbling on a plate, making it tough to pinpoint entries and hold onto stuff. We’re OK with some buying, but continue to keep it smaller than normal and aim for dips.

This week’s list looks like 2020 all over again, with lots of technology and growth earnings spots. Our Top Pick is a marketing play that showed great resilience since February and has already kissed new high ground.

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Continued Progress

June 14, 2021

Our thoughts on the overall environment remain the same—growth stocks continue to slowly repair the damage, though most stocks aren’t out of the woods yet and there remains lots of selling on strength and rotation on a daily basis, so it’s tough to make much progress. All in all, we’re going to keep our Market Monitor at a level 6—we’re close to raising it, but the lack of upside breakouts and the continued chop keep us in a “trust but verify” mode. There are things to like, but we need to see more.

Interestingly, this week’s list is heavy on growth stocks, though finding buy points is tricky. Our Top Pick is an electronic document company that has shown excellent accumulation since earnings, though we favor keeping it small and/or trying to get in on dips.

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Now the Real Test Begins

June 7, 2021

The holiday-shortened week was a relatively quiet one, with most indexes and sectors mostly meandered in tight ranges. After the prior two and a half weeks of constructive action, we consider the lack of selling a positive, but now the real test will begin—if the former leaders that have run right into some tough resistance can hold firm, if recent breakouts can build on their gains and fresh breakouts can emerge, this rally could gain steam … but if the sellers return, things could go back in the soup within a few days. Right now, we’re still in the trust-but-verify mode of the rally.

This week’s list has a wide array of stocks, including a few cyclical names that are pushing up after a few weeks of consolidation. Our Top Pick looks like a leading oil play as that group has come to life.

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