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Still Not (Yet) Letting Things Run

May 3, 2021

To us, the major (and most disappointing) theme of the past few weeks has been the selling in stocks as they approach their old highs; while selling pressures are controlled, buyers aren’t exactly stepping up in a major way. Of course, the real question is whether earnings seasons causes the bulls to flex their muscles; so far, that hasn’t happened, but we’ll see how it goes. We continue to think keeping some cash on the sideline and aiming to enter mostly on pullbacks remains the best play.

This week’s list has a hodgepodge of names, many of which have reacted well to earnings, so if you’re going to buy strength, these are some top candidates. Our Top Pick is one of those, gapping up with great power last week.

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Earnings Reactions Will be Key

April 26, 2021

Earnings season is always important, but it looks even more so this time—many growth stocks and a decent number of cyclical names have been resting for a while. Thus, a collection of positive, powerful reactions to earnings could result in a bunch of good-looking buying opportunities … but, as always, we have to wait to see that happen before pouncing. Just going with what’s in front of us, nothing has much changed, so right now we’re sticking mostly with a buy-on-dips approach and waiting for buyers to really flex their muscle.

This week’s list has a broad mix of names, though most are more cyclical or turnaround plays. Our Top Pick is a good-looking cyclical name that’s just emerging from a tight area.

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Still Positive Despite Cross-Currents

April 19, 2021

Growth stocks are still in mostly good shape, though there are some areas of concern in the broad market. There’s still quite a bit of rotation underway, and cross-currents could be a factor in the near term. Still, the weight of evidence prevents us from being overly cautious. With a fair number of nice-looking setups in individual stocks across several industries, we’re leaving our Market Monitor at level 6 for now.

This week’s list includes a mix of growth and cyclical themes, most of which have a solid story. Our Top Pick is an established semiconductor name with a growing presence in the soaring high-performance computing (HPC) market, and which has just broken out to new highs on strong volume.

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Another Step in the Right Direction

April 12, 2021

It certainly hasn’t been a buying panic, but last week was another step in the right direction, and while there’s still some iffy pieces of evidence out there, it appears that the sellers have run out of ammunition for the time being. For now, we’re leaving our Market Monitor at a level 6, but another good week may change that.

This week’s list has a bunch of good-looking charts, most of which have a solid growth story. Our Top Pick is a cheap medical play that recently staged a powerful breakout on positive news.

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Evidence is Improving

April 5, 2021

For the first time in a few weeks, we’re seeing some signs of spring when it comes to the Nasdaq and growth stocks. Moreover, we’re seeing many more six- to 10-week structures out there, which are far more palatable than the jagged three-week bases seen a while back. That said, we’re not out of the woods; we do think the market has a chance to kick into gear, but still think the general game plan (small positions, buying cyclical names on weakness) makes sense for now.

This week’s list is a nice mix of growth and cyclicals, many of which look like either potential breakouts or early-stage pullbacks. Our Top Pick is a reasonably valued name in the chip space that is attacking its old highs after a two-month rest.

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The Song Remains the Same

March 29, 2021

Overall, the song remains mostly the same—growth stocks are mired in a correction, and while many cyclical-related stocks are holding up well, few are really making much upward progress. There are some pullback opportunities here and there, but at the moment, the market action resembles a kid scribbling on a piece of paper, with jerky movements that don’t persist. We continue to think you should mostly play it safe, keeping new positions small and holding a generous amount of cash.

This week’s list is mostly turnaround-based, with our Top Pick a retailer that just broke out a few weeks ago and is pulling back for the first time.

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Still Consolidating

March 22, 2021

There were some intra-week ups and downs, but overall, not much changed with the evidence last week, which keeps the broad market in an uptrend but also means growth stocks and the Nasdaq are still in corrections and consolidations. We’re looking for definitive signs that the buyers are coming back for growth stocks but it’s too soon to conclude the environment is changing. Thus, we’re sticking with the same stance: Some small buys of strong stocks on pullbacks is fine, but we’d stay relatively close to shore.

This week’s list has something for everyone, whether you’re looking for different sectors or setups. Our Top Pick has has reemerged on the upside and could be leading a new group move.

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Solid Rebound, but Still a Split Tape

March 12, 2021

Up is good, so last week’s rebound in growth and continued push higher in the broad market was encouraging. That said, nothing much has changed with the overall evidence—resilience and upside from here would suggest the huge pullback earlier this month was more of a shakeout, but renewed selling pressure would hint toward another leg down. Right now, we’re playing things halfway—we’re OK with some buying, but we’re not pushing the envelope and need to see more from growth before concluding the storm has passed.

This week’s list is very much a mixed bag, with cyclicals, retail, growth and turnarounds all making the cut. Our Top Pick is  leader of a fresh group move. You could nibble here or (preferably) on dips.

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Growth Cracks, Rest of the Market Holds

March 8, 2021

The selling pressure that we saw emerge two weeks ago really picked up last week, with the vast majority of leading growth stocks cracking intermediate-term support. That said, the rest of the market has refused to follow the Nasdaq’s lead, with the broader indexes holding up. Just going with the evidence, we’d be shying away from growth stocks while looking for opportunities in the strong sectors, but we advise going slow and giving some thought to capital preservation.

As expected, this week’s list is heavy on cyclical and re-opening themes, and our Top Pick is a vacation name that is just starting a massive turnaround.

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A Tale of Two Markets

March 1, 2021

The market staged a nice-looking rebound today, but when examining the evidence, it’s a tale of two markets—growth stocks still look ragged, but the broad market is largely fine, with small- and mid-cap indexes perched near their highs and many sectors acting fine. All in all, the evidence has worsened, but we’re mostly taking things on a stock-by-stock basis.

This week’s list is  heavy on cyclical and re-opening plays, though chip stocks remain a bastion of resilience. Our Top Pick is part of that chip group and is just a couple of months separated from a long-term breakout.

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More Wobbles, but Nothing Abnormal Yet

February 22, 2021

After a very strong rally from the late-January lows, the major indexes are again in the midst of a pullback. Could this be the start of a “real” correction? It could be, but we never anticipate, and so far, we really haven’t seen much abnormal action yet. Given some of the yellow flags out there, our antennae are up, but with most of the evidence still positive, we’re keeping our Market Monitor at a level 7.

This week’s list has many recent earnings winners, including a few that are busting loose from good-sized bases (regular or post-IPO). Our Top Pick is one of those names that could be bought on today’s dip.

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Be Selective, but Stay Bullish

February 16, 2021

With the major indices in record territory and the leading growth stocks showing strength, it’s hard to be anything less than bullish right now. Even at these elevated levels, the market has provided us with a few attractive entry points recently. But with earnings season well underway and sentiment still elevated, the potential for near-term volatility has increased. Thus, it’s imperative not to throw caution to the wind in this news-sensitive environment. Given the weight of evidence, being selective when buying is the preferred tactic. The dominant intermediate-term trend is clearly up, though, so you don’t want to be too defensive. We’ll keep our Market Monitor at 7 and see how things go from here.

This week’s list has a nice mix of stocks across several industries benefiting from different trends. Our Top Pick this week is an automotive industry company which recently had a high-volume breakout from a huge basing pattern.

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Encouraging Action, though Earnings Still Lurk

February 8, 2021

NOTE: Because of President’s Day, our offices will be closed next Monday, February 15—so your next Top Ten issue will be published Tuesday, February 16.

Last week’s issue was titled “Next Few Days Should be Key,” and we think they were—in a bullish way, as the market’s strong snapback bodes well. That said, the action didn’t erase all the yellow flags out there, either, especially as tons of names are set to report earnings in the days ahead. 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 things work their way higher.

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 an earnings winner that’s just gotten going from a multi-month structure and looks ready for a sustained advance.

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Next Few Days Should be Key

February 1, 2021

After one of the wildest weeks in months, what happens during the next few trading sessions that will count most—right now, the intermediate-term trend of the major indexes is up, though it’s more of a mixed bag for leading stocks (both growth and cyclical). From here, with a strong, broad rebound (including some positive earnings reactions) likely boding well, while an inability to bounce/further selling possibly puts a nail in the coffin of this advance. For now, we’re paring back and tightening stops but still giving most of our winners a chance to hold support and resume their advances.This week’s list has a surprising number of solid charts given the recent turmoil, though we generally still favor buying on dips or some tightening action.

Our Top Pick is a newer name we featured a month ago and has shown no inclination to pull back during this recent selling wave.

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More Yellow Flags

January 25, 2021

It’s usually hardest to keep things simplest, which is why we always put our main emphasis on the trends of the major indexes and action of leading stocks—and with both of those still positive, we’re sticking to a generally bullish stance. However, there’s little doubt we’re seeing some late-in-the-advance happenings and, chart-wise, nearly everything is sticking straight up in the air. Overall, there’s little doubt that the risk/reward for most stocks here isn’t great, so we’re raising stops on names we own and are being very selective on the buy side, focused mostly on buying dips.

This week’s list has a wide mix of stocks, though most are either setting up during the past few months or staging initial pullbacks after huge runs. Our Top Pick is a leading materials play that’s finally begun to pull in–further weakness would be tempting.

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Some Churning, but Pullback Normal So Far

January 19, 2021

Sellers finally landed a few punches last week, with many tech-related growth stocks finding resistance and the big-cap indexes losing a little ground. So far, though, the pullbacks in the indexes and individual stocks appear normal and other timing indicators look fine. We are seeing continuing rotation, but the trends of just about all indexes and leaders are up, so we remain mostly bullish.

This week’s list has stocks from many different nooks and crannies of the market. Our Top Pick is from the strong medical area and it’s recently changed character for the better.

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Still Strong, Still Exuberant

January 11, 2021

Note: Due to the Martin Luther King Jr. holiday next Monday, your next Cabot Top Ten Trader issue will be posted after the close next Tuesday (January 19). Thank you!

The first week of the year was extremely volatile, but all in all the action ended up positive, with major indexes kissing fresh all-time highs and many leading stocks ending up nicely on the week. We’re content to ride things higher, but there’s little doubt the environment is hot and heavy, so you should continue to keep your feet on the ground and be discerning with your buys.

Because of this, most of our buy ranges are a bit below current prices (looking for pullbacks), though we still see some solid setups, including our Top Pick today, which is just bouncing off its 10-week line for the first time since its October blastoff.

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Keeping Our Eyes Peeled

January 4, 2021

After a prosperous last 12 months, 2021 got off to a sour start today, but what counts most is what happens from here: A few rounds of sharp selling in the leaders and major indexes (possibly coinciding with some intermediate-term breakdowns) would tell us the bears are making a stand. However, another quick show of support in many key stocks will be a good sign. We’re keeping our eyes open, but so far, we remain mostly bullish.

The first Top Ten list of the year is a mixed bag in terms of stocks and sectors. Our Top Pick is a stock that recently changed character and is finding support after an early-stage pullback.

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Not Unexpected

December 21, 2020

Note: This is our last issue of 2020 — we have next week off and we’ll be back at it (next regular issue) January 4. Have a great holiday season!

News of travel restrictions due to a new strain of the virus over in Europe hit the major indexes early today, though buyers quickly stepped up. At day’s end, the major indexes remain in clear intermediate-term uptrends, as do most stocks. As usual, we just go with the evidence in front of us: Near term, further reverberations are likely, so we still think it best to pick your spots and stocks carefully, but with the major evidence still positive, we are too.

This week’s list has a nice mix of stocks benefiting from different trends (growth, reopening, cyclical, etc.). Our Top Pick is a name that sits on the fence between Big Data and search, and the stock has recently broken out from a big post-IPO structure.

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Same Story

December 14, 2020

We could pretty much cut and paste from the past couple of weeks and stick it in here—the primary evidence remains very encouraging, while the main worry is that few investors are worried (in stark contrast to earlier this year, when the market was kiting higher but few believed it). Thus, we remain bullish and think putting money to work is the best course of action, but it’s also important to keep your feet on the ground and focus on the best-looking names for buying while trailing stops higher and taking partial profits as things stretch higher.

This week’s list is relatively split between true growth situations and those benefiting from cyclical/turnaround buying. Our Top Pick looks to be offering a high-odds entry point after five weeks of tight trading.

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