Stock Market Analysis Video 5/7/2010

The stock charts used in this presentation are provided by WONDA ® Copyright © 2016 William O’Neil + Co., Inc. All rights reserved. Unauthorized duplication, modification, photocopying or distribution in any form is strictly prohibited.

Editor Mike Cintolo talks about the big market correction of the past week, and tactics you can use to minimize damages. He also talks about how important it is to focus on the market itself instead of all the news, as well as portfolio management during times like this. Stocks discussed include Green Mountain Coffee Roasters (GMCR), Baidu (BIDU), Netflix (NFLX), and Coinstar (CSTR).

Mike CintoloMichael Cintolo
Vice President of Investments, Editor of Cabot Market Letter and Cabot Top Ten Report

A growth stock and market timing expert, Michael Cintolo is editor of Cabot Market Letter and Cabot Top Ten Report. Since joining Cabot in 1999, Mike has uncovered exceptional growth stocks and helped to create new tools and rules for buying and selling stocks. Perhaps most notable was his development of the proprietary trend-following market timing system, Cabot Tides that has helped Cabot place among the top handful of market-timing newsletters numerous times. Cabot Market Letter is one of only nine newsletters included in Hulbert Financial Digest's 2010 Honor Roll for performance in up and down markets, and Timer Digest Top Ten Long-Term Timer.


The Most Lucrative Phase of this Bull Market is Beginning Now!

Dear Cabot Wealth Advisory Reader,

I usually don’t write this kind of letter, as I prefer doing what I love to do--picking stocks, timing the market and helping my subscribers make money. But I put together this special write-up because I feel strongly about the following: The most lucrative phase of this bull market has just begun! And if you identify and invest in the market’s best leading stocks--not just the myriad also-rans that are touted online and on TV--you’ll stand to make big, big money.

Why do I say this?

First and foremost, because of what I’m actually seeing in the market … and my knowledge of market cycles going back 75 years. In a nutshell, 2008 was the year of the crash; we’ve seen such declines only a handful of times in history. And every time, the following year (2009 in this case) was the year of the turnaround stock--that is, the stocks that fell 90% or more during the crash rebound strongly for many months. (Think Bank of America, Goldman Sachs and some of the beaten-down commodity stocks.)

However, it’s what happens next that really excites me. It turns out that, following the big “rebound” year, the market historically gets back to “normal”--the turnaround stocks of the prior year calm down and generally meander sideways. But the best leading growth stocks go through the roof! And true to history, I am now seeing literally dozens of top growth stocks in many sectors advancing on powerful volume … a clear sign that deep-pocketed institutional investors are buying hand over fist. Many of these stocks are so strong they can’t pull back for more than a day or two before getting up and running again!

But beyond the action of individual stocks are the signals from my time-tested market timing indicators--the same indicators that had my subscribers averaging 50% cash for the entire bear market (including 90% in early September 2008, just before the crash) and that gave fresh buy signals in early April 2009. These indicators are unanimously bullish right now, and some of them point to much higher prices down the road.

For instance, as of March 17, a full 90% of the 1,500 stocks in the S&P indexes (including the small-, mid- and large-caps) were above their 10-week moving average--a very rare blast-off signal that almost always leads to double-digit gains in the major indexes within six months. A similar signal was flashed last year, leading to huge gains, and before that it was last seen in June 2003 … just as the market was set to rip ahead for another year.

Moreover, traditional measures of market breadth--things like the number of stocks hitting new 52-week highs--are hitting their best levels in years. That has never (never!) happened within a few months of a major top.

Thus, the evidence is clear--this market is heading higher, and it’s not the beaten-down stocks from 2008 that are leading the way. It’s the true growth stocks that have great sales and earnings, that are in leading fast-growing industries and, most important, that have revolutionary and unique products or services that are changing the way we live and work. How can you discover such stocks? I suggest Cabot Market Letter, our flagship newsletter that has, for the past 40 years, picked most of the best leading stocks of every market cycle.

Now, granted, I am a bit biased--I’m the editor of the newsletter! But I can say that Cabot Market Letter’s track record speaks for itself; it’s not so much my stock-picking ideas as much as Cabot’s stock-picking system, which has been refined and improved over those 40 years to be able to spot the true leaders, and to know the best times to buy (and buy more), hold and sell.

That’s why, going back to the 1970s, Cabot Market Letter was able to uncover the leaders of each cycle, whether you’re talking about American Medical Systems and MCI Communications back in the late 1970s and early 1980s (up 1,097% and 295 %, respectively), or SafeCard and Triangle Industries (both rose more than 150%) in the late 1980s, or American Power Conversion and Summit Technology in the early 1990s, or Yahoo!,, JDS Uniphase and Qualcomm in the late 1990s.

The success has been even more pronounced during the past decade, despite the market’s horrendous ups and downs. In the 2003-2005 advance, we nailed XM Satellite Radio, eResearch, Taser (which was one of our biggest and fastest winners of all time, up 295% in just five months), Apple and Google, all of which mushroomed more than 100%. And in the great year of 2007, we enjoyed big gains in Crocs (up 177% when we sold in November) and First Solar (we sold our last piece in September 2008 for a 298% gain, as well as some solid winners like GameStop (profit of 61%) and Intercontinental Exchange (67%).

What about the bear markets, you ask? Did we hold these winners during the good times, only to ride them all the way back down as so many investors did? Absolutely not! While we give stocks plenty of rope as long as they’re acting well, when big investors begin dumping shares (i.e., when we identify clear distribution), we tighten our stops.

Just as important, however, is our market timing system, which is based mainly on the market itself. Simply put, when the trend is up, we’re bullish; when the trend is down, we’re cautious. Yes, it’s that simple, and it’s that simplicity that has made us the #2 long-term market timer among all newsletters according to Timer Digest (the keeper of the keys of timing newsletters). Cabot Market Letter was also named to Hulbert’s prestigious Honor Roll for performance in both up and down markets.

For example, here’s an excerpt from our Cabot Market Letter dated September 10, 2008:

“Cash is still king. Since the last issue, we’ve sold First Solar--taking our big profit and walking away--and Qualcomm, taking a small loss. We find ourselves in a highly unusual position--the Model Portfolio contains just one stock (out of a maximum of 12) and is over 90% in cash. The market has been nothing if not a meat grinder the past few weeks--almost no stocks have enjoyed sustained advances. And the few that do advance for a time often get hit hard in the weeks that follow. Thus, we’re content to sit with our cash hoard and avoid the market’s viciousness. We need to see at least some strong buying power emerge before we recommend buying in a serious way.”

After that, AIG got bailed out and Lehman went under--and the Dow fell 3,400 points in one month! In fact, we averaged a 50% cash position in our Model Portfolio during the entire bear market (October 2007 through March 2009)--a feat our subscribers are very thankful for.

Moreover, we didn’t hide in a cave as so many did following the crash. We know that bull markets always follow bear markets, and we began receiving buy signals in late March and early April of 2009, just as the bull market was getting underway. And we’ve been bullish ever since!

During that bullish time, we’ve gotten back to doing what we love most--finding and buying great growth stocks. We recently averaged up in one of our favorites, a stock we believe is the #1 leader of this leg of the bull market. Its major competitor just left town, and sales and earnings are projected to grow 50% in both of the next two years … and frankly, I believe those numbers are way too low.

We also own a company that’s already doubled for us since our recommendation a year ago, but I feel there is much more left. Why? Because the company is revolutionizing one of the biggest mass markets in the world; it’s by far the top dog in its industry, and we think it will sell millions more of its products in the quarters ahead. It’s truly one of the biggest stories we’ve ever uncovered, and the stock continues to act well as big investors pile in.

Then there’s a firm that is leading the charge in replacing all standard, incandescent light bulbs around the globe. Its technology produces lights that last many times longer, use far less energy and don’t contain any harmful mercury. Known as light emitting diodes (LEDs), these products are in huge demand, both from the HDTV industry (which is switching over to LEDs in a big way), but also by commercial and industrial outfits that can save millions of dollars each year in lighting costs. While there is some competition, right now, this firm is selling all it can produce. Long-term, this is a market that could total $100 billion!!

And, as I wrote above, this bull market is nowhere near its end … meaning many more potential winners are likely building launching pads as you read this. I think many of them will likely lift-off during the current earnings season, as Wall Street continues to underestimate the earnings potential of a number of young growth companies.

So, if you want to be like most investors--sit in an index fund and ride the S&P 500 (which hasn’t made any progress since 1998) like a yo-yo during the next few years, go for it.

But if you want to take full advantage of this bull market, which is launching big winners left and right … and know that you’re following a system that knows not only when to buy, but also when to sell and hold cash … then I urge you to try Cabot Market Letter.

And to give you that added push, I’m offering a special low introductory price for new subscribers. As my long-term subscribers can attest, giving Cabot Market Letter a try is a decision you’ll thank yourself for. You have nothing to lose ... and everything to gain. Click below:

Order Now Learn More


Michael Cintolo
Editor of Cabot Market Letter

P.S. I’m continuing to spot more and more good-looking stocks with great stories and growth. I expect many will take flight during the next couple of weeks as they report better-than-expected earnings and institutional investors pile in. Don't delay--this is a completely risk-free offer …

If you don’t see the huge profit potential our 40-year advisory service offers you then call us and cancel within 60 days. I’ll rush you a full and prompt refund. So what are you waiting for?


Stock Picks


This stock could rise 50% before becoming fairly valued.

This hot technology company is growing like a weed, thanks to products that speed up cloud communications.

This stock is somewhat well known, but far from well loved.

Cabot Wealth Advisory

Buy This Small-Cap Tech Stock as the Nasdaq Thrives

By Tyler Laundon on October 20, 2016

Technology stocks are thriving, as the Nasdaq has been outpacing the S&P 500 and the Dow for months. And one small-cap tech stock in particular is outperforming the industry’s big boys. Read More >

Is Allergan (AGN) Still an Undervalued Stock?

By Crista Huff on October 18, 2016

Five months ago, Allergan (AGN) was an undervalued stock with tons of growth potential. It's up 21% since then, but still has plenty of upside. Here's why.Read More >

Diversify with Canadian Stocks

By Timothy Lutts on October 17, 2016

Canadian stocks are a good way to diversify your portfolio without taking on too much risk. And one Canadian stock in particular looks quite undervalued.Read More >