The market is still trending higher. But it can’t continue at the recent pace. And a 10% or so correction is possible at any time, especially after such a strong move higher. While the short term is always unpredictable, I’m still bullish over the intermediate and longer term.

With the market looking topsy in the near term, it’s a great time to write covered calls. In this issue, I highlight two call writing opportunities on existing portfolio positions. These calls provide a great way to cash in on a high market without giving away too much upside potential.

Despite the current tug of war between cyclical and technology stocks for market leadership, financial stocks are likely the best positioned stock sector in the near term as well as for the rest of the year. They offer a complete package of value, momentum and position in the economic cycle.

Financials tend to thrive in the early stages of an economic cycle, which is where we are now. Financial companies also love rising interest rates. Interest rates are already rising and all but certain to keep climbing amidst a booming economy and trillions of stimulus dollars.



While the financial sector has been the second best performing sector on the S&P YTD, it isn’t as overextended as energy. It’s is only up about half as much so far this year.



In this issue I highlight two fantastic financial stocks for purchase. These stocks offer the very rare combination of value and momentum. It’s a great time to get in cheap ahead of great opportunities to write covered calls for a high income in the weeks and months ahead.

The timing is right for alternative energy.

Alternative energy (also referred to as clean or alternative energy) is by far the fastest growing energy source. The International Energy Agency (IEA) estimates that global renewable power supply will grow 50% in just the next 5 years.



While clean energy has been a story and knocking at the door for a while now, a certain critical mass in growth and development seems to be taking place recently. The market usually gets it. And it’s telling us something.



The iShares Global Clean Energy ETF (ICLN), which tracks 30 stocks in the Global Clean Energy Index, has taken off lately after going nowhere for more than a decade. ICLN soared 100% over the past year and 178% for the past two years, compared to S&P 500 returns of 22% and 44% respectively over the same period.



The market clearly sees big changes looming in the energy sector. It also helps that the Biden Administration will likely reward clean energy companies with more tax breaks and subsidies and other goodies. But more importantly, the focus will draw still more investor attention to the booming growth in alternative energy. And investor intrigue will only accelerate.



This month’s highlighted stock NextEra Energy (NEE) should clearly benefit going forward. It may not be the sexiest clean energy. But it provides a great way for more conservative, income oriented investors to play the trend.

The S&P 500 is making yet another new all time high. The index has risen 72% since last March and over 17% just since the beginning of October. That’s amazing performance in a short amount of time.

I’m positive on the market for the rest of this year as a full recovery along with low interest rates and massive stimulus should be very positive for stocks. But the market never goes straight up. And a selloff is overdue. It would present a buying opportunity ahead of a promising year.



While I am increasingly cautious in the near term, there are very select places where great value can still be found. And even fewer that historically move independently of the overall market.



In this issue I highlight a stock that moves to its own drummer and not with the market. It is near the low point of its range in a long-term uptrend facilitated by rapid growth in its business. The situation presents an ideal time to buy into the stock now and write calls later.

The New Year promises to be a great one for dividend stocks. After underperforming the market in 2020, the stars are aligning to make 2021 the year of the dividend.

The distribution of the coronavirus vaccine promises to bring this pandemic to an end and unleash a full and robust recovery in 2021. Energy stocks that had been neglected in the market recovery have caught fire in anticipation of a full recovery in 2021.



A huge and overdue rally in the sector has paused temporarily ahead of a very promising year, giving us an opportunity to get into one of the very best stocks in the sector at a still cheap price.



Global energy giant Chevron (CVX) currently offers the rare combination of great value and momentum, as well as a fat yield. The stock has already moved higher, the rally has a long way to go.

The euphoric vaccine rally has driven the market indexes to all time highs. A vaccine likely means the end of the pandemic, sooner rather than later. The removal of the remaining lockdown restrictions should unshackle the economy and bring on a full and robust recovery.

A full recovery will lift those stocks and sectors that depend on the Main Street economy. It will lift cyclical sectors like energy, finance and hospitality that had not participated in the partial recovery. It’s already happening. The losers of the earlier stock market recovery are on fire.



In this issue I highlight one of the best banks in the country. It is a highly desired stock that should be very quick to recover. The stock has strong momentum and is still priced well below the 52-week high. This issue also highlights two covered call opportunities to cash in on the market rally.

These are crazy times. This pandemic-riddled year isn’t done with us yet. In fact, Covid cases are rising and many states are reinstating new batches of lockdown restrictions. At the same time, we’re less than a week away from an election with a high risk of a contested result and the ensuing uncertainty.

At some point, we will get past the election and the pandemic. The economy should boom and the market will be free to rise. But things could still get awfully dicey in the weeks and months before we get to the Promised Land.



In this issue, I highlight a high-income stock that is ideal for the current situation. The business is benefitting mightily from the pandemic. It’s a defensive stock that should continue to perform well amidst the volatility. Yet, it should also be a star in the post-pandemic market.



Not only does this stock pay a high dividend, but it attracts high call premiums as well. It is one of the very few stocks that is well worth buying in the current situation.

The incredible rally from the March lows has been disrupted. After soaring a remarkable 60% from the March lows, the S&P has pulled back more than 8% from the high. The selloff was long overdue and frankly healthy. It couldn’t continue the torrid pace higher forever.

The recent pullback has put several high quality stocks back in the buy range. In this issue, I highlight one of the very best large companies on the market. The recent turbulence has caused a rare pullback in the price that presents a buying opportunity in a stock that is rarely ever cheap. It also generates substantial call premiums and fantastic income potential.

It’s time to look beyond the pandemic. It may seem like it will drag on forever. And it may still be a while yet before it’s behind us. But it will pass. In the grand scheme of things, it is a very temporary situation.

The overwhelming majority of your investing career from here will be in the post pandemic environment. And the virus has created opportunities. While the market indexes are at all time highs, many of the more cyclical and real economy stocks are still historically very cheap. But these stocks will be lifted by the inevitable recovery ahead.



In this issue, I identify two industry leaders with stock prices that are temporarily depressed in the current environment. Yet, they present fantastic opportunities if we look beyond the haze.

In anticipation of a booming economy in the months and quarters ahead, the stock market has rallied within a whisker of all time highs. But certain individual stocks and sectors are still languishing despite the index performance. It is among these stocks where great value and high yield can still be found.

In this issue I highlight one of the best banks in the country at a historically low price as the sector struggles. But the bank has remained solidly profitable through the horrible economy in the second quarter, and the stock will benefit as the recovery gains traction. It currently offers a great income opportunity with a high yield and getting high call premiums as the market anticipates better days ahead.

This is a fantastic environment for income. The upward bias of the market is creating high call premiums. And certain pockets of the market still offer deep value and higher dividend yields than have existed in many years.

In this issue I identify three excellent dividend stocks to buy now.



One is a high yielding energy play with a stratospheric, but safe, yield. Another is one of the most defensive and reliable income generating stocks in the market that still offers good value and a strong yield. And the third is a technology stock that sells at a reasonable price with an incredibly strong catalyst for the stock price to shoot up in the future.



The issue also includes covered calls on these same stocks that will provide a double digit income in a short time if the stocks move higher, and a great income return if they don’t.

Welcome to the inaugural issue of Cabot Income Advisor. It is my pleasure to share investment ideas that can provide you with a high income in today’s low interest rate world.
In this issue I highlight three stocks that are great buying opportunities right now for income investors. The stocks are chosen for their high yields, ability to generate attractive call premiums and the likelihood of capital appreciation over time.


While the market indexes have rebounded strongly from the March lows, many individual industries and stocks are still dirt cheap and high yielding, In fact, this is the best market in over a decade in which to find high yields in quality stocks.


Of course, the market is still dangerous and many high yielding stocks are in a precarious financial condition. Many will have to cut the dividend and the price will likely fall. While quality high yields are out there, stocks must be chosen wisely.


These three stocks are a great way to lock in high income and start to build your high income portfolio. Now is the time to embark on your journey to higher income and a more rewarding financial future. I look forward to being your trusted partner.

It’s a new bull market! The S&P 500 has rallied over 20% from the low, the technical definition of a bull market. The index is also up about 12% YTD. Are stocks topping out or are we off to the races? Despite inflation, the Fed, and increasing forecasts of recession, stocks have defied conventional wisdom and rallied strongly. That’s impressive. But this rally is incredibly thin. Ten primarily large technology company stocks are responsible for all of the index gains YTD. The other 490 stocks have collectively gone nowhere.

The economy is showing some mixed signals. But it certainly does not appear to be near a recession now. That could change. But it keeps not coming.


At the same time, the Fed is near the end of the rate hiking cycle. Sure, there’s speculation about another rate hike in the June meeting or the next one. But it is still close to the end of the hiking cycle. Inflation appears to be moderating (for now). Unless there is a big surprise with that number, the market can soon stop worrying about the Fed.

Last week was a big week in the market. Game-changing news in the technology sector that significantly improves future earnings projections for many companies is causing the sector to soar.


AI or artificial intelligence had been seen as a huge growth engine going forward as companies invest heavily in the technology. Those growth projections got a huge shot of adrenaline and the AI phenomenon got real when semiconductor company Nvidia (NVDA) reported earnings and guidance that blew the doors off expectations because of much higher investment and spending in the technology than previously thought.

The market is up for the year. That’s promising after last year’s debacle. But stocks have been going sideways since the beginning of April and can’t seem to decide on the next decisive direction.


On the one hand, the market has shown inspiring resilience amid the troubling headlines. On the other hand, there is a strong chance that the next significant move is lower after stocks have rallied 20% from the October low.

As I mentioned in the last update, last week was a big week for the market. Important earnings, the Fed meeting, and the jobs report all had implications for the near-term direction of the market. The market survived and came away about even for the week. Now what?

Earnings were generally positive. The Fed did what was expected by raising 0.25%, and the statements afterward were ambiguous. The employment report was solid as many more jobs were created. Also, the last two months of jobs figures were lowered. The readjustment quelled inflation fears while the current jobs report indicated no recession in sight.

This is a very important week that should determine the near-term direction of the market.


While the market digests the JPMorgan (JPM) buyout of First Republic Bank (FRC), the largest bank failure since the financial crisis, it looks ahead to a packed week. There’s a Fed meeting on Wednesday, where the Central Bank is widely expected to raise the Fed Funds rate by 0.25%. But the Chairman’s comments afterward will probably have a bigger impact on the market.

The market is changing. The risk is shifting from more Fed rate hikes and inflation to a growing possibility of recession in the quarters ahead. The math is changing and so is market rotation.


At the same time, earnings season is here, and we are likely in an earnings recession already. Average S&P 500 earnings shrunk 4% last quarter and are forecast to fall 5% this quarter. Much of that expectation is already reflected in prices and investors will be carefully watching the guidance for future quarters. If that is negative, companies that can continue to grow earnings and buck the trend should be at a premium.

It’s a big week. The March Consumer Price Index (CPI) report comes out on Wednesday. The number may determine the short-term course of the market.

Stocks have trended higher over the past month as the banking situation has so far tempered the Fed without any offsetting crisis. There now seems to be a greater likelihood of a recession later this year, but investors are also pricing in Fed rate cuts in the second half. That’s the dicey part.

Things are looking up in the market. The S&P 500 soared 3.5% last week and is now more than 7% higher YTD.

Investors love that the banking issues have had the benefit of tempering the Fed with no apparent offsetting crisis, so far. The expected timeline for the Fed to stop raising rates has moved way up, to one more rate hike from what could have been a hiking cycle that lasted the rest of the year.

This is a big week in the market. Investors are grappling with the fallout from the banking crisis and the Fed meeting later this week.


The failure of two banks last week also turns a spotlight on the vulnerabilities of smaller regional banks. The situation so far has not caused major reverberations in the market, as the government backstopped the fallout so far. But the situation might not be over. There could be more bank failures and ugly days for the market ahead.

We were rolling along in a choppy market to nowhere as the sticky inflation/hawkish Fed conundrum promised to play out for longer than hoped at the beginning of the year. But over the past several days a Black Swan event popped up, the failure of Silicon Valley Bank.

The market had a great start to the year and then slumped in February. March started off with the best week in a month for the S&P 500. What’s next?

There will be a lot of information coming out this month that could determine whether the market rallies or slumps from here. This week, the Fed speaks and the February jobs report comes out. These events could give investors a better idea of how aggressive the Fed will remain.

Sell USB November 19th $60 calls at $2.30 or better

Sell CVX April 1 $95.50 call at $4.30 or better

Sell BGS February 19 $27.50 call at $2.40 or better

The idea is to sell a covered call, meaning you already own or you just purchased V on the buy recommendation.

The first issue of Cabot Income Advisor just came out yesterday. The idea is to sell a covered call, meaning you already own or you just purchased IIPR on the buy recommendation.