Ahead of the long holiday weekend the market had yet another good week. The S&P 500 gained 1.75%, the Dow rallied 1.5%, and the Nasdaq rose another 1.9%.

This week in an attempt to diversify the portfolio we are adding an energy play.

Last week had a couple of big news items and, not surprisingly, the market was all over the place, with some strong up action, a wild reversal and then some support after the Fed’s talk. All in all, we consider the shows of support modestly encouraging, along with the fact that sentiment has taken a sharp turn lower as the worries of the world come back into focus. But nothing has really changed with the here and now: The intermediate-term trend of the major indexes and most stocks is pointed down, with few names making any progress. That can obviously change, but for now, we’re still patiently waiting for the buyers to retake control. We’ll leave our Market Monitor at a level 5 tonight.


This week’s list is another mixed set of stocks, though we like the fact that we’re seeing a few more positive earnings moves. Our Top Pick is trying to leave behind a multi-month range after its recent earnings surge.

Stocks are finally showing signs of life after a brutal August, and many of our Stock of the Week positions have fared even better than the market of late. Don’t expect much movement this week as investors will likely play out the summer string until they lock in after Labor Day. Will the (modest) recent gains hold in September, notoriously the weakest month on the investment calendar? We’ll start to find out next week. In the meantime, we won’t try and do too much, which is why today we’re adding a solid-if-unspectacular big-cap retailer that has a habit of beating the market. It’s a new addition from Cabot Dividend Investor Chief Analyst Tom Hutchinson.

Last week we sold calls against newly issued shares in PFE, BITO, GDX and KO. Since we are only a few days into each trade, I plan on posting the details of each position, per usual, in next week’s issue. Until then, I intend on adding one more position to the mix this week. Again, my goal is to have 8 to 10 ongoing positions using the income wheel approach with the occasional one-off trade to bring in some extra income from time to time.

The market had many ups and downs last week, and despite a nasty sell-off on Thursday the indexes closed the week mostly higher. The S&P 500 gained 0.8%, the Dow lost 0.45%, and the Nasdaq rose by 2.26%.

The market had many ups and downs last week, and despite a nasty sell-off on Thursday the indexes closed the week mostly higher. The S&P 500 gained 0.8%, the Dow lost 0.45%, and the Nasdaq rose by 2.26%.

The S&P 500 is right where it was roughly two weeks ago.

The lack of movement has been wonderful for our most recent SPY iron condor, our only open position at the moment. With 53 days left until the October 20 expiration cycle ends, my goal this week is to open two new positions, preferably a bull call spread and bull put spread. We’ve mostly been sitting on the sidelines while implied volatility, as seen through the VIX, traded well below 15. But after the fairly short reprieve, August has thankfully brought new life back into volatility. Of course, we would prefer to see the volatility index kick up to at least 17, if not higher, and plant itself there for a while.

Earnings season is nearing an end once again, but that doesn’t mean that there aren’t a few opportunities left on the table.

This week we have a few interesting opportunities, with the most intriguing being Lululemon (LULU). The majority of the other potential trades, while having decent options liquidity, are just too volatile for my liking. Again, even though it has been a slow earnings cycle for trading, it doesn’t mean we should force a trade. Remember, trading is always about quality over quantity.

The market remains in a correction, though we’re fairly encouraged by this week’s bounce in growth titles, which corresponds with some souring sentiment and many big-picture positives. That’s good to see--but there’s been nothing decisive on the upside, so we remain cautious and flexible, holding plenty of cash and patiently waiting for the major uptrend to resume. We do have one new small buy tonight, but that will still leave us with around half the portfolio in cash.

In tonight’s issue, we write about the short- and long-term view of interest rates, and spend a good amount of space highlighting some names that could be ready to run when the market kicks into gear--including a bigger watch list with a couple of new names.

Warren Buffett became the world’s most famous investor in part by investing in companies with strong economic “moats.” Today, we add a well-known company that fits that description. We also say goodbye to two stocks to make room for more reliable opportunities as the market teeters.

Ahead of the long holiday weekend the market had yet another good week. The S&P 500 gained 1.75%, the Dow rallied 1.5%, and the Nasdaq rose another 1.9%.

This week in an attempt to diversify the portfolio we are adding an energy play.

This market has confounded a lot of people over the past few years. Individual market sectors have been as perplexing as the indexes. Last year, the worst performing market sector by far was technology. This year it is by far the best performing sector. Last year, energy was the best performing sector. In the first half of this year, it was the worst performing.

Other sectors like consumer discretionary stocks that had been among the worst sectors last year are among the best this year. Defensive sectors including health care and utilities that delivered stellar returns last year have been dogs this year. In fact, the utility sector has displaced energy as this year’s worst performing S&P 500 sector.

The last few years have also illustrated a tendency for downtrodden stock sectors to rise from the canvas and become among the market’s best performers. Many utility stocks are currently near multi-year lows. But not because of the operational performance of the companies, which has largely remained solid. It’s mostly because of high interest rates, which may be peaking, and the mood of investors so far this year, which always changes.

Utilities are dirt cheap in an expensive market. They are also stellar relative performers in a slowing economy. But they are likely to rise from the current dark depths even if the economy remains buoyant. In this issue, I highlight one of the best performing utility stocks over the past 10 years that is currently selling near a multi-year low in a changing market.

Buying great stocks cheap is never a bad strategy over time.

I also highlight a fantastic covered call opportunity in a stock that has been on fire over the past couple of months. It’s a great chance to keep the income rolling in.

This note includes our review of earnings from Wells Fargo (WFC) and our ratings change from yesterday for Credit Suisse (CS) from Buy to Sell.

Next week, Mattel (MAT) and Nokia (NOK) report earnings, followed by the earnings deluge which starts the week of July 25^th when 13 companies report.

The Cabot Turnaround Letter is traveling this week, so we will not be including a podcast in this update.

Things were looking up until we received this week’s inflation report courtesy of the June CPI data.

There are a lot of high-quality stocks trading at value prices out there. For next week’s recommendation, I’m looking at semiconductor companies worldwide and will try to pick the stock with the most upside and lowest downside risk. This is as Congress wrangles over the $52 billion CHIPS act to support the domestic semiconductor supply chain.

It remains a very weak market, and there are plenty of reasons to remain skeptical of near-term improvement. We’re still under the moving averages and the bearish trendline from November’s peak. Greentech and the broader technology sector (the Nasdaq 100) are both sitting just over areas of technical support that would probably signal a fresh round of sharp sell-offs if breached. For Greentech, a 10% drop here would test the pre-pandemic, nine-year high.

Although it’s already a bear market, there is a good chance that stocks fall to new lows before the market recovers.

The broader S&P 500 hit a low in mid-June on recession fears resulting from persistent high inflation and the Fed’s aggressive actions to tame it. The market has since bounced off the lows, but the issues that drove the market to those lows haven’t really improved.

As a practitioner in the investing world, I find theoretical debates to be sometimes interesting but usually not highly applicable to my work. This mirrors a favorite saying of mine, attributable to Albert Einstein: “In theory, theory and practice are the same. In practice, they are not.”

Based on resilient price action and cumulative strong earnings reports, we are purchasing another 2.5% stake in Okta, Inc (OTKA). Increasing our total position to 5% of the equity portfolio. We will continue to build a position in this name. From a technical perspective, we look for tradable stocks that are building a strong base, forming a cup and handle pattern. Furthermore, in my experience, stocks and cryptocurrencies breaking above their 21-day moving averages on volume can run.

With earnings season starting next week, few if any companies had much to say this past week. We had no companies reporting earnings this past week and only one provided news of any note.

So, we delve briefly into cryptocurrencies and more deeply into the fascinating financial, strategic and governance train wreck that is Wayfair (W).



Next Friday, Wells Fargo (WFC) reports earnings, and Mattel (MAT) and Nokia (NOK) report the following week. Then, the earnings deluge starts with 13 companies reporting during the week of July 24th.

This has been another extremely challenging week. Yesterday the Nasdaq opened in the green and was up over 2% before selling off hard into the close. It ended down more than 1%. Today, the Nasdaq is toying with a somewhat key technical level at 14,000.

Yesterday was an ugly day as the Nasdaq got off to a good start and was up more than 2% then faded, with the selling accelerating into the close. The index ended the day down more than 1% and today is toying with the somewhat critical 14,000 level.

The market is getting hit again today, though some stocks are trying to put up a fight. As of 12 am EST, the Dow is down 80 points and the Nasdaq is off another 134 points.

2022 has gotten off to a rough start for the bulls as growth stocks have gone through a mini-crash, and of late the selling has moved to the rest of the market. Whether this is the start of a real market correction, or simply a normal pullback, is anyone’s guess. Regardless, because we are selling calls to lower our breakeven on our stock purchases, the Profit Booster portfolio has held up much better than the overall market.

This Real Estate Investment Trust ETF began trading last September. It’s top five holdings include: Medical Properties Trust, Inc. (MPW, 1.66% of assets); Omega Healthcare Investors, Inc. (OHI, 1.59%); Spirit Realty Capital, Inc. (SRC, 1.57%); Vornado Realty Trust (VNO, 1.54%); and Equity Residential (EQR, 1.54%).

Today, we’re buying a Florida utility, and selling two previous ideas.

Onsemi (ON) closed beneath 60 yesterday. That triggers our tiered sell-stop for the position, of sell half ‘near 60.’

A couple of quick notes are in order. We exited our trading position in U.S. Steel (X) today after our stop-loss at 23.50 was violated on an intraday basis.

This gold miner is expected to grow earnings by more than 37% this year.

As we continue to balance the pursuit of opportunities with the desire to preserve capital/current gains we’re intently focused on stocks that are breaking down to new lows. Today we’ll take partial profits on another name and step completely away from one stock.

This company has had its issues, but analysts and insiders are betting on a turnaround. Earnings will be announced February 1, and the stock is trading at a P/E of just 9.15. The shares offer a current annual dividend yield of 4.80%, paid quarterly.

Both Sprout Social (SPT) and Kornit Digital (KRNT) have made fresh lows today so we’re going to take partial profits by selling one quarter of each position.

A few Cabot Options Trader subscribers have asked me about ways to protect gains in their portfolios, so I thought I would write to everyone with a couple of strategies using options to hedge your portfolio.

A subscriber recently asked me if I keep a journal of my trades. Many traders keep journals so they can look back at their trades and evaluate what they did right and what they did wrong.

Want to know how the big institutional investors use options? Here is an example of how one trader spent $132 million on three technology stocks.

Options trading has its own vernacular. To know how to do it, you need to know what every options term means. Here are some of the basics.

Our Cabot Momentum Trader’s market timing system consists of two parts—one based on the action of three select, growth-oriented market indexes, and the other based on the action of the fast-moving stocks Cabot Momentum Trader features.