Explorer stocks were steady or slightly down this week but don’t get discouraged. It is likely that Fed interest rate hikes have ended and, combined with a debt ceiling deal, could ignite a rally. Next week I will give an update on our three Explorer ETF positions.

The unemployment rate for Chinese people ages 16 to 24 rose to a record of 20.4% last month. The rate of youth unemployment in China has consistently been two or three times higher than the general population. Not a good sign.

In the May Issue of Cabot Early Opportunities, I profile a potential turnaround story in a well-known stock that is returning to its roots.

We also take a closer look at one of the highest-end luxury brands in the world, an unknown green tech company, an emerging MedTech star and a construction materials specialist that’s spreading across the U.S.

Enjoy!

This week is the expiration of eight of our positions. Expect to hear from me on how we will manage these trades Thursday afternoon or Friday morning.

Big picture, the factors that have been in place for the past few weeks are still hanging around, but we’re also starting to see more names give it a go on the upside—after a rough start to earnings season, more and more are starting to react well and push through some resistance, with others that did get hit snapping back impressively. (Indeed, today’s list is as growth-y as we’ve seen it in a while.) Is it enough to change our stance? No, as we’re leaving our Market Monitor at a level 4, but we’re keeping our antennae up in case the buying pressures spread and more real leaders emerge.

This week’s list has a bunch of strong names with solid numbers and stories, from a variety of industries, too. Our Top Pick is toyed with new highs a couple of times in recent months and now looks to have decisively broken through.

It’s tough to make money in a sideways market like this one. But soon enough, a breakout is coming – history tells us that this bear market (18 months old in the Nasdaq) is on borrowed time. When it does, it will happen fast, and that’s when the real money is made – at the onset of a new bull market. To be prepared for its eventual arrival, we maintain a full 20-stock portfolio. And today, we add a familiar growth stock that got pummeled last year but is on the fast track to recovery in 2023. It’s a new recommendation from Mike Cintolo in his Cabot Top Ten Trader advisory.

Details inside.

After the recent pullback, the All-Weather portfolio is now up 9.88%, with the Vanguard Total Stock Market ETF (VTI) doing the heavy lifting, up 25.36% since it was introduced to the portfolio back on 6/15/22.

I will be rolling all of our LEAPS positions to the 2025 expiration cycle this week. So, be prepared to make a few trades this week as we increase the duration of our LEAPS while simultaneously continuing to sell more call premium.

Mega-cap tech again outperformed last week, while the banks continued to look suspect/horrible, and the action under the surface is flashing warning signs.

Mega-cap tech again outperformed last week, while the banks continued to look suspect/horrible, and the action under the surface is flashing warning signs.

As we head towards the end of the May expiration cycle we have two positions, BITO and WFC, that need to be rolled. Both positions have little to no premium left. As a result, I want to buy back our short premium positions, lock in profits and immediately sell more premium in both positions. Be on the lookout for a trade alert Monday or Tuesday.

I’m going to keep it short this week as we enter a busy end to the expiration cycle. We locked in an 11.1% profit in our DIA bear call spread last week to add to our 6.8% gain the week prior. Our total cumulative return stands at 135.63% (an all-time high) with a win ratio of 87.5% (28/32 winning trades) since we started Quant Trader just under one year ago … numbers we are proud of and hope you are as well.

Our focus this week will be on Home Depot (HD), Target (TGT) and Walmart (WMT).

We’ve gotten back on track the past few weeks with another small winning trade, a one-day, 4.2% gain in Disney (DIS). In total we’ve placed six trades this earnings season, with a cumulative loss of -11.9%. With a few more weeks left on the earnings calendar, we have three to four more opportunities to bring our returns back to breakeven for this cycle or possibly into positive territory.

The markets traded sideways through most of April. But since then, the choppiness has returned—along with worries about the uncertainty regarding the debt ceiling, the expiration of the immigration-limiting legislation, and ongoing debate about the possibility of a recession.

Yet, economically speaking, the trends are still healthy. Manufacturing has held up, employment continues to rise, and job openings are still underutilized (as you can tell if you’ve been in a restaurant lately!).

After being stuck in a lateral range for the past year, gold was finally able to overcome the psychological $1,900 an ounce barrier that has held back all previous rallies since early 2021.

In today’s ETF Strategist update, I’ll answer two questions that came in this week. Here is a summary, and I go into further detail in the short podcast that accompanies this update.

We summarize our recent monthly edition of the Cabot Turnaround Letter as well as the Catalyst Report,
provide comments on our companies that reported earnings or had other meaningful news. Also, some thoughts on the war in Europe.

It’s been another wild week as we’ve had four companies report quarterly results (two more are on deck tonight) and have seen the situation in Ukraine deteriorate as Russia has invaded the country. We’ve also had the S&P 500 Index officially slip into correction territory (-10% or more).

The Russian invasion of Ukraine will surely roil markets today and raise uncertainty over the next week. U.S. markets are off about 10% since early January as tech and growth stocks in particular reset their valuations amidst higher expected interest rates and geopolitical risk in Ukraine and Asia. Losses are broad-based with 10 of the S&P 500’s 11 sectors down, with only the energy group bucking the trend. On the positive side, valuations are more attractive, the pandemic seems to be fading and China seems to be growing.

It’s official. We are in a correction.

The S&P 500 fell 10% from the high on a closing basis earlier this week. In and of itself, a correction is normal in bull markets, especially considering the current circumstances. After a massive 100% move higher in less than two years, a correction might be considered healthy.

Russia’s invasion of Ukraine likely brings some short-term effects that matter to the Greentech sector. The primary one is probably a rise in costs for oil and natural gas, partly because oil tends to react upward on global crises generally, and also because the cancellation of the Nord 2 undersea natural gas pipeline to western Europe from Russia means natural gas will leave the U.S. as LNG to supply Europe.

I feel very good about the Cabot Micro-Cap Insider portfolio. Each stock looks attractive on an absolute and relative basis. And none of the portfolio should have a direct impact from the geopolitical events in Russia/Ukraine.

Mike Tyson inadvertently offers sage advice for investors. We add a new Buy, two stocks are approaching our price targets so we put them under review, and one stock surges following a shareholder-friendly payout announcement.

In this week’s ETF Strategist update, I’ll continue answering questions I received after we launched this advisory.
In particular, a reader asked why the specific funds were included in the allocation.

We comment on seven companies reporting earnings.

This has been a relatively quiet week for us in terms of quarterly reports as Repligen (RGEN), which reported this morning (details to follow), was the only portfolio company on the schedule.

This morning we found out that Endava (DAVA) has postponed its Q4 earnings report from tomorrow (September 23) until next Tuesday (September 28).

Monday’s big, sharp market pullback was shocking to some investors, and scary enough to cause many to sell stocks in the fear that the correction would go deeper. It certainly might—the September/October period often brings major corrections—and maybe it should, though should is a word that I try to avoid when writing about the market.

The top five holdings in this ETF are: Enphase Energy Inc (ENPH, 11.34%); SolarEdge Technologies Inc (SEDG, 10.01%); Sunrun Inc (RUN, 7.18%); Xinyi Solar Holdings Ltd (00968, 6.88%); and First Solar Inc (FSLR, 6.21%).

Coverage of the stock of this dynamic tech company was initiated last month by several brokerage companies, with the following ratings: Credit Suisse, Outperform; Wedbush, Outperform; Loop Capital, Buy; and Piper Sandler, Overweight. By the way, this technology is catching on with many real estate pros, as it’s 3-D picture is a great way to show a house!

The broad market gapped sharply lower today on fears China’s Evergrande could cause a domino-effect of loan defaults. That triggered a few of our sell-stops.

The market is taking a beating so far on Monday, and this time, the selling is across the board. As of 1 pm, the Dow is down 724 and the Nasdaq is down 392.

For its third quarter, this midwestern utility beat analysts’ EPS estimates by $0.02. The shares have a current dividend yield of 4.10%, paid quarterly.

Today we’re stepping away from our remaining three-quarter position in long-term holding 10X Genomics (TXG), which we added in December 2019. The stock has been moving sideways since January, and this week management spoke at conferences and suggested it is seeing lower-than-expected lab activity during what’s already a seasonally slow period.

Today is the expiration of September options and three of our positions will likely expire for full profits, and one will likely be a small loss or gain come Monday. Overall, it’s been another great month for us.

In addition to being a COVID testing powerhouse, this healthcare company is diversified into other pharmaceutical, diagnostic, nutritional products, and medical devices. And in the past 30 days, two analysts have boosted their earnings prospects for the company.

Thursday was a tough day for gold as bullion prices dropped over 2%, stopping out our speculative position in our favorite gold tracking ETF.

Our first idea is a software company whose shares recently had a strong breakout. Our second is profit-taking on a previous recommendation.

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.