The holiday-shortened week was mostly a non-event as the S&P 500, Dow and Nasdaq were mixed. And while the week was quiet, under the surface there was selling pressure in growth stocks and materials that raised some yellow flags.

After a couple of good weeks, some pullback was half-expected—and, when looking at the big-cap indexes, nothing out of the ordinary has been seen. That said, digging deeper, we saw a good amount of selling in resilient stocks, another round of selling in the broad market all while defensive names found buyers. To this point, the potential leaders that took on water are still holding onto intermediate-term support, so we’re not advising any major change in stance. That said, the next couple of weeks will be key (for good or bad), especially as earnings season gets started. We’ll leave our Market Monitor at a level 5 today.

This week’s list has an interesting mix of names, including more than a few turnaround-type actors that remain under accumulation. Our Top Pick is a former winner that offers a mix of growth and defensiveness in this environment.

The market took a deep breath last week on the cusp of an eventful upcoming stretch. This week alone we get the latest CPI and PPI numbers before a very pivotal earnings season kicks off on Friday. Potential catalysts – and potholes – abound, so chances are the coming weeks won’t be as calm as the first week of April was. With that in mind, in today’s issue, we’re adding a stock fit to weather any further storms. It’s a century-old company that pays a dividend, trades at a mere 12 times forward earnings, and yet is up 14% year to date – and has been a mainstay in the portfolio of Bruce Kaser’s Cabot Undervalued Stocks Advisor.

The message is consistent this week with all five of our open positions: All there is to do at the moment is allow time decay to work its magic. And that is exactly what we plan to do.

All five of our positions are in great shape at the moment, so our focus turns to adding a few positions to the mix, a topic of discussion for, well, weeks. Earnings season rears its head this week with several of the big banks due to announce Friday. As a result, I expect to see several short-term positions (30 to 60 days ‘til expiration) being added to the mix. I’ve been very conservative about adding new positions to the mix and I don’t necessarily think all is clear ahead, but I do think we have an opportunity during this earnings season to add a few selective positions to the portfolio.

Earnings season kicks off this week with several of the big banks due to announce towards the latter part of the week.

On Friday, prior to the opening bell, JPMorgan Chase (JPM), Wells Fargo (WFC) and Citigroup (C) are due to announce and will be the focus of our attention this week. I’ve discussed below a potential trade in JPM, but it wouldn’t surprise me if Citigroup and Wells Fargo enter the trading fray this week. That being said, we’ve had decent success with JPM since starting Earnings Trader, with 3 out of 3 winning trades for an average one-day return of 5.3%, so I will most likely stick to the script this week.

Nothing has changed from last week. We currently have two open positions, a bear call spread in DIA and an iron condor in IWM. Our deltas continue to be skewed towards the bearish side of things, so we will need to balance out our deltas by adding a bull put spread or some other bullish leaning strategy…potentially a bullish leaning iron condor? So, the focus this week, like last week, will be adding some positive deltas to the mix to bring the portfolio closer to a delta-neutral state. My focus will be on expiration cycles ranging from 35 to 60 days until expiration.

The holiday-shortened week was mostly a non-event as the S&P 500, Dow and Nasdaq were mostly mixed. And while the week was quiet, under the surface there was selling pressure in growth stocks and materials that raised some yellow flags.

The holiday-shortened week was mostly a non-event as the S&P 500, Dow and Nasdaq were mostly mixed. And while the week was quiet, under the surface there was selling pressure in growth stocks and materials that raised some yellow flags.

This week’s action has been a disappointment, with growth stocks suffering selling while defensive names have picked up steam. Still, nothing much has changed--the top-down evidence is mixed, and growth stocks, while taking on water, haven’t suffered anything abnormal to this point. Thus, given that we’re about half in cash, we’re mostly standing pat in the Model Portfolio tonight.

More than $15 trillion in assets are linked to the performance of the S&P 500 index in some way, according to S&P Dow Jones.

Apple, at about $2.4 trillion, and Microsoft, at $2.1 trillion, are so large that, taken together, the two companies would be the third-largest sector of the index, behind tech and health care. This share is trending lower as other companies rise.

We’re digging into another compelling MedTech story this month.

The company in focus is a spine specialist. It’s been grabbing market share from larger players by growing a portfolio that covers the full spectrum of spine care, from imaging and surgery planning to surgical tools and implants.

It’s a great example of how intense focus on a specific market can set one player apart from the big boys. Enjoy!

Despite the banking worries of last month, the S&P 500, Dow and Nasdaq have strung together three straight weeks of gains.

It’s the end of remarkable year. With just two more full market days left, the S&P 500 is up 28% for 2021.

Another year has come and gone. I can’t believe it. They never used to go by this fast. Anyway, it was a terrific year for stocks. The market is up 28% for the year.

Greentech continues to sit on the bearish side of things, but it’s holding the bottom of the trading range the sector has been in since May 15.

This week’s Friday Update is brief, with no earnings reports or ratings changes. And, with the long holiday weekend just ahead, there was little news on our recommended companies.

Since May, Greentech has traded in a 20-point range, between 70 and 90 in the benchmark we look to for sentiment, the Wilderhill Clean Energy Index. On Monday, we saw a break below support to 68, enough to cause concern we could be in store for an extended correction.

Bring it on. Persistent high inflation, a rapid Fed tightening cycle, and the explosion of Omicron have barely mussed the bull’s hair.

The market is higher so far today, though volumes and volatility are already fading ahead of the long holiday weekend. As of 11 am EST, the Dow is up 177 points and the Nasdaq is up 98 points.

Big picture, the prominent topics of debate out there continue to be the potential economic impact of Omicron and the longer-term market/stock valuation/investor risk tolerance impact of a rate hike cycle (assuming the Fed can pull that off).

For metal investors, it has been a classic tale of two markets. On the precious metals side of the market, disappointment still reigns as gold remains stuck in neutral and the white metals (led by palladium) are still in the dumps.

This week’s Friday Update is brief, with no earnings reports. As next Friday is a Christmas holiday, we will be publishing our Friday note and podcast next Thursday, December 23.

It’s been a challenging week for growth investors as the stocks that climbed the fastest are getting hit the hardest, such as our Cloudflare (NET) position, despite still posting strong numbers. On the other hand, Oracle (ORCL), where expectations are more modest, jumped from 89 to 104 this week on earnings that beat expectations.

The biggest thing happening is the change in fiscal stimulus and interest rate policy. Yesterday the Fed said it intends to accelerate the tapering process by reducing purchases by $30 billion a month (from $90 billion to $60 billion) starting in January. This is half of what was being purchased a few months ago. The program is on track to end by March 2022.

This utility beat both earnings and revenue estimates for the last quarter. The shares have a current annual dividend yield of 2.12%, paid quarterly.

This small bank beat analysts’ EPS estimates by $0.03 last quarter, earning $0.31 per share. The bank has a current annual dividend yield of 4.15%, paid quarterly.

Avalara (AVLR) shares are rising today after the company beat expectations and gave a solid outlook for the rest of the year. Maintaining at buy.

This small bank beat analysts’ EPS estimates by $0.03 last quarter, earning $0.31 per share. The bank has a current annual dividend yield of 4.15%, paid quarterly.

Revolve (RVLV) beat expectations in Q2 but concerns that the story has been “as good as it can get” and that things will slow down in the coming quarters, in part due to Delta variant circulation curbing going-out activities, are hammering shares today (-20% at the worst, better now). All things considered the selling appears overdone and I expect a bounce in the coming days. How RVLV acts in the near future will determine its standing in our portfolio, but at the moment aggressive investors may want to step in to buy. Formally, we are maintaining at hold to see how this earnings report is digested over the coming days.

Oaktree reported a reasonably strong quarter, with net investment income (adjusted for the merger with Oaktree Strategic Income) of $0.19/share, sharply higher than $0.12 a year ago and the consensus estimate for $0.14. Net asset value, or NAV, increased 2% from the prior quarter and 19% from a year ago (despite paying out roughly 8% of its NAV in dividends during this period).

The earnings of this construction company are forecasted to grow by 37.8% this quarter.

Inspire (INSP) is soaring this morning as the company trounced Q2 estimates and management raised guidance. Revenue was up 335% to $55 million (beating by $9.1 million) while EPS of -$0.48 improved from -$0.88 in the year-ago quarter and beat by $0.14. Driving the results was the addition of 63 new U.S. centers (well above expectations for 35 to 40) and a jump in covered lives. Results were strong both in the U.S. (up 349% to $49.4 million) and Europe (up 201% to $3.6 million) with average prices of both $23.9K and $23.4K (U.S. flat, Europe up modestly).

Looking at the charts of our portfolio stocks today, there’s been no real change since last week, so I have no changes. But there have been a few relevant news items.

The shares of this car parts manufacturer are rated ‘Strong Buy’ by two analysts and ‘Buy’ by one analyst. Wall Street expects the company to earn $80,240,000 in 2021.

This morning, we received bad news from Medexus. Medexus announced that it has received a complete response letter from the FDA related to Treosulfan, its newly in-licensed drug that was expected to drive substantial revenue growth. What is a complete response letter?

Our buy recommendation today is expected to grow earnings by more than 26% this year. We are also selling two previous ideas.

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.