First, a housekeeping note: With Santa coming in a few days, there will be no issue next Monday, but we will send a “full” update next Monday (in place of the issue) to keep in touch, and we’ll be around if you have any questions. Merry Christmas and Happy Holidays!

As for the market, the post-Fed action was clearly a downer and is threatening to reverse the intermediate-term uptrend, which was the lone positive piece of top-down evidence. To this point, we will say many individual stocks have bent but haven’t broken, but the onus is once again on the bulls to step up and offer support. We’ll move our Market Monitor down to a level 4, and it could sink further should the bears keep at it.

The good news is we’re still finding many solid-looking charts, though they’re from all nooks and crannies of the market. Our Top Pick today is in the surprisingly resilient housing group.

Santa Claus hasn’t arrived yet for investors, as stocks are enduring a rough December. As a result, we have two sells today and another rating downgrade. However, we are adding a stock that’s perfect for these turbulent times: a dividend-paying utility that holds up well in sharp sell-offs like this one but features an alternative energy wing that has allowed it to outperform the market for years, even in good times. It’s built for safety and growth and is a longtime favorite of Cabot Dividend Investor Chief Analyst Tom Hutchinson.

Despite a strong start to the week that saw the S&P 500 gain a combined more than 2% Monday and Tuesday, the sellers once again took control, as the index then fell 4.5% Wednesday and Thursday.

Despite a strong start to the week that saw the S&P 500 gain a combined more than 2% Monday and Tuesday, the sellers once again took control, as the index then fell 4.5% Wednesday and Thursday.

We’re just shy of a month away from earnings season, but that doesn’t mean that potential trading opportunities don’t exist. This week we actually have three notable earnings releases in stocks with highly liquid options.

On Tuesday, after the close, Nike (NKE) will report earnings followed by Carnival Cruise Lines (CCL) Wednesday morning. And to top off the week, Micron (MU) will release earnings after the closing bell Wednesday.

As we head into the holiday season, there really isn’t much to do with our existing positions. I do plan on buying back our BITO calls this week and selling more calls against our shares, but other than that I don’t have any plans, at least at the moment, to place any trades in our Income Wheel portfolio. That being said, after the sell-off last week there are several good candidates for our shorter-term Income Trades portfolio. If all goes as planned, we could have at least one, if not two trades for our one-off, short-term (30 to 60 days) Income Trades portfolio.

The sell-off late last week led to us taking off our SPY bear call spread after just three days. We locked in 8% on the bear call spread which added to our cumulative total return of better than 112% since starting the portfolio back in early June.

In the last three weeks alone we’ve locked in returns of 11.4%, 10.9%, 11.4% and 8.0%. Now we are left with just one open position, an iron condor in IWM, which at the moment looks to be a profitable trade.

Patience remains a virtue in this market, as the major indexes and individual stocks have been unable to get going, though for the most part, sellers have failed to take control, too. We’ll see if today changes that; today’s post-Fed selling was ugly, though it hasn’t cracked our Tides buy signal or most stocks that were setting up. Either way, we’re remaining defensive, with nearly three quarters of the portfolio in cash.

Tonight’s issue is very stock heavy, with a big watch list and write-ups on on a variety of names (including some recent IPOs) that are acting well and have great stories. We continue to think a few good days could make all the difference, but until we see it happen, less remains more as we keep our eyes open for signs the buyers are showing up and the sellers have left the building.

The Fed raised benchmark interest rates a half a point and signaled more to come. Elsewhere, scientists studying fusion energy at Lawrence Livermore National Laboratory have crossed a huge milestone in reproducing the power of the sun in a laboratory. Explorer positions showed relative strength, led again by Kraken (KRNKF). Today we go to Britain for a historic and strategically important company, brand, and stock selling for a bit over $1 a share.

It is reasonable to expect a significant market turnaround sometime next year. The market trends higher over time. And bear markets always give way to bull markets. Things should get a lot better in 2023. But there is a strong chance they get worse first given the current uncertainties regarding inflation, the Fed, and a recession.

Of course, a recovery and new bull market should reward the short-term pain handsomely over time. As a longer-term investor, which dividend investors should be, it should just be short-term noise on the way to long-term profits. But we can do better than just riding out the storm. We can exploit another possible market downturn to our advantage.

It’s a fact that many stocks that get hurt the worst in a bear market are the first to recover when the market turns. In this issue, I highlight a phenomenal cyclical stock that had been a market superstar but has been clobbered in this bear market. The stock is targeted at a low, low price that may be reached if the market falls to a new low. It could provide incredible upside leverage ahead of a market recovery.

Today, I’m recommending an energy company that is gushing free cash flow and is likely to be sold in the near future.

Key points:

· 33% of market cap in cash (downside protection)
· High insider ownership
· Trading at a price to free cash flow multiple of 4.3x

All the details are inside this month’s Issue. Enjoy!

Once again, the sellers stepped in last week and at least in the short term dented the bulls’ optimism. By week’s end the S&P 500 had fallen 3.35%, the Dow had lost 2.71%, and the Nasdaq had declined by 3.57%.

Most of our stocks continue to build bases, so I remain patient, waiting for a renewed advance by the sector. The standout stock in our portfolio is Innovative Industrial Properties (IIPR), which broke out to a new high last week after a great report.

One change to our ratings this week – We’re buying Aptiv (APTV) after spending some weeks on “watch.”

Just reading those words, “climate change,” is almost certain to light up emotions. Regardless of one’s opinions on the degree of urgency and which of a very wide range of proposed policies and actions should be taken, how could words about the end of the world as we know it not ignite emotions?

Today’s note includes earnings updates on 11 companies and the podcast. On Thursday, we moved shares of Oaktree Specialty Lending Corporation (OCSL) from Buy to Sell.

Stocks enjoyed a good rally today, with growth stocks in the lead—at day’s end, the Dow was up 271 points while the Nasdaq lifted 115 points. Not much has changed with the overall environment over the past week. From a top-down point of view, things remain mostly choppy and challenging, with our Cabot Tides remaining effectively neutral, relatively few stocks hitting new highs (though there has been a bit of improvement of late) and even growth-oriented indexes (IWO, IVOG, ARKK) mostly stuck in the mud.

The earnings extravaganza is in full swing. It’s the peak of the season that marks the peak earnings growth of this extraordinary recovery. And the market is sort of yawning it off. Part of the issue is summer malaise. People just tend to focus more on enjoying the waning days of summer than stocks this time of year. But it also may be that this quarter just isn’t as important one might expect.

According to Detrick, “The S&P 500 is up 17.02% YTD at the end of July. Since WWII, this has happened only 12 other times and the rest of the year was higher 11 times. The only time it didn’t work was ’87, but it was up 32% YTD right now (stretched rubber band).” In other words, stocks in motion tend to stay in motion. While I don’t make investment decisions based on these data points, I do find them to be helpful to give me context for what the broader market is likely to do.

It’s a crazy earnings season that the market is treating like a boring one. The second quarter marked the near-full opening up of the economy after the pandemic. It is compared to last year’s second quarter when the economy crashed amidst the lockdowns. Analysts are expecting average earnings growth of 74% for S&P 500 companies, one of the highest quarterly growth rates ever recorded. So far, earnings are exceeding those expectations. And the market is yawning it off. Stocks are doing the same thing as before earnings, trending slightly higher in an up and down fashion. What’s going on?

A key factor holding gold prices back after peaking last August has been the diminution of economic and geopolitical worries following last year’s virus-related economic volatility. In short, gold’s “fear factor”—which I maintain is the dominant driving force behind the metal’s intermediate-term trend—was missing for most of that time.

Today’s note includes earnings updates on 12 companies, the podcast and the Catalyst Report. We publish the Catalyst Report on the Friday after each monthly issue of the Cabot Turnaround Letter. There were no changes to any of our ratings this week.

The U.S. economy is growing more quickly than before the pandemic, both the S&P 500 and S&P 600 are up modestly over the past week and, so far, this earnings season has been a massive improvement over the train wreck of the first-quarter reporting season.

This northeastern bank beat analysts’ earnings forecast by $0.10 last quarter. The shares have a current dividend yield of 4.61%, paid quarterly.

This week feels a lot like March. In other words, it’s pretty awful for growth stocks both big and small. The positive momentum from April has seemingly evaporated. There’s no sugar coating it – we’re taking a hit this week. The chatter around higher rates and inflation is getting amplified out there and it’s just a crusher on high valuation/growth stocks.

It’s been a brutal week for growth stocks, and that’s continuing today. As of 11 am, it’s another horrible day for growth stocks—the Dow is up 50 points, but the Nasdaq is down 80 points and the average stock we own or are watching is off more than 2%.

This recent IPO will give you an entrée into cryptocurrencies. But be aware, it is a speculative trade and needs to be limited to a small portion of your portfolio.

The big news in the marijuana industry this week is that the Tilray/Aphria merger is complete, turning these two Canadian firms into the biggest marijuana company in the world—for now.

Cardlytics (CDLX) reported last night that Q1 revenue grew by 17% to $53.2 million (beating by $2 million) and that adjusted EPS came in at -$0.34, a drop from -$0.26 in the year ago quarter (and $0.03 shy of expectations). Overall, the quarter showed continued improvement in the business as revenue, Q1 billings ($76.3 million) and adjusted contribution ($24.3 million) were all either at or slightly ahead of consensus estimates.

In the past month, five analysts have increased their EPS estimates for this royalty company.

The market has been a little iffy over the last five or so sessions. This action, coming on the back of great earnings from mega cap tech stocks last week, but not great reactions, suggests a more conservative stance is appropriate right now for some of our high-growth names.

The market has been a little iffy over the last five or so sessions. This action, coming on the back of great earnings from mega cap tech stocks last week, but not great reactions, suggests a more conservative stance is appropriate right now for some of our high-growth names.

There’s still a chance earnings season could save the day, but so far, most reports have led to selling and after seeing many growth stocks set up in recent weeks, the bears are beginning to come out of the woodwork again.

This fertilizer company beat earnings estimates by double last quarter, posting EPS of $0.39. The shares have a current dividend yield of 3.33%, paid quarterly.

This computer company is getting ready for a big spin-off which should boost its shares.

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 Top Ten 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 Top Ten features.