Earnings season is inching closer, but we are still several weeks away (mid-October) from the big banks kicking the earnings season off.

That being said, the next two weeks should offer some potential trades as FedEx (FDX) and Costco (COST) are due to announce later this week and Micron (MU) and Nike (NKE) announce the latter part of the following week. All four offer potential trades.



If I decide to make a trade, as always, I will send out a trade alert with all the details.

The market continues to retrace its steps back toward mid-summer lows, but not all stocks are suffering. Renewable energy names, including several in the Stock of the Week portfolio, are holding up quite well thanks in large part to lingering good vibes from the passage of the Inflation Reduction Act. So we’re not fighting the tape – today, we’re adding another clean energy stock to the portfolio, recommended by our Greentech expert, Brendan Coffey.

Details inside.

The market has continued its volatility since mid-August, rising above 34,000 on the DJIA, then contracting, just to bolt upward again at the end of last week. Economic uncertainty and fears of a recession, although recently economists have been decreasing their likelihood for a 2022 recession, effectively pushing that into 2023.

The unemployment rate for August unexpectedly rose to 3.7%, but unemployment claims in the past week were less than forecast. It’s still a great market for folks looking for jobs.



We’ll have new housing stats next week, but anecdotally, I can tell you that prices are still being reduced in my region, but sales activity has increased, after about a six-week lull.

Explorer stocks held up pretty well during this turbulent week as almost all were steady or up, with Chile’s SQM up five points. Stocks stabilized yesterday after a sharp pullback on Tuesday. While prices of gasoline are down, prices of most of other things like food, rent, and medical care are still rising. This week we dive into semiconductor stocks with a return to Taiwan for a new recommendation.

It’s been a rough year for stocks. And things may get worse before they get better. Meanwhile, money markets pay barely anything, and you never know when the market will turn.
Dividends are a great answer for a market like this.


They provide an income and lower volatility in turbulent markets and make it easier to stay invested ahead of the next bull market. Dividends account for most of the market returns during flat and down markets and excel during times of inflation.


In this issue, I highlight a company in one of the most defensive and recession-resistant industries on the market that currently pays a massive 8% yield. The stock is already cheap and likely near the trough of its own bear market with far more upside than downside over time to complement the high dividend.

Today, I’m recommending a company that’s benefiting from “green” initiatives.
Key points:

• •27% revenue growth last year, and 17% expected growth for the next 5 years.•256% EPS growth last year.•A strong balance sheet with net cash.•High insider ownership.

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

It’s a good news/bad news situation for most metals, as shutdowns across Europe, Asia and South America due to power shortages and other factors are contributing to lower supplies for several industrial metals. However, signs that inflation may be in the process of reversing bodes ill for the intermediate-term outlook.

Uranium, meanwhile, is now in the driver’s seat as the global energy crisis supports the renewal of nuclear power initiatives.



In the trading portfolio, no new positions are recommended for now as the broad metals market is still unsettled.

Coming off three straight weeks of losses, the bulls staged a rebound last week as the S&P 500 gained 3.65%, the Dow rose 2.66% and the Nasdaq rebounded by 4.1%. Though of note, the market is down across the board this morning following a “hot” inflation report. The expiration of our September covered calls is this Friday. Expect to hear from me Thursday afternoon or Friday morning on how we will manage these positions.

Coming off three straight weeks of losses, the bulls staged a rebound last week as the S&P 500 gained 3.65%, the Dow rose 2.66% and the Nasdaq rebounded by 4.1%.

Coming off three straight weeks of losses, the bulls staged a rebound last week as the S&P 500 gained 3.65%, the Dow rose 2.66% and the Nasdaq rebounded by 4.1%.

Compared to the prior three weeks when the major indexes imploded, last week was a breath of fresh air. As we like to say, up is good, so the action is certainly a plus—and, more important, we still see a good number of stocks in multi-month setups. All that said, much of the recent buying has been from the off-the-bottom crowd, and at best, the intermediate-term trend of the overall market is sideways while the longer-term trend remains down. We’re certainly OK holding onto our resilient names, but we continue to need to see more before we advise becoming aggressive. We’re leaving our Market Monitor at a level 4.


This week’s list has a few more turnaround and steady Eddie-type names despite the market’s rally. Our Top Pick is a cheap name near the top of a huge launching pad that also has a decent long-term cookie-cutter story, too.

Another week of less-than-stellar earnings season opportunities as we are well entrenched in the earnings season doldrums and the opportunities are, at least for a few more weeks, non-existent.

That being said, I am intrigued by a potential trade in Oracle (ORCL) today. If I’m able to sell a three-strike-wide iron condor for roughly $0.55, I might take a small position. As always, I’ll send out a trade alert if I decide to make a trade. If not, some of you may still find the trade interesting. As a result, I discuss below a potential trade idea in ORCL that consists of a three-strike-wide iron condor. For those interested, check it out in the “Trade Ideas for Next Week” section at the bottom.

Earnings have been sensational. Reported earnings for S&P 500 companies have grown an average of 2% in the fourth quarter, compared to an expected -11%.

With the stock market regularly surging to record highs, it may seem like an unusual time to focus on valuation. After all, many stocks are remarkably expensive on traditional measures, and even somewhat lofty on non-traditional measures. But valuation still matters, especially if the market loses its current luster (assuming that is even possible)!

The market continues to perform incredibly well with the S&P 500 at an all-time high. And there continues to be signs of froth. The latest data point that I’ve found is the average SPAC is trading at a 26.4% premium to its cash value.

While the rest of the year looks very good for the market, a pullback is likely, if not inevitable, in the weeks and months ahead.

Today’s note includes earnings updates, ratings changes and the podcast.

Suffice to say we are in a bull market. Areas of it are most definitely frothy. But stepping back and thinking about where we are in a bigger cycle I continue to feel as though we are entering a more sustained economic recovery and (hopefully) sustained market run-up broadly similar to what happened coming out of other major shocks, like the dot-com bubble and Great Financial Crisis.

While the market continues to move forward, The “Buffett Indicator,” which takes the broadest Wilshire 5000 Index and divides it by the annual U.S. GDP, is now at a record high. In doing the math, the Buffett Indicator stands at about 194%. This figure is well above the 159% seen just before the dot-com bubble.

This market looks like it never wants to stop going higher. The S&P 500 just made yet another in a long series of new all-time highs.

Last week, we outlined four ingredients of a market bubble that were usefully outlined in a recently published book1”and briefly described how it clearly appears that our stock market is in a bubble. These ingredients include easy trading of assets, cheap and easy money, rising speculative fervor and an appealing narrative.

Today’s note includes earnings updates, ratings changes and the podcast.

The quick rebound in the major indexes and many growth stocks this week has been very encouraging—it doesn’t completely clear the air from some of the abnormal action last week, but it’s definitely a plus. We remain mostly bullish, though we continue to pick entries carefully, especially with so many stocks reporting earnings in the next couple of weeks.

The fourth quarter earnings season is well under way and the results have been somewhat spectacular so far, and much better than expected.

This is a very speculative biotech that has interesting potential.

We are raising our price target on Mohawk Industries (MHK).

Late yesterday Accolade (ACCD) announced it was diving deeper into the telehealth market by acquiring 2nd.MD, a small start-up based in Houston, TX. The acquisition target provides expert medical consultation services to patients, typically at a critical point in the patients’ lives when a second opinion and/or consultation and provider care options are of utmost importance.

What a market! Despite all the noise out there our portfolio’s performance continues to exceed expectations. Our average gain across 30 positions is hovering between 80% and 85% as I write.

The expiration of our January covered calls is today, and we have one position (UBER) likely to be called away for maximum gains (great scenario) and another (ADNT) that is too close to call and will likely come down to the close (good scenario).

The shares of this large bank were recently upgraded to ‘Buy’ at UBS and Jefferies.

This biotech is forecasted to grow at an annual rate of 35.60% over the next five years.

Moving DuPont (DD) to Sell.

Part of the marijuana sector’s strength, of course, is because the broad market is also trending higher. But a substantial part comes from the growing realization, especially in wake of last week’s election that promised us a uniformly Democratic federal government, that this industry will continue to boom as legal barriers are removed.

This week, this biotech reported that its full-year 2020 net sales exceeded the high end of the company’s guidance range of $2.12 billion to $2.14 billion, growing more than 65%.

Karyopharm (KPTI) pre-announced Q4 2020 results yesterday morning and I watched the stock, which was weak (closed down 8%) throughout the day as I pondered the results. I’ll get to my thoughts in a minute. First, the numbers.

This Top Pick is a speculative buy, but has recently become more buyable after the company announced its plans to offer up to $35 million in additional 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.