The big event last week for the market was that, by our measures, the intermediate-term trend of the major indexes and many growth funds turned up, which is enough for us to extend our line a bit—but, at this time, just a bit, as there remain many headwinds, including the longer-term trend and (very important) the lack of upside breakouts quite yet. That tells us to go slow and keep our eyes peeled for further upside confirmation—if we see that, we’ll continue to put more money to work in fresh leaders, but should the nascent rally hit a wall, we’ll hold off. For now, we’ve nudged our Market Monitor up to a level 4 and will take it day by day from here.


This week’s list has a bunch of names that have shown solid power of late, though most do report earnings within the next two or three weeks, so be sure to keep things small and aim for dips.. Our Top Pick is an innovative software firm whose stock is actually tightening up after a good-looking bottoming process.

Earnings season is finally in full swing next week with an abundance of high-quality, blue-chip companies due to announce.

Microsoft (MSFT), Visa (V), Mastercard (MA), and Apple (AAPL) are just a few of the names I’ll be focusing on. As you can see in “The Week Ahead” section below there are more than 15 stocks that I’ll be watching closely next week with the intent of making at least two, three, if not four trades.

There really isn’t too much to say at the moment. Our positions keep chugging along and while they are all still in a healthy position the margins of error, particularly to the upside on our SPY and IWM iron condors, have narrowed a bit. No worries, we will make adjustments if necessary, but for now the probabilities on all our trades remain in reasonable territory.

As for next week, well, due to the rally over the past week, we are seeing numerous ETFs hit a short-term overbought extreme. We don’t want to react too quickly, but if we see a continuation of the current trend higher, I think a trade or two will be in the cards as we want to take advantage of ETFs in a short-term overbought extreme. SMH is already there, but I would like to see a few others join the group before taking on another position.

All of the major indices continued to rally this week, which helped all of our open positions.

We sold calls against our newly assigned shares of BITO and GDX early in the week and decided to sell more puts in WFC towards the latter part of the week. We currently have five open positions.



That being said, I plan to add at least two to three more as we move through earnings season. I really like to sell puts for an expiration cycle or two in large-cap equities with highly liquid options several days to a week after earnings are announced. I’m currently looking at a few of the big banks to sell puts on next week as well as a few credit card companies including AXP, V and MA.

Stocks are on track to post gains for July as Explorer recommendations have a good week with new pick Centrus Energy (LEU) up 20% followed by Cloudflare (NET), up 15%. Now, we head to Germany for today’s pick.

In the July Issue of Cabot Early Opportunities I snag two stocks from our Watch List and profile three fresh names that have caught my eye. Officially, we add three of these positions to our portfolio, including a rapid growth software stock, an oil and gas producer with a growing midstream asset base, and a rapidly expanding coffee shop.
Enjoy!

This week we are jumping right back into a position in Dollar Tree (DLTR), which is a stock we traded successfully last month.

During the past two months we’ve seen big Fed rate hikes (with another likely next week), multi-decade highs in inflation, some earnings duds and leading economic indicators heading sharply south, but the market has held its own, and this week, if all goes well, we could get an intermediate-term green light. That means you should have your eyes open and shopping list ready, but we’re not ready to go nuts quite yet, as we don’t anticipate signals, there’s still plenty of damage to repair and earnings season is just revving up. For now, our Market Monitor remains at a level 3.



This week’s list has another batch of biotech names (including some speculative high-flyers), though for our Top Pick, we’re going with a medical services provider that offers both growth and reliability.

I am delighted to take the reins of the Cabot Stock of the Week advisory and hope to keep the good times rolling in our portfolio! With the market finally showing signs of life, or at least resilience, much better days lie ahead, and there’s lots of money to be made during the next big thrust.

This week’s new recommendation is the rare stock that’s already having a very good year – and is still undervalued. It’s a stock that was in our Stock of the Week portfolio not long ago and has demonstrated enough strength of late to gain re-entry.



Details inside.

I’m going to keep the weekly commentary section rather short today. My hope is that everyone has had the opportunity to watch our latest subscriber-exclusive webinar from Wednesday as I covered a lot of ground, including closed trades, open trades and potential upcoming trades. We also discussed the ins and outs of bear call spreads and covered the importance of risk management.

Earnings season is finally upon us.

Next week offers up a few potential trading opportunities, particularly in some of the market stalwarts. Johnson and Johnson (JNJ), AT&T (T), Verizon (VZ) and American Express (AXP) are just a few of the names I’ll be focusing on. Tesla (TSLA) and Netflix (NLFX) are also due to report next week. While both stocks offer some incredibly healthy options premiums, I tend to stay away from the high-flyers even if the premiums are tempting. And if I do give in to temptation, I always pare back my position size.

I’m going to keep the weekly commentary section rather short today. My hope is that everyone has had the opportunity to watch our latest subscriber-exclusive webinar from Wednesday as I covered a lot of ground, including closed trades, open trades and potential upcoming trades. We also discussed the ins and outs of bear call spreads and covered the importance of risk management.

The market is working its way through significant developments on many fronts – U.S. presidential race, raging pandemic, positive vaccine developments – and information overload is causing some intense action in individual stocks.

The economy is already rebounding, and at a stronger pace than was expected. But it still has one arm tied behind its back with the remaining restrictions and lockdowns. Plus, with the indexes not far from all time highs, the market had likely risen as much as it was going to before the next phase of the recovery came into view.

Just like that, the stock market emerged from its dark mood of October 30th to surge 8.6% in six trading days, with reinvigorated optimism following the evaporation of the election cloud and news of a very promising Covid vaccine.

This week, ten companies reported earnings, with Berkshire Hathaway (BRK.B) reporting tomorrow (Saturday): Barrick Gold (GOLD), Conduent (CNDT), Gannett (GCI), GCP Applied Technologies (GCP), General Motors (GM), Jeld-Wen Holdings (JELD), LaFargeHolcim (HCMLY), Meredith Corporation (MDP), Mosaic (MOS), and ViacomCBS (VIAC).

It appears that we will have a sharply divided government in Washington, which Wall Street initially is taking as a positive. A better way of putting it is that it could have been much worse for investors.

There should be a strong recovery and bull market on the other side of this election and pandemic. Any market spooking shenanigans in the meantime should present a buying opportunity.

We still don’t know who the president is... But the market loves it. The Dow is up over 700 points and the S&P 500 is up over 3% on the day.

While volatility has picked up recently, history suggests the market will end the year with a strong run.

Earnings season is in full gear this week, with 13 companies reporting.

A day like yesterday can make investors feel like there’s little reason to hang around in this market.

Be cautious. Growth stocks have been under pressure since early/mid-October, and our Cabot Tides buy signal has fallen by the wayside.

The anticipated market tumult has arrived. The S&P 500 is down over 5% in less than a week. It’s also down over 8% from the high. The high market combined with the mounting risks is finally spooking investors.

Three analysts have increased their EPS estimates for this pest control company in the past 30 days; they now forecast growth of 47.1% for the company next year.

Two of our portfolio stocks report earnings.

This midstream MLP (Master Limited Partnership) ETF has a current annual yield of 35.22%, paid monthly.

Yesterday, voters in all five states where it was on the ballot—Arizona, Mississippi, Montana, New Jersey and South Dakota—said they were in favor of legalization, and in every case, the majority vote was clearly positive, not even close.

Our second recommendation is a short that is failing technical tests.

Our first idea today is picking up steam due to its coronavirus testing; the company just walloped analysts’ projections for its third quarter.

Four of our portfolio stocks report earnings.

As I noted in this morning’s Covered Call email, this portfolio position broke my mental stop last week.

Our second recommendation is a sale of a previous idea.

Our first idea is an infrastructure play that just walloped earnings estimates.

This tool and storage company just announced its third-quarter results, beating analysts’ EPS estimates by $0.16.

Tyler recommends selling one stock and gives earnings updates on five more.

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.