Okay, we have two trades in the books. Both bear call spreads due to expire on July 15, 2022. So, it’s no surprise to say we are leaning bearish at the moment. Our deltas reflect our current stance, and we’re OK with it. In fact, we might be leaning a bit bearish for a while.

There is a good chance I’ll be taking the SPY 440/445 bear call off the table for a nice profit early next week, if not prior to the publishing of this issue. We can lock in some early profits and it simply doesn’t make sense to hold any risk through expiration when we can lock in over 50% of the original premium sold back on June 2.

We are firmly entrenched in the doldrums between earnings cycles, but it doesn’t mean that opportunities won’t arise.

Plus, as I wrote last week, the downtime between cycles gives us some time to reflect on the prior earnings season and, more importantly, prepare for what is ahead.



There is one potential opportunity next week, which we will discuss below. Again, there is no doubt that opportunities are scarce as we are firmly between earnings cycles.

Aside from Sea (SE), which zoomed from 80 to 88 this past week, Explorer stocks were largely flat, which to some these days is a good week. This week we look at the history of market pullbacks and some encouraging analysis on bounce-backs and trade before getting to a new recommendation from Shanghai.

Are you tired of turning on your television first thing in the morning and getting heartburn over the market’s gyrations?

Yeah, me, too. So, I’m swearing it off. I’m only going to peek at it a couple of times a day, since it doesn’t seem to be finishing the day as it starts, and I just don’t need the angst.



Instead, I’m going to keep looking at the macro-economic figures and try to do my very best to find the right investments for you to weather these ups and downs.

It’s a raging bear market in technology.
But technology has been by far the best performing sector for well over a decade for good reasons. We are in fact in a technological revolution. Technological advances are accelerating. It feeds on itself and is transforming the world. Technology is where there is massive growth and excitement for the future.


Sure, the market might get cranky in the near term. Inflation and higher rates might be all the rage right now. But technology isn’t going away. It’s likely to grow even bigger in the future. The time to buy such stocks is when they are cheap and out of favor.


In this issue, I highlight three existing portfolio positions in the technology sector ready for purchase. All of these stocks sell at compelling valuations with strong growth likely ahead. They are victims of indiscriminate selling in the sector. At some point, hopefully sooner, investors will realize the value that has been created by this year’s market turmoil.

Today, I’m recommending a company that has grown revenue at a 30% CAGR and EBITDA an 80% CAGR over the past 10 years. Despite this impressive growth, the company trades at just 5.3x EBITDA.
Other key points:

•Top 3 player in the U.S. paper shredding industry.•Massive opportunity for organic and acquired growth.•High insider ownership (over 30% of the company).

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

As has been the case for much of 2022, last week there were exciting rallies and nasty sell-offs. And while the S&P 500 fell 1.13%, the Dow lost 0.94%, and the Nasdaq declined 1%, big picture the market handled an avalanche of bad news last week very well. Maybe, just maybe, the market is in the digesting bad news stage.

The market’s evidence continues to take steps in the right direction and, by our measures, the intermediate-term trend is now on the fence—a couple of decent days from here could produce a green light. Of course, even if we do turn up, it doesn’t mean it’ll suddenly be 1999 again, but we’re not taking anything away from the action: The market has put together a few positive steps in a row, now let’s see if it can continue in the days ahead.



This week’s list again picks up on a few names that are already testing key resistance even as the indexes are just a couple of weeks off their lows. Our Top Pick is a nuts and bolts type of firm that’s seeing a huge upmove in earnings and sports a dirt cheap valuation.

While the market officially remains in a downtrend, various indicators in recent weeks, combined with terrible news and sentiment, tell us the market bottom may have passed. But until we see real strength, continued caution is advised.
Today’s recommendation may be too aggressive for some readers (it’s a semiconductor company, and we all know they can be volatile) but it has a good story and chart and I think it’s worth the risk.


As for the portfolio, there are no sales, just one downgrade to Hold.


Details in the issue.

On Wednesday we placed our first trade, a bear call spread in SPY at the 440/445 call strikes. My goal is to place at least two more trades, if not more, next week as we begin to build out the portfolio to hopefully five to eight positions. Of course, we’re not going to force trades. As always, we will patiently wait until a trade makes sense. That being said, with implied volatility remaining high across the board, we shouldn’t have any issues finding some underlying stocks and ETFs to wrap a few high-probability strategies around.

As I stated in my last update, I will be adding several more trades to our short list of open positions next week. My goal is to have a rotation of five to ten positions in both the Income Trades Portfolio and Income Wheel Portfolio.

Earnings season is finally behind us. But there are always a few interesting opportunities to be found in between earnings cycles. Plus, the downtime between cycles gives us some time to reflect on the prior earnings season and, more importantly, prepare for what is ahead.

There are a few interesting opportunities that garner a look in the week ahead, which we will discuss below. But there is no doubt that opportunities are slim as we sit in the doldrums between earnings cycles. When earnings season is in full swing we will often see 20 to 30 trade ideas per week.

One benefit of investing in micro-caps is that you can talk to management.

There isn’t any major news for any of our stocks.

The Cabot Global Stocks Explorer portfolio had another good week, with four stocks all making major moves.

These are the dog days of summer. It’s a rare time of year when a certain degree of slackery is not only tolerated, but expected. People tend to focus on enjoying the waning days of summer. More serious issues and considerations get postponed until after Labor Day.

Starting next Monday, August 31, before the market opens, the Dow Jones Industrial Average will have a new look.

This week, the main updates are from a stock that reported earnings and another portfolio stock that announced that it has sold its midstream business and will liquidate the company.

As far as the last week goes our stocks are up an average of 3%.

2020 has surely been one for the record books—the sharpest selloff in history from a record high to a bear market and then the sharpest rebound in history from a bear market to a new record high.

It has been an amazing market. The S&P 500 just made a new all time high. It has rallied a staggering 55% since the lows in less than five months. The market is forward looking and anticipates a rapidly growing economy, a friendly Fed and record low interest rates and a vaccine in the months ahead.

After a brief decline in early June, the market has resumed the uptrend that began on March 24th. It has been a spectacular 55% rally in less than five months.

Second quarter earnings season is winding down. It was quite a quarter! We’re impressed that so many companies have aggressively reduced their operating costs in the recently completed quarter.

Many of our micro-cap stocks reported excellent quarters.

Our first idea today is a food distributor who beat EPS estimates by $0.10 last quarter and has a 6.8% annual dividend yield, paid quarterly.

The idea is to sell a covered call, meaning you already own or you just purchased V on the buy recommendation.

This software company is forecasted to grow at a rate of 13.8% next year.

This biotech is seeing great results from its studies of SER-287 for ulcerative colitis, a condition that affects more than 750,000 North Americans.

There are five top holdings in this closed-end fund.

With 32 stocks in our portfolio and a market that’s going through all manner of gyrations right now, it’s time to part ways with a few of our underperforming positions.

This medical equipment company walloped earnings estimates last quarter, posting EPS of $0.75 vs. the $0.38 that Wall Street had expected.

The market’s continued weakness has tipped our Cabot Tides to the negative side of the fence for the first time since April.

Back on August 13, when the broad market was strong and marijuana stocks were even stronger, I took partial profits in our four strongest stocks (which were also our four largest positions) because they looked very extended to the upside.

This consumer electronics company is forecasted to grow at an annual rate of 15% over the next five years.

When we got into this stock we fully expected a lot of twists and turns. We didn’t expect the current drama.

This financial company is expected to grow by 11.9% in the next year.

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.