Issues
Despite big earnings from leading tech stocks, the good times came to an end last week for the market as the leading indexes fell all five days. For the week the S&P 500 lost 2.4%, the Dow declined by 1.2%, and the Nasdaq dropped 2.2%.
This is a big week for financial markets, with the Fed holding interest rates steady, $11 trillion worth of tech companies reporting earnings, a key jobs report, and a tariff deadline with China and India looming. The market pulled back as Chairman Jerome Powell indicated the Fed may not be ready to cut interest rates as expected.
But 7,392 miles from the canyons of Wall Street, an AI global governance plan was released at the World Artificial Intelligence Conference in Shanghai, which called for establishing an international open-source community through which AI models can freely be available. About 800 Chinese and international companies attended the summit.
But 7,392 miles from the canyons of Wall Street, an AI global governance plan was released at the World Artificial Intelligence Conference in Shanghai, which called for establishing an international open-source community through which AI models can freely be available. About 800 Chinese and international companies attended the summit.
Our plant-touching Cabot Cannabis Investor portfolio is up 29.2% since June 25. It is still down for the year. But it is performing better than the sector.
I believe it continues to make sense to stay long cannabis stocks, despite the big gains in the past month. Now, with the appointment of Terrance Cole to lead the Drug Enforcement Administration (DEA), cannabis investors are one step closer to learning how serious the Trump administration is about rescheduling cannabis.
I believe it continues to make sense to stay long cannabis stocks, despite the big gains in the past month. Now, with the appointment of Terrance Cole to lead the Drug Enforcement Administration (DEA), cannabis investors are one step closer to learning how serious the Trump administration is about rescheduling cannabis.
The turnaround path that Newell Brands (NWL) has navigated in the last few years has been anything but smooth, at times being downright torturous.
What started as a seemingly clear-cut turnaround story as far back as 2018 turned into a frustrating affair for investors who bought the stock back then and continued to hold it over the last seven years. But after the agonizing twists and turns since the stock’s 2017 peak, the road ahead appears clearer now than it has been in several years.
What started as a seemingly clear-cut turnaround story as far back as 2018 turned into a frustrating affair for investors who bought the stock back then and continued to hold it over the last seven years. But after the agonizing twists and turns since the stock’s 2017 peak, the road ahead appears clearer now than it has been in several years.
Before we dive into this week’s covered call idea, I am going to revisit our positions that expired on July expiration a week ago.
The market had yet another mostly quiet, mostly positive week, and the vast majority of the top-down evidence is still in good or great shape. That said, there’s no doubt things are a bit extended in time and that more stocks and sectors are beginning to lag, which is one reason we’re not flooring the accelerator. Another is the fact that earnings season really picks up this week—35%-plus of the S&P 500, along with more growth leaders, are reporting, which will obviously be key. Don’t get us wrong, we’re overall bullish, but near term we’re picking our spots. We’ll leave our Market Monitor at a level 7.
This week’s list has a wide variety of names, with many types of names and setups. This week’s Top Pick has earnings this week, but after a huge-volume ramp, shares have dipped on low volume to the 25-day line—we’re OK with a small buy here or on dips with a loose stop.
This week’s list has a wide variety of names, with many types of names and setups. This week’s Top Pick has earnings this week, but after a huge-volume ramp, shares have dipped on low volume to the 25-day line—we’re OK with a small buy here or on dips with a loose stop.
This is a massive week for the stock market. Forty percent of the S&P 500 will report second-quarter earnings results; the Fed holds its July meeting; the PCE report is due out Thursday, jobs numbers come out Friday, and President Trump’s tariff deadline is Friday, though several key deals have already been struck. With stocks precariously at all-time highs entering the week, these news events loom as potential minefields. If the market can navigate it without getting blown up, then perhaps it will continue to rise until Labor Day.
But we can only go with the evidence in front of us. And today, we try to strike while the market’s iron is still hot by adding a mid-cap medtech stock that was Tyler Laundon’s top pick in this month’s issue of his Cabot Early Opportunities advisory.
Details inside.
But we can only go with the evidence in front of us. And today, we try to strike while the market’s iron is still hot by adding a mid-cap medtech stock that was Tyler Laundon’s top pick in this month’s issue of his Cabot Early Opportunities advisory.
Details inside.
This week’s Monday Week in Review is a bit different than most weeks, with a focus on our open positions, as I spent most of my weekend getting caught up on unusual option activity from the previous week while I was in Europe. Let’s dive in …
This week’s Monday Week in Review is a bit different than most weeks, with a focus on our open positions, as I spent most of my weekend getting caught up on unusual option activity from the previous week while I was in Europe. Let’s dive in …
The overall market continues to look very bullish whether looking at our core indicators or the many unusual signs of strength (that portend higher prices down the road). That said, there are some headwinds near-term, especially in many growth stocks, which have been doing more chopping than advancing in recent weeks. That’s no reason to be negative, but we’re following along with that growth stock evidence, trimming our sails a bit while looking to see what earnings season brings.
Uncertainty is growing while the market is perched at the all-time high.
The S&P 500 soared by a remarkable 29% in just over three months. At the same time, tariffs are back and there is still a high degree of uncertainty regarding the economy.
Sure, the overall market is high. But what is true for the S&P 500 isn’t necessarily true for many individual stocks. Technology drove the S&P 500 index higher. But much of the rest of the market is well below the all-time highs. Some stocks and sectors are barely positive YTD.
Energy has lagged the market all year. At the same time, the fortunes of certain companies are improving. Natural gas volumes are growing at a strong clip as demand for electricity is skyrocketing from data centers. At the same time, overseas demand is expanding with no end in sight.
In this issue, I highlight an energy company with rapidly growing demand for its services that sells at a cheap price and pays a high yield. We don’t have to chase stock prices into the stratosphere. Let’s invest where it’s still April.
The S&P 500 soared by a remarkable 29% in just over three months. At the same time, tariffs are back and there is still a high degree of uncertainty regarding the economy.
Sure, the overall market is high. But what is true for the S&P 500 isn’t necessarily true for many individual stocks. Technology drove the S&P 500 index higher. But much of the rest of the market is well below the all-time highs. Some stocks and sectors are barely positive YTD.
Energy has lagged the market all year. At the same time, the fortunes of certain companies are improving. Natural gas volumes are growing at a strong clip as demand for electricity is skyrocketing from data centers. At the same time, overseas demand is expanding with no end in sight.
In this issue, I highlight an energy company with rapidly growing demand for its services that sells at a cheap price and pays a high yield. We don’t have to chase stock prices into the stratosphere. Let’s invest where it’s still April.
Complacency is creeping back into the market, but we remain vigilant as the earnings season cranks up into full gear. That said, the broad backdrop is still in good shape as evidenced by some of our favorite indicators. We’ve also done some pruning recently (mostly among laggards) as the market’s multi-month run is becoming a bit extended. But we still see opportunities, especially in areas investors have overlooked. All told, near-term wobbles are possible, but we remain bullish as the odds favor the new uptrend bringing us higher over time. We’ll keep our Market Monitor at a level 7, but we’ll stay nimble as earnings come in.
This week’s list contains some formerly out-of-favor stocks that are now in much better shape as industry trends improve. Our Top Pick is an engineering firm that shows all the classic signs of being under strong institutional accumulation. We’re OK using dips to enter.
This week’s list contains some formerly out-of-favor stocks that are now in much better shape as industry trends improve. Our Top Pick is an engineering firm that shows all the classic signs of being under strong institutional accumulation. We’re OK using dips to enter.
Updates
In today’s note, we discuss pertinent developments for several of the stocks in the portfolio, including Agnico Eagle Mines (AEM), Alcoa (AA), Atlassian (TEAM), GE Aerospace (GE), Paramount Global (PARA), SLB Ltd. (SLB) and Starbucks (SBUX).
Gold and silver continue to benefit from safe-haven buying, boosting our holding of Agnico Eagle Mines (AEM).
Gold and silver continue to benefit from safe-haven buying, boosting our holding of Agnico Eagle Mines (AEM).
Today’s Weekly Update will be short and sweet. I am traveling back to the U.S. after a March break vacation with my wife, kids, parents and brother and sister’s families in the Bahamas.
The main market event of the week was yesterday’s FOMC meeting, which concluded with the Fed opting to hold rates steady. During his press conference Fed Chair Jerome Powell used the word “uncertainty” about a thousand times.
The main market event of the week was yesterday’s FOMC meeting, which concluded with the Fed opting to hold rates steady. During his press conference Fed Chair Jerome Powell used the word “uncertainty” about a thousand times.
I’m in Japan this week as Warren Buffett indicated that his Berkshire is raising its stakes in Mitsubishi, Marubeni, Mitsui, Itochu and Sumitomo. Berkshire’s average holding across the five stocks increased by just over one percentage point to about 9.3%. This comes as financial pundits continue to determine the meaning of why Berkshire has accumulated a massive cash position.
Perhaps Buffett is betting that America’s share of global equity indices may be close to peaking at almost 70%.
Perhaps Buffett is betting that America’s share of global equity indices may be close to peaking at almost 70%.
March Madness starts today. It’s my favorite sporting event of the year, as the possibilities and unpredictability of a 68-team basketball tournament involving 18-to-23-year-olds never fail to deliver on its “madness” moniker. It’s messy, it’s volatile, and you never know what’s going to happen next. Sort of like the stock market in the era of Trump, tariffs and angst-ridden Fed announcements like yesterday.
Last week the S&P 500 index plunged into correction territory. The Nasdaq was already there. Has the market bottomed out or is there more downside to go?
It’s been a while since selling has gotten this ugly. The last market correction was in October of 2023. This is the second of this bull market, which began in October of 2022. That’s not unusual. Corrections are normal in a bull market. The S&P had run up about 75% in a little over two years and was due for a consolidation, especially the technology sector. But is that all this is or is it something more?
It’s been a while since selling has gotten this ugly. The last market correction was in October of 2023. This is the second of this bull market, which began in October of 2022. That’s not unusual. Corrections are normal in a bull market. The S&P had run up about 75% in a little over two years and was due for a consolidation, especially the technology sector. But is that all this is or is it something more?
The S&P 500 officially hit correction territory last week, down 10% or more from the high. While the bulk of the selling might be near the end, stocks are unlikely to gain significant and lasting upside traction until current uncertainties dissipate.
Last week’s inflation report was good. The CPI number was better than expected and showed a decrease in the level of price increases for the first time in several months. The economy appears to be slowing, but investors are likely okay with that if there isn’t a recession. Those two things add up to lower interest rates. But the tariff uncertainty seems to be preventing any kind of positive new narrative from taking shape in the market.
Last week’s inflation report was good. The CPI number was better than expected and showed a decrease in the level of price increases for the first time in several months. The economy appears to be slowing, but investors are likely okay with that if there isn’t a recession. Those two things add up to lower interest rates. But the tariff uncertainty seems to be preventing any kind of positive new narrative from taking shape in the market.
In today’s note, we discuss pertinent developments for some of the stocks in the portfolio, including Agnico-Eagle Mines (AEM), GE Aerospace (GE), Paramount Global (PARA), Sirius XM (SIRI), Teladoc Health (TDOC) and UiPath (PATH).
Gold and silver continue to benefit from safe-haven buying, boosting our holding of Agnico-Eagle Mines (AEM).
Trump’s tariffs are directly, or indirectly, roiling some of holdings, including Sirius XM (SIRI) and UiPath (PATH). The favorable long-term outlooks for both stocks remain unchanged, however.
Gold and silver continue to benefit from safe-haven buying, boosting our holding of Agnico-Eagle Mines (AEM).
Trump’s tariffs are directly, or indirectly, roiling some of holdings, including Sirius XM (SIRI) and UiPath (PATH). The favorable long-term outlooks for both stocks remain unchanged, however.
WHAT TO DO NOW: Remain defensive. Near term, we are seeing a couple of rays of light, including a developing positive divergence from our Two-Second Indicator and some legitimate dips in some reliable sentiment measures, so we’re not sticking our heads in the sand as the vast majority of primary evidence and our market timing indicators are negative, with the indexes so far having trouble finding much support. We could do some nibbling if the market finds a low it can work off of, but in the meantime, we advise staying mostly on the sideline and letting the sellers finish up their work. We have no changes tonight, and the Model Portfolio’s cash position is 83%.
The market enjoyed a little bounce yesterday but is still working to find a level of support from which to mount an eventual recovery. This is a process, not an event. Nobody knows if we have reached that level yet.
We’ve been through these types of volatile markets many times in the past. While the drivers of the volatility are often different, one of the consistencies is that it is best to exercise patience and let new leaders show themselves. They always do.
In this case, the main drivers of the current market correction are Trump’s tariffs/trade war and massive disruptions in the federal government.
We’ve been through these types of volatile markets many times in the past. While the drivers of the volatility are often different, one of the consistencies is that it is best to exercise patience and let new leaders show themselves. They always do.
In this case, the main drivers of the current market correction are Trump’s tariffs/trade war and massive disruptions in the federal government.
It’s amazing what a halfway decent inflation report can do.
On Wednesday, the Consumer Price Index (CPI) came in both lower than expected and better than the previous month at 2.8%. Economists were looking for a 2.9% year-over-year gain, down a tick from the 3% gain in January. Instead, it’s down two ticks and up just 0.2% from January – again, a tick less than the 0.3% month-over-month gain that was estimated. So, Wall Street rejoiced, at least for a few hours. All three major indexes were up more than 1% in early Wednesday trading, a welcome reprieve after weeks of getting pummeled into either correction status (the Nasdaq) or near-correction territory (S&P 500 and the Dow). Yes, the thing that’s been feeding this forceful sell-off – tariffs, and an ever-escalating trade war with multiple countries – is still raging. But higher inflation is a big reason people fear tariffs in the first place. And for one month at least, inflation came in cooler than expected.
On Wednesday, the Consumer Price Index (CPI) came in both lower than expected and better than the previous month at 2.8%. Economists were looking for a 2.9% year-over-year gain, down a tick from the 3% gain in January. Instead, it’s down two ticks and up just 0.2% from January – again, a tick less than the 0.3% month-over-month gain that was estimated. So, Wall Street rejoiced, at least for a few hours. All three major indexes were up more than 1% in early Wednesday trading, a welcome reprieve after weeks of getting pummeled into either correction status (the Nasdaq) or near-correction territory (S&P 500 and the Dow). Yes, the thing that’s been feeding this forceful sell-off – tariffs, and an ever-escalating trade war with multiple countries – is still raging. But higher inflation is a big reason people fear tariffs in the first place. And for one month at least, inflation came in cooler than expected.
It’s cannabis company earnings season. So, I highlight fourth-quarter results in this issue.
Before we get to the details, here are the key takeaways from earnings reports:
* Price compression continues, creating an ongoing “Hunger Games” environment in which only the financially strong will survive, given the debt levels at a lot of cannabis companies. Much of this debt comes due over the next two years. Bankruptcies might be the clearing event that helps bring an end to price compression. None of our names appear to be at risk, but no guarantees...
Before we get to the details, here are the key takeaways from earnings reports:
* Price compression continues, creating an ongoing “Hunger Games” environment in which only the financially strong will survive, given the debt levels at a lot of cannabis companies. Much of this debt comes due over the next two years. Bankruptcies might be the clearing event that helps bring an end to price compression. None of our names appear to be at risk, but no guarantees...
Selling accelerated this week after last week was the worst since September. The S&P is down 4% YTD and at its lowest level in more than five months. The Nasdaq index is in correction territory, down more than 10% from the high.
The big issue seems to be tariffs. Tariffs on China, Canada, and Mexico are escalating. The new Canadian Prime Minister also appears to be taking a hard line, and it looks like the trade issues won’t be resolved for a while. But it’s also the fact that tariffs are hitting the economy at a vulnerable point as fears of a slowing economy are growing.
The big issue seems to be tariffs. Tariffs on China, Canada, and Mexico are escalating. The new Canadian Prime Minister also appears to be taking a hard line, and it looks like the trade issues won’t be resolved for a while. But it’s also the fact that tariffs are hitting the economy at a vulnerable point as fears of a slowing economy are growing.
Alerts
Today, a whopping eight Profit Booster positions will expire. Most are “slam-dunk,” full-profit trades, while others will go down to the wire.
The big takeaway, before we dive in, is we are going to let the situation play itself out, and come Monday/Tuesday of next week we will revisit our profits, as well as how we will manage the remaining positions.
The big takeaway, before we dive in, is we are going to let the situation play itself out, and come Monday/Tuesday of next week we will revisit our profits, as well as how we will manage the remaining positions.
I’m recommending that we take a one-quarter profit in our position in real estate fintech Zillow (Z).
AST SpaceMobile (ASTS): Most Confusing Success Story Ever!?
Mama’s Creation (MAMA), our micro-cap grocery company that’s a play on the growth in deli prepared food, reported a solid Q2 after the closing bell yesterday that slightly surpassed expectations.
WHAT TO DO NOW: The market’s selloff this week is accelerating today, once again led by growth stocks. The Nasdaq is fully in re-test mode at this point, and while many stocks are showing some relative strength overall, we remain cautious given the selling with our growth-heavy indicators (Growth Tides, Aggression Index) looking poor. We sold TransMedics (TMDX) in last night’s issue, and today we’re going to cut bait with ProShares Russell 2000 Fund (UWM), which will leave us with around 49% in cash.
Solventum (SOLV), a spinoff of 3M’s healthcare business, was mentioned in last week’s CTL podcast.
On Tuesday morning I suggested traders might want to take some profits in positions accumulated the week before, because of a possible dearth of catalysts on the near-term horizon. I also suggested maintaining long-term exposure to the group.
Portfolios
An updated portfolio for Cabot Options Institute – Quant Trader.
An updated portfolio for Cabot Options Institute – Fundamentals Portfolio.
An updated portfolio for Cabot Options Institute – Quant Trader.
An updated portfolio for Cabot Options Institute – Income Trader.
An updated portfolio for Cabot Options Institute – Earnings Trader.
An updated portfolio for Cabot Options Institute – Fundamentals Portfolio.
An updated portfolio for Cabot Options Institute – Quant Trader.
An updated portfolio for Cabot Options Institute – Income Trader.
An updated portfolio for Cabot Options Institute – Earnings Trader.
An updated portfolio for Cabot Options Institute – Fundamentals Portfolio.
An updated portfolio for Cabot Options Institute – Quant Trader.
An updated portfolio for Cabot Options Institute – Income Trader.
Strategy
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.