The recent bull run continued last week, this time led by Small Caps (IWM) which gained 3.5%, followed by a gain of 2.3% for the Dow, and 1.7% for both the S&P 500 and Nasdaq.

The S&P 500 and Nasdaq reached new records on Wednesday, reversing Tuesday’s declines. President Trump’s tax-and-spending bill squeaked through the Senate and is now at the heart of a battle in the House. This is hopefully settled today, and a setback would have an impact on the stock market.

Luckin Coffee’s (LKNCY) revenue in China has already surpassed Starbucks in China. This week, it brought the battle to America as its first two U.S. locations opened in New York. This may be just a public relations gambit.

Today’s addition is a small-cap networking company on the cusp of a potential multi-year growth cycle.

The big-picture growth catalyst? Emerging AI and cloud computing technologies that place new strategic importance on network infrastructure and security for data centers, hyperscalers and global enterprises.

All the details are inside this month’s Issue.

Enjoy!

After a weekend that many feared would sink the market as the Middle East situation was flaring up, to the surprise of many, the market didn’t sell off and, in fact, by week’s end the S&P 500 had gained 3.4%, the Dow had rallied 3.8% and the Nasdaq added 4.2%.

Even as worries fade over the recent Middle East flare-up, new tariff-related headlines have lately crept back into the news. However, stocks have taken it in stride by ignoring what would normally be “bad” news. In view of this, we’re pleased with the market’s resilience—and it’s also welcome that it hasn’t become overheated with too much enthusiasm yet. We’re still seeing a few flies here and there, with some stocks having trouble breaking above resistance, but a growing number of stocks are joining the parade, with a nice mixture of growthy and cyclical names getting into sync with the general march forward. All told, we like what we’re seeing, and in view of the continued strength, we’re raising our Market Monitor to a level 8.

This week’s list features names across multiple industries, which we view as a sign that categorical strength is building. Our Top Pick is a sporting goods giant that has multiple growth tailwinds and is tightening up as the 25-day line has caught up. We’re fine entering here or (preferably) on a dip.

Chaos was the overriding theme of the first half of 2025. But for all the pearl-clutching over tariffs, Middle East conflict, slowing economic growth and still-high interest rates, the S&P 500 was up 5% and has risen to new all-time highs. Stocks have truly climbed the proverbial “Wall of Worry.” Will they continue to? I wouldn’t bet against it. So today, we add a once-great large-cap tech stock name that may finally be ready to dig out of a years-long funk. Clif Droke identified it as a prime turnaround candidate in his Cabot Turnaround Letter. Now, we add it to the Stock of the Week portfolio.

Details inside.

After a weekend that many feared would sink the market as the Middle East situation was flaring up, to the surprise of many, the market didn’t sell off and in fact by week’s end the S&P 500 had gained 3.4%, the Dow had rallied 3.8% and the Nasdaq added 4.2%.

After a weekend that many feared would sink the market as the Middle East situation was flaring up, to the surprise of many, the market didn’t sell off and in fact by week’s end the S&P 500 had gained 3.4%, the Dow had rallied 3.8% and the Nasdaq added 4.2%.

As we wind up the first half of the year, the market has a great setup in place—in fact, it’s looking like that’s what’s been going on for the past six or seven months, with the big-cap indexes etching their own launching pads. Combined with some big-picture positives (like still-dour sentiment), we continue to think the next big move is up. And, while it’s not completely decisive, we’re finally starting to see some growth stocks perk up, too. Thus, we’re taking another step into the market’s waters tonight, adding one new small position and averaging up on a current holding.

Cannabis stocks remain out of favor. It has been a long wait, but it is still too soon to give up on key federal reform that could help the sector and boost stocks. That’s the view of a top-five cannabis company CEO.

Meanwhile, states continue to make steady progress on legalization.

None of this should be a surprise. Polls consistently show that a majority of voters favor legalization. Many politicians at both the state and national levels are responding. Beyond polls, we see growing support for cannabis in consumer spending trends. Wallet share continues to rise. I provide more details on these trends below in the news roundup section.

Few things are more enduring than America’s love of a good hamburger. Indeed, the iconic sandwich is so much a part of the country’s pop cultural heritage that, according to numerous opinion polls, it’s one of the first things foreigners mention when asked to name the most American symbol they can think of.

Stocks have been very resilient. The market has proven a lot of naysayers wrong. But prices are high, and uncertainty abounds.

Tariffs won’t be a disaster, but there will still be more headlines and uncertainty in the months ahead. The economy is okay, but it’s not great. Interest rates are still stubbornly high. And now the Iran conflict is thrown into the mix along with the tariffs and the economy. Meanwhile, the market indexes are hovering near the high and most stocks are pricey.

Several portfolio positions have had strong rallies in the recovery and are generating high call premiums. The high strike prices guarantee a strong total return if the stocks are called. The high premiums provide a great way to lock in the recent market good fortune by generating a high income from call premiums.

Let’s take what the market is giving. Right now, it’s giving a high income. Tomorrow, who knows? In this issue, I highlight a covered call in Qualcomm (QCOM). It is the sixth call sold on the position since the stock was added to the portfolio four years ago. It’s a great time to prime the pump for income once again.

The U.S. stock market is doing just fine. More than fine, in fact. On Tuesday, the S&P 500 closed at a new all-time high, and the index is up roughly 4% year to date through the first seven weeks of 2025. That comes on the heels of back-to-back years of gains in excess of 20%. And while the current bull market has been mostly spearheaded by a handful of artificial intelligence and Magnificent Seven stocks, the rally is finally starting to spread, with the Equal Weight index also up 4% this year, the Dow Jones Industrial up nearly 5%, and the Russell 2000 up nearly 3%.

While the S&P 500 has stalled at about the same level since late November, it’s been more exciting under the hood.

The market indexes have stalled mostly because of technology. Those stocks still haven’t fully recovered from the DeepSeek plunge in late January. At the same time, earnings for the rest of the market are catching up.

The market has been sideways for the past couple of months. It’s up YTD because of a rebound from the December swoon. But the S&P is still at about the same level it was in early December.

Earnings have been solid, averaging about 11% growth in the quarter as tech earnings moderate and the rest of the market catches up. Earnings are expected to average about 14% in 2025. But the solid earnings quarter is only helping the market hold serve in the face of higher interest rate expectations, tariffs, and a strong dollar.

In today’s note, we discuss pertinent developments for some of the stocks in the portfolio, including Alcoa (AA), American Airlines (AAL), Berkshire Hathaway (BRKB), Sirius XM (SIRI) and SLB Ltd. (SLB).

Overall market liquidity remains ample, yet small-cap stocks have lagged in recent months, suggesting money availability isn’t as profuse as it was last year.

WHAT TO DO NOW: We continue to stay relatively close to shore as the major indexes remain rangebound and many stocks are hit and miss—but we are impressed given the resilience shown after some worrisome headlines, and earnings season has gone fairly well so far. Today and tonight, we’re making a few small moves: On the sell side, we sold one-third of our AppLovin (APP) stake today and, tonight, will sell half of our On Holding (ONON) position—but we’ll also buy an additional 3% position to Duolingo (DUOL) and start a half-sized stake in DoorDash (DASH). All told, we’ll still have a mid-40% cash position, but we could do more buying if the recent resilience leads to clear buying.

Small caps have underperformed since last Thursday with yesterday’s selloff pushing the index to the lowest level since mid-January.

The main culprits are yesterday’s slightly hotter-than-expected CPI report, concerns about tariffs (carveouts expected) and an uptick in bond yields. Yesterday the 10-year yield jumped back to 4.64%, a three-week high.

On last Friday’s Cabot Street Check episode, the weekly podcast I co-host with my colleague Brad Simmerman, we welcomed on four different Cabot analysts to help us take the market’s temperature in the midst of an eventful and rather volatile start to 2025. All four of them – Mike Cintolo, Cabot’s Chief Investment Strategist; Jacob Mintz, our options trading expert; Tyler Laundon, our small-cap and early-stage stock expert; and Clif Droke, my fellow value investor who runs the Cabot Turnaround Letter – described themselves as varying degrees of “cautiously bullish.” Given all the headlines of late, that qualifies as a victory.

These are dark days for cannabis investors, maybe the darkest ever.

AdvisorShares Pure U.S. Cannabis (MSOS), one of the key benchmark exchange-traded funds in the space, is down 85% in the past five years against market gains of 80%.

As has always been the case, the fate of cannabis stocks is much more about politicians than the leadership and results at cannabis companies.

Stocks continue to move higher despite more tariff news. A 25% tariff was announced over the weekend on all imported steel. But the market is so far taking the news in stride during a good earnings season.

We’ll see what happens with the tariffs. But whatever happens with this latest round, it is most likely that tariff issues will remain at least a background story for most of this year. Meanwhile, stocks are being buoyed by strong earnings.

In today’s note, we discuss pertinent developments for some of the stocks in the portfolio, including Alcoa (AA), Janus Henderson Group (JHG), Paramount Global (PARA), Starbucks (SBUX) and Teladoc Health (TDOC).

The market is continuing its bumpy ride higher. Despite a barrage of concerns, 10 of the 11 S&P 500 stocks sectors are higher year to date.

While Nvidia (NVDA) has pulled back more than 20% over the past two weeks, our conservative AI play IBM (IBM) has tacked on 40 points over the same period- hitting an all-time high early this week.

Cloudflare (NET) shares were up again this week and are now up 28% in 2025 to reach 140.

Dutch Bros (BROS) shares rose 8.5% this week and have surged 23% so far in 2025.

WHAT TO DO NOW: Remain cautious. Due to the poor action in growth stocks in recent weeks, we’ve been steadily paring back and came into today with a 61% cash position—just as the market went over the falls this morning with some panic selling. Near term, it’s possible the market will bounce, and indeed most stocks are well off their lows today, so we’re going to hold onto our remaining positions for now—though we’ll be in touch if we make some changes later this week.

Shares of new addition FTAI Infrastructure (FIP) are trading down modestly today but outperforming the market after delivering Q2 results at the crack of dawn this morning (not after the bell yesterday, as they were supposed to).

WHAT TO DO NOW: After a sharp reversal lower yesterday, the market is suffering a selling storm today with most major indexes down 2%+ and growth stocks remaining very weak, including another chunk that are giving up the ghost. We’re going to sell our half-sized stake in Robinhood (HOOD) and put the ProShares Ultra Russell 2000 Fund (UWM) on hold. That will bring our cash position to 60%.

Enovix (ENVX), Weave (WEAV), TransMedics (TMDX) and Zeta (ZETA) Deliver

Microsoft (MSFT) Still a Buy

Sell Netflix (NFLX) and Celestica (CLS)

Celestica (CLS) Reports. AST SpaceMobile (ASTS) Update

FTAI Aerospace (FTAI) Still Firing

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 – Earnings Trader.

An updated portfolio for Cabot Options Institute – Income Trader.

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.

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.