Issues
Let’s start with some remarkable statistics.
Nvidia’s (NVDA) fourth-quarter revenue reported yesterday was $68 billion, up 73% from the same period last year. It now makes more revenue in a single quarter than most chip competitors generate in an entire year. Nvidia’s profit for the last 12 months was $120 billion. Just three years ago, Nvidia’s profit was $4.4 billion.
It is estimated that more than one-third of the value of the stock market is represented by companies based in the San Francisco Bay/Silicon Valley area.
Nvidia’s (NVDA) fourth-quarter revenue reported yesterday was $68 billion, up 73% from the same period last year. It now makes more revenue in a single quarter than most chip competitors generate in an entire year. Nvidia’s profit for the last 12 months was $120 billion. Just three years ago, Nvidia’s profit was $4.4 billion.
It is estimated that more than one-third of the value of the stock market is represented by companies based in the San Francisco Bay/Silicon Valley area.
We continue to get solid signals from the White House that cannabis rescheduling is on track. That’ll be a significant catalyst for cannabis stocks. The only question is the timing. That remains uncertain and probably unknowable. Cannabis stocks remain a buy on weakness ahead of this catalyst.
The background here is that last December, President Donald Trump signed an executive order directing the Justice Department to move cannabis to Schedule III from Schedule I under the Controlled Substances Act.
The background here is that last December, President Donald Trump signed an executive order directing the Justice Department to move cannabis to Schedule III from Schedule I under the Controlled Substances Act.
The bull market has broadened out beyond technology in a big way. While the S&P 500 is about even for the year so far, most market sectors are beating the index, and by a lot. In fact, six of the eleven sectors have a better than 8% YTD return, not even two months into the year.
The new market dynamic is having a profound impact on the portfolio. Several stocks that had been dead weight in the portfolio have soared in recent months to 52-week highs. The new market has turned previously underperforming stocks into strong income generators.
It has been a strong run for several portfolio stocks. But a largely successful earnings season is almost over. That means there will be no obvious catalyst to continue driving stocks higher, at least for now. The situation makes it a better time to capitalize on recent price surges instead of adding more positions and hoping for more.
Under the current circumstances, the biggest market opportunity right now is income. In this issue, I highlight three more high-priced covered calls on stocks that have had strong rallies.
The new market dynamic is having a profound impact on the portfolio. Several stocks that had been dead weight in the portfolio have soared in recent months to 52-week highs. The new market has turned previously underperforming stocks into strong income generators.
It has been a strong run for several portfolio stocks. But a largely successful earnings season is almost over. That means there will be no obvious catalyst to continue driving stocks higher, at least for now. The situation makes it a better time to capitalize on recent price surges instead of adding more positions and hoping for more.
Under the current circumstances, the biggest market opportunity right now is income. In this issue, I highlight three more high-priced covered calls on stocks that have had strong rallies.
In researching potential candidates for this month’s edition of the newsletter, I narrowed down my final list of top choices to the usual 10 stocks. What caught my attention when reviewing the list, however, was how many of them were in the healthcare sector—in particular, the therapeutic arena.
I was gratified by this discovery since I feel that a.) medical stocks are underrepresented in the portfolio, and b.) the sector is at once defensive in nature (always a good thing in my estimation) yet also poised to benefit from ongoing sector rotation.
I was gratified by this discovery since I feel that a.) medical stocks are underrepresented in the portfolio, and b.) the sector is at once defensive in nature (always a good thing in my estimation) yet also poised to benefit from ongoing sector rotation.
Before we dive into this week’s covered call idea, I need to address two items.
First, we are going to sell our RKT stock as the February call that we sold expired worthless, leaving us with our stock position.
First, we are going to sell our RKT stock as the February call that we sold expired worthless, leaving us with our stock position.
It remains about as mixed an environment as we can remember, which does mean the risk of some sort of convulsion (a correction, a re-rotation into laggards, etc.) is elevated. That said, as opposed to the on-again, off-again action from certain areas in January, we have seen the winners persist of late, so that’s where we’re focusing—while also holding some cash and raising stops along the way given what’s going on. For the moment, we’ll stick with a level 6 on the Market Monitor, but again, we’re OK taking swings at strong stocks.
This week’s list is very heavy on the cyclical side of things, with many names perking up and out of long ranges. Our Top Pick has a solid growth profile and has emerged on the upside after a six-month choppy phase.
This week’s list is very heavy on the cyclical side of things, with many names perking up and out of long ranges. Our Top Pick has a solid growth profile and has emerged on the upside after a six-month choppy phase.
Tariffs rejected. Big shortfall in GDP growth. Possible emerging conflict with Iran. There were enough headlines last week – and really, Friday alone! – to make your head spin. And yet … stocks were mostly calm, with no sudden movements in either direction. As always, the stock charts matter more than the headlines, at least when it comes to investing.
So, let’s stay the course, which this week means adding a well-known stock that continues to thrive in the midst of the ongoing travel resurgence. It was Mike Cintolo’s Top Pick in his Cabot Top Ten Trader momentum-trading advisory last week.
Details inside.
So, let’s stay the course, which this week means adding a well-known stock that continues to thrive in the midst of the ongoing travel resurgence. It was Mike Cintolo’s Top Pick in his Cabot Top Ten Trader momentum-trading advisory last week.
Details inside.
Despite early-week angst over continued AI disruption fears, markets steadied into the weekend as tech found fresh legs and headline risk eased after a key Supreme Court ruling altered the U.S. tariff landscape. The rebound in mega-cap names helped sentiment improve off midweek lows, though small caps lagged. For the week, the S&P 500 rallied 1.1%, the Dow advanced 0.3%, and the Nasdaq led with a gain of 1.5%, while the Russell 2000 was essentially flat.
Despite early-week angst over continued AI disruption fears, markets steadied into the weekend as tech found fresh legs and headline risk eased after a key Supreme Court ruling altered the U.S. tariff landscape. The rebound in mega-cap names helped sentiment improve off midweek lows, though small caps lagged. For the week, the S&P 500 rallied 1.1%, the Dow advanced 0.3%, and the Nasdaq led with a gain of 1.5%, while the Russell 2000 was essentially flat.
It’s not 1999 out there, but the Model Portfolio has been doing OK despite the choppy, challenging, crosscurrent-filled market of late, partially thanks to an interesting dynamic—while the top-down evidence really hasn’t changed much in recent weeks (if anything, it’s probably worsened a bit, especially when it comes to growth funds and our Aggression Index), we are definitely seeing more individual stocks perk up, both within AI and in cyclical areas.
We do have two or three moves we’re close to making—while we’re not eager to be heavily invested given the evidence, we have a lot of cash and are likely to put some to work soon. But, tonight, we’ll stand pat and see if opportunities arise in the next few days—while also seeing if the Nasdaq’s test of its recent low holds. Bottom line, stand pat here, but we’ll be in touch with any changes in the days ahead.
We do have two or three moves we’re close to making—while we’re not eager to be heavily invested given the evidence, we have a lot of cash and are likely to put some to work soon. But, tonight, we’ll stand pat and see if opportunities arise in the next few days—while also seeing if the Nasdaq’s test of its recent low holds. Bottom line, stand pat here, but we’ll be in touch with any changes in the days ahead.
With the market’s rotation into energy, industrial and other “unloved” stocks continuing well into 2026, we’re leaning deeper into the trends.
This month’s issue focuses on yet another specialty industrial player, an under-the-radar biofuel story, and an energy name with exposure to strong, international markets.
As always, the goal is to stay aligned with what’s working.
Enjoy!
This month’s issue focuses on yet another specialty industrial player, an under-the-radar biofuel story, and an energy name with exposure to strong, international markets.
As always, the goal is to stay aligned with what’s working.
Enjoy!
Despite a small bounce Friday on softer inflation data that eased some knee-jerk selling, markets finished on their back foot as renewed investor anxiety around artificial-intelligence disruption rippled through tech and cyclical stocks. Growth names lagged, pressure widened beyond software to financials and real estate, and defensive sectors outperformed amid falling Treasury yields that weren’t enough to stem the slide. By week’s end, the S&P 500 had fallen 1.4%, the Dow Jones had lost 1.2%, and the Nasdaq Composite had tumbled 2.1%.
Updates
It has been called by many pundits the biggest speculative event since the late ‘90s Internet stock mania. I’m referring, of course, to the widely referenced “AI bubble” that has been in play for the better part of the last three years.
But is it truly a “bubble” in the historical sense of the term? The answer to this question is salient for us not only as investors, generally speaking, but also as it concerns at least a couple of the stocks in our portfolio—namely Intel (INTC) and Centuri Holdings (CTRI).
But is it truly a “bubble” in the historical sense of the term? The answer to this question is salient for us not only as investors, generally speaking, but also as it concerns at least a couple of the stocks in our portfolio—namely Intel (INTC) and Centuri Holdings (CTRI).
WHAT TO DO NOW: It’s not 2008 out there, but the market environment remains very challenging, especially for growth, where most indexes, funds and stocks are struggling. That said, we have started to see some growth names emerge on the upside, and our watch list is growing—if we can see more than a day or two of strength, we’d like to put some money to work. But until then, we’re content to stay close to shore and patiently wait for growth stocks to get moving. In the Model Portfolio, we’re placing Axsome Therapeutics (AXSM) on Hold tonight; our cash position is still just above 50%.
It’s been an interesting week here in Rhode Island, where most people are finally dug out from the roughly three feet of snow that fell across the state Sunday night and into Monday.
Growing up in Vermont, major snowstorms were certainly disruptive. But more often than not, it was all about how we would get to the ski resort without going off the road.
Growing up in Vermont, major snowstorms were certainly disruptive. But more often than not, it was all about how we would get to the ski resort without going off the road.
Hello from sunny Florida!
I am on vacation with my family this week, taking a much-needed break from the harsh, snowy Vermont winter (and narrowly making it down here ahead of the latest blizzard to dump another foot or two of snow on the Northeast). But with so much going on in the market – tariffs rejected! GDP growth slowing! AI panic! – I wanted to provide an update on everything that’s going on with our stocks.
I am on vacation with my family this week, taking a much-needed break from the harsh, snowy Vermont winter (and narrowly making it down here ahead of the latest blizzard to dump another foot or two of snow on the Northeast). But with so much going on in the market – tariffs rejected! GDP growth slowing! AI panic! – I wanted to provide an update on everything that’s going on with our stocks.
It’s the same basic market story as it has been for the last four months. Technology is floundering while other sectors are killing it. But a couple of events occurring this week could potentially change the dynamic.
For value-focused investors, this year’s prologue has been a welcome change from the turmoil experienced in early 2025.
In just the past few weeks, some of last year’s most ignored or underappreciated laggards have posted outsized gains, with rallies that have made even momentum-driven tech stock traders envious. Even more remarkable is the fact that much of that strength has been concentrated in ultra-defensive areas of the market like consumer staples, utilities and healthcare.
In just the past few weeks, some of last year’s most ignored or underappreciated laggards have posted outsized gains, with rallies that have made even momentum-driven tech stock traders envious. Even more remarkable is the fact that much of that strength has been concentrated in ultra-defensive areas of the market like consumer staples, utilities and healthcare.
The market rotation continues to be the main story out there this week, though rumblings of a potential strike on Iran, an update from the January FOMC meeting, and a slew of earnings reports and economic data releases have been giving investors plenty to think about.
In terms of the rotation, the equal‑weight S&P 500 ETF (RSP) is up 5.5% so far this year, illustrating that leadership is broadening beyond the narrow group of mega‑cap stocks that drove much of last year’s performance.
Year to date, the S&P 600 SmallCap Index is up 8.3% and the S&P 400 Mid‑Cap Index is up 7.9%. Both are comfortably outperforming the S&P 500, which is up just 0.1%, and the Nasdaq, which is down 2.1%.
In terms of the rotation, the equal‑weight S&P 500 ETF (RSP) is up 5.5% so far this year, illustrating that leadership is broadening beyond the narrow group of mega‑cap stocks that drove much of last year’s performance.
Year to date, the S&P 600 SmallCap Index is up 8.3% and the S&P 400 Mid‑Cap Index is up 7.9%. Both are comfortably outperforming the S&P 500, which is up just 0.1%, and the Nasdaq, which is down 2.1%.
Happy Chinese New Year! The year of the horse is upon us.
China is expecting an incredible 9.5 billion trips to be made during the 40-day Lunar New Year travel period. Chinese automakers are also on the move as the country’s numerous brands sold nearly 200,000 vehicles in Britain last year, doubling their market share to almost 10%.
China is expecting an incredible 9.5 billion trips to be made during the 40-day Lunar New Year travel period. Chinese automakers are also on the move as the country’s numerous brands sold nearly 200,000 vehicles in Britain last year, doubling their market share to almost 10%.
As U.S. investors have shifted from risk-on to risk-off mode in recent months, a clear disparity between the “haves” and the “have-nots” has materialized.
Let’s start with the “have-nots.” Financials have fared the worst so far this year (-4.7%), followed by technology (-3.1%), communication services and consumer discretionary (-2.8% each). The downturn in the two tech-related sectors in particular is a stark departure from recent years, when technology led the charge of the current bull market.
Let’s start with the “have-nots.” Financials have fared the worst so far this year (-4.7%), followed by technology (-3.1%), communication services and consumer discretionary (-2.8% each). The downturn in the two tech-related sectors in particular is a stark departure from recent years, when technology led the charge of the current bull market.
Cyclical stocks are soaring and technology is floundering in the transformed market.
The bull market is turned upside down. For most of the first three years, technology, and particularly AI stocks, soared while most other stocks did very little. Now, previously meandering stocks are killing it while technology sinks.
The bull market is turned upside down. For most of the first three years, technology, and particularly AI stocks, soared while most other stocks did very little. Now, previously meandering stocks are killing it while technology sinks.
Strong fourth-quarter earnings are confirming what the market was already doing.
Current estimates based on earnings reported so far are for 13.2% overall S&P earnings growth for the quarter. It’s a solid quarter and the fifth straight quarter of double-digit earnings growth. In terms of sector performance, cyclical companies are killing it, and technology is floundering, just like before earnings.
Current estimates based on earnings reported so far are for 13.2% overall S&P earnings growth for the quarter. It’s a solid quarter and the fifth straight quarter of double-digit earnings growth. In terms of sector performance, cyclical companies are killing it, and technology is floundering, just like before earnings.
Like many coffee aficionados, I have something of a love/hate relationship with Starbucks (SBUX). My main gripe is that the company’s food and beverage offerings have always been pricey compared to the fare served in most fast-food restaurants and run-of-the-mill coffee houses.
Alerts
Sell One-Third
Celgene (CELG)
from Cabot Market Letter, recommended around $100 in the February 22, 2013, Daily Alert and issue 738.
Rumors of military action against Syria rattled the markets yesterday afternoon, and the sellers unloaded on shares today, driving the Dow down another 170 points and the Nasdaq down a significant 79...
Celgene (CELG)
from Cabot Market Letter, recommended around $100 in the February 22, 2013, Daily Alert and issue 738.
Rumors of military action against Syria rattled the markets yesterday afternoon, and the sellers unloaded on shares today, driving the Dow down another 170 points and the Nasdaq down a significant 79...
Sell
Aruba Networks (ARUN)
from The Investment Letter, recommended around $15 in the May 30 Daily Alert and issue 744.
I bought to take advantage of earlier panicked selling [and ARUN has] done very well since. [As it was] intended to be a short-term investment, I think now is a good time to...
Aruba Networks (ARUN)
from The Investment Letter, recommended around $15 in the May 30 Daily Alert and issue 744.
I bought to take advantage of earlier panicked selling [and ARUN has] done very well since. [As it was] intended to be a short-term investment, I think now is a good time to...
In today’s Daily Alert we have two important sell alerts. The second is on Roadrunner Transportation Systems (RRTS), from Upside.
The first concerns the stock that was our best-performing Top Pick for 2013 at mid-year, Invivio (NVIV). When we published our mid-year update issue last month, NVIV, chosen by BI Research...
The first concerns the stock that was our best-performing Top Pick for 2013 at mid-year, Invivio (NVIV). When we published our mid-year update issue last month, NVIV, chosen by BI Research...
Sell
Roadrunner Transportation Systems (RRTS)
from Upside, recommended at $23 in Investment Digest issue 740 and the April 4, 2013 Daily Alert
Roadrunner Transportation Systems (RRTS) is being downgraded to Sell because of deteriorating Quadrix scores and an unfavorable valuation. Moreover, our interest in trucking stocks has diminished, partly reflecting the group’s mixed June-quarter results.
The stock’s...
Roadrunner Transportation Systems (RRTS)
from Upside, recommended at $23 in Investment Digest issue 740 and the April 4, 2013 Daily Alert
Roadrunner Transportation Systems (RRTS) is being downgraded to Sell because of deteriorating Quadrix scores and an unfavorable valuation. Moreover, our interest in trucking stocks has diminished, partly reflecting the group’s mixed June-quarter results.
The stock’s...
Today’s recommendation is a call writing recommendation from Bernie Schaeffer’s Option Advisor. The recommendation is to buy a intermediate-term call on the stock below. The call is currently “in the money,” meaning the stock is currently trading above the strike price – the price at which the call can be...
Today Benjamin Shepherd recommends a Brazilian energy company with an NYSE-listed ADR and Paul Goodwin drops a recent recommendation from his Watch List.
Braskem (BAK)
from Global Investment Strategist
Consuming about 40% of the U.S. corn crop each year, ethanol production in America is a touchy subject. While farmers are generally in favor...
Braskem (BAK)
from Global Investment Strategist
Consuming about 40% of the U.S. corn crop each year, ethanol production in America is a touchy subject. While farmers are generally in favor...
Drop
LightInTheBox (LITB)
from Cabot China and Emerging Markets Report, recommended as a WATCH in the August 2013 Investment Digest.
LITB did NOT react well to the company’s earnings report as the company missed analysts’ projections on broth revenues and forecasts. The stock dropped like a stone immediately after and it’s falling still....
LightInTheBox (LITB)
from Cabot China and Emerging Markets Report, recommended as a WATCH in the August 2013 Investment Digest.
LITB did NOT react well to the company’s earnings report as the company missed analysts’ projections on broth revenues and forecasts. The stock dropped like a stone immediately after and it’s falling still....
Today we have a momentum recommendation from Stock Trader’s Almanac and updates on two buy-rated stocks from Cabot Stock of the Month: Melco Crown Entertainment (MPEL) and Tesla Motors (TSLA).
DSW Inc. (DSW)
from Stock Trader’s Almanac
[There is a seasonal trend of] historical consumer strength running from approximately the end of September...
DSW Inc. (DSW)
from Stock Trader’s Almanac
[There is a seasonal trend of] historical consumer strength running from approximately the end of September...
2012 Top Pick Update
Tesla Motors (TSLA)
from Cabot Stock of the Month, recommended as a Top Pick for 2012 at $27 in the January 18, 2012, Investment Digest.
Tesla continues to thrill shareholders and confound experts who claim the stock is too high. Certainly, TSLA is overvalued by all traditional measures, but...
Tesla Motors (TSLA)
from Cabot Stock of the Month, recommended as a Top Pick for 2012 at $27 in the January 18, 2012, Investment Digest.
Tesla continues to thrill shareholders and confound experts who claim the stock is too high. Certainly, TSLA is overvalued by all traditional measures, but...
Update: New Highs
Melco Crown Entertainment (MPEL)
from Cabot Stock of the Month, recommended at $23 in the April 10, 2013, Investment Digest.
Melco Crown Entertainment (MPEL) hit a new high yesterday, propelled by growing support of Chinese gambling stocks. The stock remains extended, but the trend is strong, so I believe further...
Melco Crown Entertainment (MPEL)
from Cabot Stock of the Month, recommended at $23 in the April 10, 2013, Investment Digest.
Melco Crown Entertainment (MPEL) hit a new high yesterday, propelled by growing support of Chinese gambling stocks. The stock remains extended, but the trend is strong, so I believe further...
Today we have an extended recommendation from 100% Letter Editor Tyler Laundon. This high-potential but speculative Nasdaq-listed stock is appropriate for aggressive investors.
Endocyte (ECYT)
Today we’re going to hitch a ride on one of the most exciting and high-potential biotech stocks in the market.
Endocyte (ECYT) is a $560 million market cap...
Endocyte (ECYT)
Today we’re going to hitch a ride on one of the most exciting and high-potential biotech stocks in the market.
Endocyte (ECYT) is a $560 million market cap...
You’ll receive your new, re-redesigned monthly Investment Digest issue this afternoon. I’d love to know what you think of the new issue – you can email me your comments at chloe@dickdavis.com.
Today’s Daily Alert recommendation is a long-term ETF play from Unconventional Wealth.
Guggenheim Global Water ETF (CGW)
from Unconventional Wealth
Water distribution infrastructure...
Today’s Daily Alert recommendation is a long-term ETF play from Unconventional Wealth.
Guggenheim Global Water ETF (CGW)
from Unconventional Wealth
Water distribution infrastructure...
Portfolios
Strategy
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.