The markets reacted strongly—and bullishly—to the results of the presidential election and also found favor after the Federal Reserve’s quarter-point rate reduction.

As of today, they’ve pulled back a bit, awaiting the latest inflation report.

However, the economy continues rolling along. Unemployment remains steady, and consumer sentiment is positive. And while the housing market continues to be challenged by low inventory and rising prices, on the local level, I’m seeing improvement in both categories.

The election of Donald Trump has altered the trajectory of the economy and the market.

Investors perceive his election will deliver stronger economic growth, primarily through deregulation and tax cuts. Although interest rates spiked higher on the expectation of a stronger economy, the market views the revised prognosis as overwhelmingly bullish, so far.

The new administration will employ drastically different policies that will have a significant effect on different sectors and can’t be ignored. The most obvious sector beneficiary of the new administration is energy.

A huge beneficiary will be natural gas exports. The U.S. has recently become the world’s second-largest exporter of natural gas. Exporters ideally sell cheap American gas overseas where it fetches a much higher price. More production and cheaper domestic prices are ideal for exporters. At the same time, the new administration is likely to encourage as much natural gas exporting as possible.

In this issue, I highlight a company that runs the largest liquid natural gas (LNG) export facility in the country. It is a subsidiary of existing portfolio position Cheniere Energy (LNG), which is up 15% since the election. It pays a huge income and still sells at a reasonable price.

The election results and Federal Reserve rate cut were seemingly just what the market was looking for as the S&P 500 rallied 4.7% last week, the Dow added 4.65% and the Nasdaq gained 5.4%.

There were a few pre-election wobbles in the market, but last week’s action looks decisive, with many major indexes that had been capped below their summertime peaks bursting to new highs, while leading stocks went bananas, including many out-of-this-world moves on earnings. Now, to be fair, we’re still seeing some earnings duds, and the action is very hot and heavy, which raises the risk of some sort of near-term rug pull. Thus, it’s important to keep your feet on the ground—but overall, there’s no question the evidence is bullish and the buyers are control. We’re moving our Market Monitor back to a level 8 and could go higher if the buying pressures remain intense.

This week’s list is has something for everyone, with a couple of cyclical names sprinkled in among a batch of strong growth titles. Our Top Pick is showing great growth and just staged a solid breakout from a very tight area last week.

The election is over. Earnings season is largely behind us. And the Fed matched investor expectations by cutting rates by another 25 basis points. The result? A market at fresh all-time highs and with newfound momentum on the heels of a sluggish October. And the Stock of the Week portfolio is performing even better, with no fewer than 10 stocks (!) trading at new all-time or 52-week highs as of this writing.

So, let’s lean into the growth environment while it lasts by adding a mid-cap fintech software stock that Tyler Laundon introduced to his Cabot Early Opportunities readers last month.

Details inside.

A broad-based Republican victory in the election is spurring a sharp rally on Wall Street as investors bank on investor-friendly policies.


Bitcoin, the U.S. dollar, and gold also rose. It was reported that the gold reserves of Italy and France have risen in value by about $100 billion in the last two years. It is unusual historically for gold and the U.S. dollar to rise in tandem. Gold’s steady rise is also unusual given that traders would normally take profits along the way. U.S. economic sanctions have encouraged many to move into gold beyond the long reach of the U.S. government.



It is amazing how much money is being spent on politics. More than 11,000 political groups spent almost $15 billion to influence the election. Of course, this amount seems small weighed against a global economy of about $100 trillion, with the U.S. accounting for about $23 trillion (and about 35% of global debt).



It will be very interesting who gets the top economic policy posts and the GOP strategy going forward.

The election is over, a winner swiftly declared, and the Fed is set to cut rates again today. All of that is hugely bullish, as evidenced by the market hitting fresh all-time highs on Wednesday. But it’s even bigger news for small-cap stocks, which are historically overdue for a massive run. So today, we add a new small-cap stock whose name virtually everyone knows – and perhaps has indulged in themselves. That addition is part of a sweeping portfolio overhaul in our November issue, which includes two stocks reaching – actually eclipsing – our price targets, and our one true laggard getting the ax after a bad earnings report.

Lots to talk about today. Let’s get right to it.

Today we’re jumping into a small-cap recovery story that appears to be in its early innings. It’s a familiar name, and we’re not the first to jump on it. Bank of America just put out a very bullish note after the company posted a big earnings beat.

But this stock isn’t a consensus buy, far from it. There’s a lot of work to be done before Wall Street jumps on board. That spells opportunity.

I don’t think it’ll be a small-cap stock for long. Because of the crazy week with the election and FOMC meeting we will start with a half-sized position with today’s stock.

Today is finally election day, and how the market will react in the days to come is truly anyone’s guess. Because of this uncertainty, today’s covered call is a defensive play on a leading aluminum play that “should” do well under either candidate’s presidency.

It’s fair to say the evidence has taken a small step back in recent days because the intermediate-term trend of the major indexes is essentially on the fence, because the broad market has also faded somewhat, and because we’re finally seeing some earnings-induced dents in strong stocks. Of course, the election has finally (almost) arrived, which could easily cause some hecticness in the days ahead—but also remove some uncertainty. Put it all together and we’re still bullish, but we did pull in our Market Monitor to a level 7 and will take it as it comes in the days ahead.

This week’s list has a pretty solid growth component to it, which we do find encouraging. For our Top Pick, we’ll go with a zinger that has a great story and a powerful chart that we think can go far.

It’s election week, and it will be the elephant in the room for investors until a winner is declared. Will that be before the market opens on Wednesday, as in 2016? Will it take until this weekend, like it did in 2020? Or could this toss-up election drag out even longer, a la Bush/Gore in 2000? Either of the two former scenarios probably wouldn’t impact the market much. The latter would, at least for a time. So let’s all hope for a quick result. Sprinkle in the latest round of Fed cuts later in the week, plus more than a handful of earnings reports for Stock of the Week stocks, and it’s an incredibly pivotal week for the market.

With so much up in the air, today we add a relatively “safe” large-cap stock with a decent yield, low beta and impressive earnings growth. It’s been a staple of Tom Hutchinson’s Cabot Dividend Investor portfolio for quite some time.

Details inside.

Before I dive into my election preview, I first wanted to address Palantir (PLTR) earnings as the company will report its quarterly results today after the close.

Luxury leader LVMH Moët Hennessy (LVMUY) CEO Bernard Arnault has a mantra that can be applied to business and investing: “In times of uncertainty, be patient.”

I would add that this requires playing both defense and offense.

Our offense has been working quite well of late: Super Micro Computer’s (SMCI) share price was up another 40% this week and is now up 300% since the start of the year. Sea (SE) had a good first week in our portfolio as well, up 22% after an encouraging financial report.

The market rally is forging ahead and making fools of the doubters, despite the Tuesday pullback. The S&P 500 is up 20% since late October and 7.5% so far this year as of Monday’s close.

The good times keep rolling. The S&P 500 continues to make new highs and closed last week up 7.7% YTD. Nine of the 11 S&P sectors are well into positive territory for the year so far.

As usual, the index is being led higher by technology, which is by far the largest sector. Technology stocks are up over 12% YTD. While no other stock sectors are up as much as the overall market, most of them are delivering very respectable returns for the year so far. The only down sectors are Real Estate and Utilities. But even these beleaguered sectors are only down 1.4% and 3.25% respectively YTD.

This week, we review earnings reports from Advance Auto Parts (AAP), Berkshire Hathaway (BRK/B), Dril-Quip (DRQ), Elanco Animal Health (ELAN), Fidelity National Information Services (FIS), Gannett (GCI), Macys (M), Six Flags Entertainment (SIX), Viatris (VTRS) and Warner Bros Discovery (WBD).

WHAT TO DO NOW: Remain bullish, but continue to be selective on the buy side. The market continues to act well, and we’re encouraged by the snapback seen in many leading stocks of late, as well as a fresh barrage of positive earnings reactions in recent days. In the Model Portfolio, we’re happy to own some very strong actors, and tonight we’re going add one new half-sized stake (5% of the portfolio) in Applovin (APP), while also restoring our Buy rating on Nutanix (NTNX), which reacted well to earnings today. Our cash position will be around 28%.

It’s amazing how much some of our stocks have moved over the last week while the average gain of our portfolio is almost EXACTLY the same as that of the S&P 600 Small Cap Index.

Measuring Wednesday to Thursday early morning, shares of Remitly (RELY) are up 18%, Docebo (DCBO) is up 17% and Enovix (ENVX) is down 12%. Taking a simple average of our positions’ change over the last five sessions, though, the average change is 0.7%. That compares to a 0.8% gain in the S&P 600!

All is well with the market so far this year. The S&P is up 6.7% in less than two months. It’s a continuation of the 23% rally that started at the end of October and a more than 40% rise from the bear market low in late 2022.

But recent news may jeopardize the current market dynamic. January CPI was higher than expected and indicated that the current problematic inflation isn’t dead yet. Sure, it’s way down from the 9.1% peak in mid-2022 to 3.1%, but it has been rising for several months and is still well above the Fed’s 2% target.

We’ve all seen the data: Nvidia (NVDA) shares have jumped 59% in this still-young (37 trading days) year and 615% since touching $112 in October 2022. The 171x gain in the past decade – turning a $4,500 purchase into $800,000 – makes Nvidia’s price increase among the largest in market history over such a brief period, and certainly the largest for a company that began its 10-year run at a not-small $11.6 billion market value.

Small caps traded slightly lower the first two sessions of this holiday-shortened week while the S&P 500 and Nasdaq wobbled a bit but enjoyed a bigger pop than small caps today.

Nothing high level that’s a huge priority at the moment, other than that today we saw a significant “risk on” rally as Nvidia’s (NVDA) monster quarter restoked the AI enthusiasm flame that was beginning to dim earlier in the week.

Given all the earnings reports, and another due up early tomorrow (DCBO) I’m jumping right into our stocks for short and sweet updates.

It was a relatively quiet week for Explorer stocks as a financial media frenzy focused an unprecedented amount of attention on the expected financials of one stock – Nvidia (NDVA).

Nvidia has quickly become the third most valuable company in the United States.

As of last Friday, about 30% of the S&P 500’s gain for the year was due to Nvidia, according to an S&P analyst.

The market has had a good year so far. The rally that began at the end of October is still in force. But things are getting wobbly.


Last week’s inflation number came in higher than expected. CPI was 3.1% for January and that’s down a lot from the high of 9.1% in June of 2022. But it’s still above the Fed’s target rate of 2%. And inflation has stopped going down even with interest rates at the highest level in decades. That’s a problem.

In what has been a basically good market this year, investors just got a dose of bad news. Inflation isn’t going down enough, even with the current high rates. That makes the rate cut “Holy Grail” far less likely anytime soon.

The Fed will have to at least keep interest rates at a very high level to prevent inflation from reigniting. But at some point, the Fed will need to lower interest rates in order to keep the recovery alive. But they can’t, at least to an impactful degree. Historically, inflation tends to come right back when the Fed takes its foot off the gas.

Our WBA calls are worthless and due to expire. As a result, let’s buy back our short calls and immediately sell more call premium.

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.

We currently own the JPM January 17, 2025, 100 call LEAPS contract at $46.20. You must own LEAPS in order to use this strategy.

I will be exiting the American Express (AXP) trade today. I will discuss the trade in greater detail in our upcoming weekly issue.

I will be holding a subscriber-only webinar tomorrow at 12 p.m. ET. Click here to sign up. No worries if you can’t make it, we archive everything here at Cabot. You can find all the archived recordings here.

I’m buying back our short calls in AAPL and TXN and immediately selling more calls. Additionally, I plan to add a brand-new stock to the portfolio over the coming days. Stay tuned.

I’m going to buy back our short calls in EEM and EFA and immediately sell more call premium going out to the December 1, 2023, expiration cycle. I plan to roll our remaining October 20, 2023 call positions in SPY, TIP and VNQ tomorrow.

With the October 20, 2023, expiration cycle coming to a close in a few days, it’s time to start buying back the rest of our October 20, 2023 short calls and selling more premium going out 30 to 60 days. I’ll be sending out numerous trade alerts for the various portfolios over the next few days, including a few new names in our active portfolios.

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.