Stocks are rolling again, and the panic that engulfed the market just two weeks ago has vanished, replaced by the longest market winning streak all year. Nearly all our Stock of the Week stocks are up in the past week, several of them by double digits, led by AST SpaceMobile (ASTS) – up more than 80% (!) since we last wrote. So, let’s strike while the iron is hot and add another upstart growth stock to the portfolio in the form of a mid-cap just recommended by Carl Delfeld in his Cabot Explorer advisory.

Details inside.

Change is constant and inevitable, but one thing that hasn’t changed for the past three centuries: America’s love affair with coffee. Coffee is a commodity that has been prized since the 18^th century in America. Many believe it is the fuel that drives America’s economic engine.

So today, we add a fast-growing American coffee company to the Explorer portfolio. It might not be the name you’re expecting...

The explosive growth of artificial intelligence, electric cars, and manufacturing is causing an explosion in the demand for electricity in this country.

After nearly two decades of stagnant growth, electricity demand is expected to soar in the years ahead. This year alone, electricity demand is growing 81% more than it did last year. Electricity demand is expected to grow at nearly twice the past rate for the rest of this decade.

The new demand transforms certain previously stodgy and boring utility stocks into growth investments.

In this issue I highlight one of the very best and fastest-growing electricity producers in the country. This company is in an ideal position to benefit from the increasing electricity demand from data centers and other sources. AI may be the cutting edge of technological innovation. But it doesn’t work without electricity. While most investors are running around chasing the same AI stocks, we can reap the rewards of the tremendous new opportunity from Thomas Edison’s invention.

Before I dive into this morning’s Cabot Profit Booster covered call idea, I wanted to mention that the Mintz family will be traveling to Europe this Wednesday through the following Wednesday.

That means we will simply let our August positions expire this Friday, and we will not be sending a new trade next week. However, I will address August positions if needed when I return.

Moving on …

Before I dive into this morning’s Cabot Options Trader Weekly Update, I wanted to bring to your attention that the Mintz family will be traveling to Europe this Wednesday through the following Wednesday.

And while I will be offline in terms of trading, answering questions, and the Daily Order Flow list, I will keep a distant eye on our positions and if we need to act, I will send instructions.

Before I dive into this morning’s Cabot Options Trader Weekly Update, I wanted to bring to your attention that the Mintz family will be traveling to Europe this Wednesday through the following Wednesday.

And while I will be offline in terms of trading, answering questions, and the Daily Order Flow list, I will keep a distant eye on our positions and if we need to act, I will send instructions.

After a very sharp dip for most major indexes and especially the Nasdaq, a bounce is underway. When looking at individual stocks, we’re fairly encouraged with what we see, which is a good sign that there will be leadership to sink our teeth into once this correction finishes up. But, at this point, we can’t conclude the correction is over, with most major indexes and key measures still buried under resistance (such as 50-day lines) and with formerly strong areas (chips, etc.) still looking suspect. We’re not opposed to a nibble here or there, but we continue to think remaining patient will pay off. We’ll move our Market Monitor up to a level 5, but still think keeping plenty of cash on the sideline makes sense.

This week’s list is chock-full of names that are acting great, most of which have recently shown big-volume strength after earnings, though we prefer to aim for dips in many cases. Our Top Pick is a familiar name that staged a classic earnings-induced breakout last week.

Calm has been restored to the stock market, at least for now. A week ago – when the VIX briefly spiked as high as 66(!) – it was the opposite of calm. So even if stocks don’t suddenly go straight back up again, this is a welcome return to pre-August form. With that in mind, we have no new sells or downgrades (several of our stocks are hitting new highs!), and we add a very normal-looking growth stock that’s been sailing along just fine despite the many headwinds of the last few weeks. It’s a recent recommendation from Mike Cintolo in Cabot Top Ten Trader.

Details inside.

The market’s pullback went over the falls late last week and on Monday, with panicky trading leading to a huge gap down--and possibly a short-term low. Overall, the evidence tells us the intermediate-term trend is down and that, even if we have bottomed, plenty of repair work will be needed. That said, the longer-term evidence is still positive and, frankly, we’re not having trouble filling up our watch list for potential fresh leaders. Long story short, we remain cautious here and hold lots of cash, but we’re not sticking our head in the sand, either, and could have a couple of small moves if the market continues to stabilize.

I have to admit, a couple of weeks ago, on our Cabot Street Check podcast, Chris Preston, host and Chief Analyst for Cabot Value Investor, and I discussed the possibility of a recession and I commented that I thought recession fears were mostly over.

Well, I’m going to reconsider that (a bit) after Monday’s 1,000+ point loss in the Dow. Last week’s jobs report came in at 114,000 jobs—considerably less than the 185,000 expected—spooking the markets and causing economic gurus to once again bring up the possibility of the dreaded “R” word. Additionally, the unemployment rate edged up to 4.3% and manufacturing and construction spending were also less than expected, furthering economic worries.

The dramatic decline in the stock market of the last couple weeks has pushed two of our positions through our stops. And because of that we are going to exit those positions …

Please note, S&P 500 futures are indicated lower by approximately 4.5% this morning, while the Nasdaq is looking down 5.5%. I go into some of the reasons why below.

Regardless of the reasons, I do not expect to buy or sell many positions today. Instead, as I’ve said for weeks as the trading action had become murkier, I continue to preach patience.

Moving on to our Week in Review …

Cabot Options Institute Income Trader is focused exclusively on the creating consistent income through a variety of options selling strategies. Whether you have questions about selling puts, covered strangles, jade lizards or our income wheel approach, Andy is more than happy to help you steepen your learning curve in this live event.

The November rally is alive and well. After the market soared to the highest weekly returns of the year in the first week of the month, the rally sputtered last week. But it has come alive again after a good inflation report.

Last week, the Hong Kong Monetary Authority hosted hundreds of bankers including the heads of 90 global financial institutions to discuss the current status and future outlook for the world’s capital markets. Despite the increasingly tight grip that China has on Hong Kong, which is leading to a diminished relevance for the island state, notables including Morgan Stanley CEO James Gorman and Goldman Sachs head David Solomon participated in the in-person meetings. The draw: Hong Kong remains an important gatekeeper for access to mainland China’s financial markets.

This has been a very positive month so far in the market. Will the rally continue?

After three straight down months for the S&P 500 where the index dipped into correction territory (down 10% from the high), the index has turned around and is up over 5% so far in November. The catalyst is the perception that interest rates have peaked.

This week’s note includes our comments on earnings from Adient (ADNT), Ammo, Inc (POWW), Bayer AG (BAYRY), Berkshire Hathaway (BRK/B), Brookfield Re (BNRE), Elanco Animal Health (ELAN), Goodyear Tire & Rubber (GT), L.B. Foster (FSTR), TreeHouse Foods (THS) and Warner Bros Discovery (WBD). The earnings deluge continues next week.

WHAT TO DO NOW: Remain cautious overall, but if you have a ton of cash, it’s OK to put a little to work. Our market timing indicators have improved, but by our eye, haven’t yet turned up, and while last week was a great first step for the market, there hasn’t been much follow through or expansion of new highs. To be clear, we’re optimistic and a few good days could make all the difference, but right here we’re still going slow and seeing if the market and leadership can truly emerge. In the Model Portfolio, we’ll buy another half of DraftKings (DKNG), leaving us with around 65% in cash. We’re also restoring our Buy rating on Uber (UBER) for those that don’t own any given the stock’s very powerful snapback. If things kick into gear, we’ll likely put money to work quickly, but right now we’re going slow and letting the rally prove itself. Details below.

The broad market has traded higher for eight straight sessions, the longest run since 2021. The Nasdaq is up for nine sessions.

The S&P Small Cap Index is up in five of the last nine sessions, but the last four have been down. What the ...?!!

Big picture, this isn’t great for the broad market as we want a more broad-based rally. And in theory it’s not great for us.

But the reality is our portfolio isn’t diversified along the same lines as the small-cap index. We’re not overweight financials, energy and health care (we have little to no exposure to all three) and instead are focused on pure-play opportunities that aren’t expected to trade in lockstep with the small-cap index.

With a 29% average annual rate of return over 13 years at Fidelity, Peter Lynch certainly earned his status as a legendary investor.

Recently, Lynch revealed that indexes like the S&P 500 and Nasdaq have been propped up by a handful of high-flying tech stocks. “The truth is, we’ve been in a stealth bear market for a long while now if you don’t count those 10 or so darling mega-caps,” Lynch remarked with his trademark sarcasm.

That may soon be coming to an end.

Cannabis stocks are up 10%-20% since I encouraged you to buy them on weakness in my last update on October 31.

That’s a nice short-term gain – much better than the 5.5% S&P 500 advance over the same time.
I hope you participated.

Traders may want to book profits. The stocks are strong this morning on news that Ohio voters approved a referendum on recreational use legalization. This rally could reverse. However, cannabis stocks are still down sharply from the rescheduling rally last summer. I suggest continuing to stay long in the midst of the overall weakness since that rescheduling news rally last summer.

What a difference a week can make. Just one week ago, the market was reeling. The S&P 500 concluded the third straight month of declines after falling into correction territory a few days earlier. But then stocks turned around and had the best week of the year with the S&P 500 rallying nearly 6% for the week.

While the S&P 500, Nasdaq 100 and Russell 200 are down on the day, the Dow is up on the day. As a result, our Dogs and Small Dogs portfolios are benefitting greatly, as seven out of the ten positions are up on the day.


We still have a few July positions to roll forward and several underlying stocks that have recently pushed above their short call strikes. So, the plan is to buy back our short calls, where needed, and immediately sell more premium. I’m going to start today with AMGN which is one of the few positions with July 21, 2023, calls.

WHAT TO DO NOW: The market is quiet today, and while the possibility of a near-term pullback in growth stocks is growing, the big-picture evidence remains in good shape. Today, though, we are pulling the plug on Inspire Medical (INSP), which hasn’t been able to get going and today is cracking support on big volume. We’ll sell our half position and hold the cash.

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.

While the S&P 500, Nasdaq 100 and Russell 200 are down on the day, the Dow is up on the day. As a result, our Dogs and Small Dogs portfolios are benefitting greatly, as seven out of the ten positions are up on the day.


We still have a few July positions to roll forward and several underlying stocks that have recently pushed above their short call strikes. So, the plan is to buy back our short calls, where needed, and immediately sell more premium. I’m going to start today with AMGN which is one of the few positions with July 21, 2023, calls.

I will be exiting the International Business Machines (IBM) trade today. I will discuss the trade in greater detail in our subscriber-exclusive webinar at noon ET tomorrow, July 21.

Sell Terex (TEX)

We jumped into TEX four months ago on March 3, literally just a few days before the stock took a dive that ended up sending it 30% lower over the next few weeks. We held on and those of you that added shares along the way should have a much better return than the roughly 7% gain showing in our official portfolio. With so many growthier stocks acting well and TEX up over 50% from its April lows, I’m going to take the modest gain and boot it from our portfolio today. To be clear, I don’t hate TEX and think the bullish thesis I presented back in March still holds true. That said, the reality is there are just too many other stocks with better upside potential right now and I want to maintain concentration in those while taking down our market exposure ever so slightly through next week’s Fed meeting (our next Issue is due out in two weeks). SELL

Remember, as is always the case, risk management is the key to long-term success when using high-probability option strategies. It’s the only way to truly allow the law of large numbers to work in your favor. Don’t get greedy and enamored by the quick nature of these trades. Stay disciplined!

With the July 21, 2023, expiration cycle coming to a close in nine days, it’s time to start buying back our 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 the potential for a few more new trades in our active portfolios.

With the July Issue of Cabot Early Opportunities coming out this Wednesday and the market acting extremely strong, we’re going to be opportunistic and lock in a few modest gains today.

With the July 21, 2023, expiration cycle coming to a close in nine days, it’s time to start buying back our 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 the potential for a few more new trades in our active portfolios.

With the July 21, 2023, expiration cycle coming to a close in nine days, it’s time to start buying back our 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 the potential for a few more new trades 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.