Cannabis investors remain in a depressed state, despite several potentially bullish developments that could move stocks in the sector up significantly over the next year.

For much of the last two years, the white-hot semiconductor space was the industry group least likely to yield any meaningful turnaround candidates. But that dynamic changed following this summer’s tech sector sell-off, which brought many of the previously high-flying chip stocks back to earth (or at least further away from the firmament).

A new era has begun.

Most of the last two years have been an environment of rising and high interest rates and technology sector dominance. Now, we are entering a period of falling interest rates and a slowing economy. The new stage will bring different winners and losers.

The previously beleaguered interest rate-sensitive stocks and defensive stocks ignited and began to lead the overall market higher as technology pulled back. Since the summer, this new trend has been confirmed. And it is unlikely to be a mere short-term gyration but rather the beginning of a new environment that should last for some time.

In this issue, I highlight a great monthly income stock. The yield is massive, and it provides a high income in an uncertain market. The stock also can provide great price performance when the interest rate cycle goes its way. This point in the cycle provides a great opportunity to get a high income and total return on the right side of a pronounced market shift ahead.

Aided by a strong week for the market following the Federal Reserve interest rate cut, our three September covered calls (SFM, CPNG, SG) expired for profits ranging from 4.62% - 6.25%.

This week we turn our attention to the October expiration cycle via a covered call sale in a grocery delivery play that is breaking out to new highs.

Between the late-July/early-August market plunge and the relatively sharp post-Labor Day selloff, more than a few weak hands were likely kicked out of their positions. That paved the way for the past two weeks, which have been very encouraging, with the major indexes certainly improving and with many of those same leaders acting well, including a bunch that moved to new high ground. It’s all to the good, though a lot of the same flies in the ointment that we’ve written about are still out there, too. There’s definitely more good than bad out there, but we continue to pick our spots. We’ll leave our Market Monitor at a level 7 today.

This week’s list has something for everyone, from high-tech to infrastructure to stocks leveraged to asset prices. Our Top Pick is a potential liquid leader that, after a few months of choppy action, looks to have finally broken out on the upside.

Our national high-interest-rate nightmare is over, as the Fed has (finally) started slashing short-term rates in a big way, cutting by 50 basis points last week. The market likes the aggression, sending two of the three major indexes to new all-time highs. Is it the beginning of a new – and more egalitarian – leg of the bull market? Could be. Regardless, let’s strike while the iron is hot, adding shares of the leading company in one of the hottest new U.S. markets: sports betting. It’s a recent recommendation from Mike Cintolo in his Cabot Top Ten Trader advisory.

Details inside.

As I noted last week, because of family travel this Monday’s update is focused on our open positions. Let’s dive in …

As I noted last week, because of family travel this Monday’s update is focused on our open positions. Let’s dive in …

The market has been volatile in recent weeks, but the two biggest pieces of evidence to us have been the continued longer-term uptrend, as well as the buoyant action among many individual growth stocks, a few of which we own; while they can get tossed around, they have tended to bounce back strongly as soon as the pressure comes off the indexes. That said, there are still some flies in the ointment out there, with many broad growth measures just so-so we’re not cannonballing into the pool, but we are putting some more money to work tonight, averaging up in a current holding and adding one more potential leader.

Welcome to fall! The September Issue of Cabot Early Opportunities is heavy on software and industrial names, two areas of the market where I continue to see plenty of emerging opportunities and potential for share prices to benefit from lower rates.

Enjoy!

The market bounced back very nicely from the previous week’s losses, ahead of the big Federal Reserve announcement this week. By week’s end the S&P 500 had rallied 3.2%, the Dow added 1.9%, and the Nasdaq rebounded 4.9%.

The post-Labor Day selling was worrisome, suggesting the correction that began in mid-July (for the big-cap indexes) or March (for the broad market) was still ongoing. And, frankly, we continue to think that—from a top-down perspective, the market is still mostly working through a consolidation, and safer measures are outperforming (a sign big investors are hesitant). That said, there’s no doubt the action among individual stocks remains mostly encouraging: Last week saw tons of beefy action, with many roaring right back to (or out to) new high ground as soon as the pressure came off the indexes. We’re going to nudge our Market Monitor up a level 7, though our general advice (small new positions, hold some cash) still holds.

This week’s list again has many familiar names from a range of sectors, a sign that the underlying resilience is persisting and broadening a bit. Our Top Pick has a great-looking launching pad—as with many names, it hasn’t broken out yet, so either start small here and use a loose leash and/or aim to buy on a decisive breakout.

Most stocks produce lackluster returns. A recent study¹ by Hendrick Bessembinder, a professor at Arizona State University’s WP Carey School of Business, looked at U.S. stock market returns from 1926 to 2022. Nearly 60% of all stocks detracted from shareholder value during this time period. From 1926 to 2016, half of the total wealth created in the stock market was produced by only 90 stocks. By 2022, the number was only 72 stocks.

This week’s note includes our comments on earnings from Advance Auto Parts (AAP), Macy’s (M), Tyson Foods (TSN) and Vodafone (VOD). The earnings season is winding down, with Kohl’s (KSS) reporting next Tuesday (Nov. 21) and Duluth Holdings (DLTH) reporting on November 30.

Cabot Options Institute Quant Trader is focused exclusively on creating consistent returns using high-probability options strategies including bear call spreads, bull put spreads, iron condors and more. Whether you have questions about the strategies, or even about setting up your account, or how to make your own trades, Andy will answer all of your questions

There have been a lot of interesting developments in the market over the past week, with the lower-than-expected inflation reading and resulting speculation over the Fed’s next move right near the top of the list.

As it stands now, the market is saying no more Fed rate hikes, and even that we’ll see two cuts by next July.

Frankly, that seems a bit aggressive.

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.

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.

Okay, everyone, earnings season is finally upon us. I suspect we are in for an interesting earnings season, and to get us started, 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.

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.

After over a month of teetering back and forth, with no real opportunity to take profits, our QQQ bear call spread finally hit our stop loss. The trade marks our first loss since April 11. Our win ratio now stands at 31/36 trades, or 86.1%. And our total returns over the past year sit at over 130%.

WFC has provided us a nice source of income since we introduced the big bank to the portfolio. We’ve managed to bring in 18.98% of options premium/income in just under one year using the Income Wheel strategy while the stock itself has only made half of that return at 9.19%.

The bullish momentum continues to benefit all our portfolios. None of this should be a surprise as all of our portfolios are inherently long delta.

Our BITO June 30, 2023 puts are essentially worthless, so we can lock in some decent profits and immediately sell more puts.

SPY has pushed into another short-term overbought state coupled with a gap higher today. As a result, we are going to once again add a bear call spread to the mix.

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 Momentum 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 Momentum Trader features.