We remained on the sidelines last week and by the looks of what is on the earnings calendar this week, we might be sitting on the sidelines again this week. No worries, our patient approach continues to serve us well. I say this because this earnings cycle has been one of the most volatile in years. More active earnings traders have struggled while those that have remained patient, waiting for real opportunities to arise, have been rewarded. And while my goal is to make 8 to 10 trades per earnings season, sometimes we just don’t get there and that’s OK. Successful trading has always been about quality, not quantity. Who cares how many trades one places, if success isn’t a direct byproduct?

Nvidia (NVDA) is due to announce this week and has the chance to significantly move the market over the short-term. We have two positions that are both bearish-leaning at the moment, so a short-term move to the downside would be welcome. However, if that doesn’t occur, no worries, as long as we the market doesn’t rally significantly higher. If it does, we will need to adjust or close out our SPY iron condor. Shortly after the NVDA announcement I intend to add several new positions to the mix.

We locked in a 17.1% gain in DKNG at expiration on Friday. The gain in DKNG and GDX pushed our total return to all-time highs at 143.5%. I plan to continue our wheel-based approach in DKNG by selling puts early last week. As for GDX, we bought back our calls and sold more calls the week before (2/12).

Hopefully, we have the opportunity to add to our total with two trades due to expire at the end of this week. We sold puts in XLU and KO in mid-January and as it stands, both look to expire out-of-the-money. Of course, we need to see how the week plays out, but given our income wheel approach, with the exception of a crash, we are perfectly fine with whatever occurs. Our ultimate goal is to bring in options premium in a continual basis.

As traders grappled with the moves in the bond market (expectations of rate cuts coming soon have faded), the market moved violently day-to-day, though big picture the indexes were mixed. By week’s end the S&P 500 had fallen 0.35%, the Dow was mostly unchanged, and the Nasdaq had lost 1%.

As traders grappled with the moves in the bond market (expectations of rate cuts coming soon have faded), the market moved violently day-to-day, though big picture the indexes were mixed. By week’s end the S&P 500 had fallen 0.35%, the Dow was mostly unchanged, and the Nasdaq had lost 1%.

The latest earnings reports were mixed but generally encouraging.

The S&P 500 exceeding the 5,000 mark reminds us that while our dynamic economy leads to disruptions in companies and markets, and Fed interest rate moves can impact the market, it is revenue and earnings growth that really drives stock returns over time. Companies normally become more profitable over time, and that’s what leads to higher stock prices. Staying in the market and leveraging the power of compounding returns is important to successful investing.

So today, we expand our portfolio by starting a small position in a brand new asset class.

A year from now we could be in a raging bull market or bounding toward a recession. Interest rates could be high or much lower. And we have to see what will happen with these wars and who will be elected president in November. Nobody knows the answers to these questions.

But a year from now there is at least one thing we can bank on: The population is already older than ever before in history and will continue to get still older at warp speed. Between 2011 and 2029, about 76 million boomers born in the U.S. between 1946 and 1964 will turn 65. That’s about 3.6 million per year. There will be tens of millions more older people running around in the years ahead.

The inescapable fact about older people is that they spend much more than any other segment of the population on healthcare. That’s just how we’re built. Boomers control about 70% of this nation’s wealth and the aging population has enormous implications for businesses and markets.

Certain healthcare companies and stocks are positioned ahead of a megatrend and a massive wave of spending. In this issue, I highlight two “BUY”-rated portfolio healthcare stocks. If you don’t own them already, they are well worth considering.

Despite some under-the-surface concerns, it was another strong week for the market as the S&P 500 gained 1.5%, the Dow was mostly unchanged and the Nasdaq added 1%.

Housekeeping: Just a heads up that next week’s issue will come after the close on Tuesday, February 20 due to the Presidents’ Day holiday.

The story remains the same as it has for a couple of weeks now: The trends of the indexes remain up and the action of leading stocks (especially leading growth stocks) remains excellent, but most of the market has just sat around since the start of the year (though we are seeing some broadening out of buying pressures the past couple of days) and, for some of the tech/AI names, the action is definitely short-term frothy. We’re leaving our Market Monitor at a level 7, holding our winners but also a little cash, while focusing on fresher names (both inside and outside of tech) that are emerging with some power.

This week’s list has a bunch of fresh ideas in a variety of areas—dips in many of them would be tempting. For our Top Pick we’re going to go with a zinger in the AI space—a liquid name with a great, leading position that’s just gotten going on earnings. If you enter, use a loose leash, as the stock is bound to be super volatile.

Stocks keep hitting new highs, riding a stronger-than-expected earnings season and multiple red-hot trends (artificial intelligence, semiconductors, weight-loss drugs), all of which we have heavy exposure to in the Stock of the Week portfolio. It’s possible stocks in those sectors are due for a pullback, but tech as a whole is clearly thriving at the moment, so today we split the difference by adding a dividend-paying technology stock that’s been a long-time favorite of Cabot Dividend Investor Chief Analyst Tom Hutchinson.

I plan on ramping up the positions in our actively managed portfolios (Buffett and Growth/Value) over the next expiration cycle. My goal is to have a minimum of 5 positions per portfolio, but I’m not going to race to get there. I’ll continue to pounce when the opportunity presents itself. We’ve taken our time adding positions since initiating our portfolio and, so far, our patience has served us well.

Volatility continues to remain low as a result of the seemingly never-ending market rally. While all of our bullish positions in our other Cabot Options Institute services (Fundamentals, Income Trader, Earnings Trader) continue to thrive in this environment, anything with a bearish-leaning or hedge-based trade has struggled. But as I’ve stated numerous times in the past, that’s why we always want to diversify our strategies when approaching the market.

The plan remains simple. I continue to focus on balancing out the overall deltas of our current positions by adding a trade, most likely a bull put spread. I’ll be concentrating on sector ETFs and individual stocks as the major indices continue to see low levels of volatility.

Consumer prices in April showed inflation pressures remain high but backed off a bit. The consumer price index came in at 4.9%, slightly less than the 5% from March. Not a big deal but a step in the right direction as the below graph highlights.

Electric vehicle (EV) prices and profits are also going down for the most part. Tesla reported $2.5 billion of profits in the first quarter, down from $3.7 billion in the last three months of last year, and $3.3 billion in the first quarter of 2022.

Cannabis stocks rose sharply in early May on news that Congress is getting serious again about allowing banks to serve cannabis companies. The Senate banking committee will hold hearings on the favorable bank reform May 11.

The reform bill, called the Secure and Fair Enforcement (SAFE) Banking Act, was recently refiled by a bipartisan group of lawmakers in both branches of Congress. The co-sponsors were: Sens. Jeff Merkley (D-OR) and Steve Daines (R-MT), and Reps. David Joyce (R-OH) and Earl Blumenauer (D-OR).

This past weekend I attended the company’s annual shareholder meeting in person in Omaha. While the online viewing of Warren and Charlie’s commentary produces many tangible take-aways (which can be found on a wide variety of media outlets), it was the intangibles – obtained only from being there in person – that provided the incremental value.

As I mentioned in the last update, last week was a big week for the market. Important earnings, the Fed meeting, and the jobs report all had implications for the near-term direction of the market. The market survived and came away about even for the week. Now what?

Earnings were generally positive. The Fed did what was expected by raising 0.25%, and the statements afterward were ambiguous. The employment report was solid as many more jobs were created. Also, the last two months of jobs figures were lowered. The readjustment quelled inflation fears while the current jobs report indicated no recession in sight.

We discuss earnings from Adient (ADNT), ESAB (ESAB), Frontier Group Holdings (ULCC), Gannett (GCI), Ironwood Pharmaceuticals (IRWD), Janus Henderson Group (JHG), Kaman Corporation (KAMN), Molson Coors (TAP) and Western Union (WU).

A big week in the market has started badly. The failure of First Republic Bank (FRC) and fears of further fallout have sent stocks reeling ahead of more news the market may not like later this week.


The market moved on from the banking crisis. But it is rearing its ugly head again. There is now worry of more bank failures and an escalating crisis. More small regional banks could fail. But the situation is still unlikely to devolve into a major crisis, at least at this point.

This week, I wanted to highlight two quick things before getting into our regular update.

First, I’ve talked a lot about the biotech bear market and how it’s lasted longer than most previous biotech bear markets.

I just stumbled upon the below chart on Twitter which shows the length of the current biotech bear market versus the previous three.

As you can see, the bear market is getting a little long in the tooth.

This is a very important week that should determine the near-term direction of the market.


While the market digests the JPMorgan (JPM) buyout of First Republic Bank (FRC), the largest bank failure since the financial crisis, it looks ahead to a packed week. There’s a Fed meeting on Wednesday, where the Central Bank is widely expected to raise the Fed Funds rate by 0.25%. But the Chairman’s comments afterward will probably have a bigger impact on the market.

This week, seven companies reported earnings, including Capital One Financial (COF), General Electric (GE), Mattel (MAT), M/I Homes (MHO), Newell Brands (NWL), Polaris (PII) and Xerox Holdings (XRX). Newell reported this morning, so our comments are brief.

WHAT TO DO NOW: Remain cautious. The market and (especially) growth stocks have come under further pressure this week, and while many names are still setting up well, more are hitting air pockets. Overall, we think the general environment is mostly unchanged (tedious, up and down, etc.), but we are making a couple of small defensive moves today—we’ll sell one-third of our stakes in both Academy Sports (ASO) and Wingstop (WING), taking some profits and holding the cash (around 63% of the portfolio) for now. Details below.

As discussed on our weekly call today, I will be taking a position in Home Depot (HD). HD is due to announce earnings before the opening bell Tuesday (February 21). The stock is currently trading for 315.41. The reason I am placing the trade today is due to the market being closed on Monday, so this is the only time we can get in prior to the announcement. The earnings date is also the same for WMT, but as I explained on our call earlier today, I do not want to have two open earnings-based positions carry through the long weekend so I will not be trading WMT for this earnings cycle.

Exscientia (EXAI) is down about 10% this morning.

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.

As a reminder, this trade is for the CVX position in the Growth/Value Portfolio, not the CVX position that resides in our Dogs of the Dow Portfolio. I have a CVX position in both, as both portfolios are looked at as separate entities to keep things mechanical and consistent. However, for most subscribers, it is unnecessary to have double exposure. Just understand that I will be treating each CVX position as two separate entities. I hope this clears up any confusion.

I am buying back out short calls today and immediately selling more premium. The underlying stock position is up 7.06% since we initiated the position. Our CSCO position is up 19.42% over the same time frame.

NerdWallet (NRDS): Sell A Quarter and Hold the Rest

Moving Conduent (CNDT) to Sell

It’s expiration week and we need to roll a few of our positions. Expect to see several trade alerts over the next few days as we buy back our short calls and immediately sell more short calls (collecting premium) for the March expiration cycle.

SPY continues to rally and has now pushed through our short 415 call strike. As a result, I am going to take off the trade. I will be following up this trade with a few opening trades as we need to start looking towards March expiration for premium-selling opportunities.

Earnings Updates: ABNB, NRDS, TIXT, SEDG, UDMY

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.