Despite some weakness early in the week, the indexes bounced back in a big way, closing at new all-time highs. For the week the S&P 500 gained 1%, the Dow added 1.07%, and the Nasdaq soared higher by 2%.

While every situation is different, a pretty good rule of thumb for investors is to look for stocks of well-run companies with solid fundamentals in a sector that has been out of favor. Then check that the stock is in an uptrend with clear catalysts that support a further rise in its stock price.

Today, we add a stock that checks all those boxes.

In the January issue of Cabot Early Opportunities, we take a look at updates within our portfolio then dive into five stocks from markets ranging from defense to cybersecurity to the blooming IT infrastructure market.

As always, there’s something for everybody!

The three leading indexes again made a run at new highs last week as the S&P 500 gained 1.75%, the Dow rallied 0.7% and the Nasdaq added 2.88%.

After a sour first week of the year, leading stocks snapped back very nicely last week, and when you add in the other encouraging intermediate-term vibes (trends of the indexes and most sectors are up), we remain bullish overall. That said, we’re also keeping our feet on the ground: The current advance is now about two and a half months old, earnings season is here and the broad market was a notable laggard last week, all of which means further volatility and crosscurrents are possible, even likely. We’ll leave our Market Monitor at a level 7.

This week’s list is another where’s there’s something for everyone. Our Top Pick is one of many medical-related stocks that’s showing strength thanks to a new product, great Q4 guidance and expectations of accelerating growth this year.

The market is in a holding pattern, but holding patterns aren’t bad things when they come on the heels of the kind of run-up we saw in November and the first three weeks of December. Besides, many of the stocks in our Stock of the Week portfolio aren’t in a holding pattern, with 10 of them (!) trading at either 52-week or all-time highs. So today, we add another high-upside position that should benefit from another banner year for the travel industry. Mike Cintolo recently recommended the stock to his Cabot Top Ten Trader audience.

We have three positions due to expire this week, all of which are profitable positions. As a result, I’ll be selling more premium early next week to replace our expiring positions and hopefully adding another one to two positions to give us eight total income-producing positions in our portfolio. Otherwise, we will continue to allow our wheel-based approach to work its magic. So far, we’ve managed to reap a total return of 114.7% since initiating our Income Trader service for Cabot Wealth readers 19 months ago.

We are completely flat at the moment.

Volatility continues to float between a fairly tight range of 12 to 14 which makes it challenging to sell premium, at least in the major indices. If we see a push to 15 or higher, I’ll most likely add a premium selling play in SPY. Until then, my focus is sector ETFs and individual stocks. I’m leaning more towards the former at the moment with earnings season upon us. But I’m definitely looking to sell premium shortly after a few key announcements in some of the big blue-chip stocks over the next few weeks in Microsoft (MFST), Visa (V) and a few others.

As I discussed in our first subscriber-only webinar of 2024, the week after the initial big banks announce is slow. Yes, there are a few more big banks that announced prior to the opening bell (GS, MS) this morning, but, as we talked about, we didn’t really want to hold an earnings-based position over the long weekend.

With expiration upon us, we have several trades to place during the holiday-shortened week. All but one position in our two “passive” portfolios (All-Weather, Yale Endowment) have short calls that need to be rolled. Additionally, there is a good chance that I will sell my 2025 LEAPS and extend my duration through buying new 2026 LEAPS. I like to do this when my LEAPS have 10-12 months’ worth of life. It is possible that I will wait one more expiration cycle before making the transition, but as always, I’ll let everyone know in my numerous trade alerts this week. It’s going to be a busy expiration cycle and a great opportunity to add some new positions.

The three leading indexes again made a run at new highs last week as the S&P 500 gained 1.75%, the Dow rallied 0.7% and the Nasdaq added 2.88%.

The three leading indexes again made a run at new highs last week as the S&P 500 gained 1.75%, the Dow rallied 0.7% and the Nasdaq added 2.88%.

Last week marked the fourth straight week of declines for the S&P 500 and was the worst week so far this year, down nearly 3%.

The problem is inflation, go figure. The Federal Reserve’s preferred measure of inflation, the Personal Expenditures Price Index (PCE), was much higher than expected in January and showed inflation moving higher, not lower, to start the year.

This week, we comment on earnings from Elanco Animal Health (ELAN), Gannett (GCI), Kaman Corporation (KAMN) and Warner Bros Discovery (WBD).

We also include the Catalyst Report and a summary of the March edition of the Cabot Turnaround Letter, which was published on Wednesday.

We’re in the thick of our portfolio’s earnings season so today’s update will be short and sweet. My focus this week is on providing updates on positions as they report and laying out expectations for companies that have not yet reported.

While our reports have been mostly good so far the market is still swinging with the interest rate breezes. I had thought that influence might diminish but with Fed members making hawkish public comments and expectations for more hikes after March both the 10-year and 2-year yield have become troublesome.

We’ll continue our mini-series on the Tech Hype Cycle next week, as we thought some brief comments on the war in Ukraine might be timely roughly one year after Russia’s invasion.

Clearly, the war is an awful situation for all involved, certainly on a humanitarian level but also on an economic level. While the conflict has degenerated into a World War I-style artillery battle between two entrenched forces, we anticipate that spring will bring more mobile hostilities.

Part of our risk management process is to identify risks, then gauge whether those risks are increasing, or decreasing. This simple directional metric avoids the impossible task of predicting the future yet provides an effective way to understand risks.

The impressive early year rally has ended. The S&P ended its third straight down week on Friday and is sharply lower to start this week.


The “soft landing” optimism of January has given way to concern about a hawkish Fed and rising long-term rates. Inflation had been coming down, and the Fed appeared to be chilling out while the economy remained on solid footing. But a continued strong economy, a rise in January inflation, and a more belligerent Fed are spoiling the party.

This week, I want to use my introduction to spend some time diving into Liberated Syndication (LSYN) because I spoke to the CEO, Brad Tirpak, for about an hour last week.


To review, Liberated Syndication stopped trading publicly in late 2021 because it was so behind on its historical financials, that FINRA/SEC revoked its ability to trade. So since late 2021, the stock has been private.

This week, we comment on earnings from Conduent (CNDT), Ironwood Pharmaceuticals (IRWD), Organon (OGN), Toshiba (TOSYY) and TreeHouse Foods (THS).

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

WHAT TO DO NOW: Continue to lean bullish. The market has chopped around for the past couple of weeks, but while we’re always on the lookout for yellow flags, none have appeared yet—all of our key market timing indicators are positive and most stocks are doing pretty well. We’re not close to fully bullish, but we’ll put a bit more money to work tonight by filling out our position in Uber (UBER), which will leave us with around 35% in cash. We’re also going to place Shift4 (FOUR) on Hold after today’s selling. Details below.

The market has continued to hold up surprisingly well in the face of less-than-great inflation reports.

We’re in a period where it appears the pros of slightly stronger economic growth outweigh the cons of a slower-than-desired inflation retreat. Earnings season is helping to return focus to company specifics, for the time being.

Our earnings season really heats up next week as we should have at least six positions report. It’s going to be an intense week, so buckle up!

Retail sales rose 3% in January, the Census Bureau said yesterday, reversing November and December’s declines. Manufacturing output increased by 1%, following a steep 1.8% decline in December. Positive but slow growth right now might be just what we need to avoid more interest rate increases by the Fed.

With the Russell 2000 ETF (IWM) trading for 184.87, I want to place a short-term iron condor going out 30 days. My intent is to take off the trade well before the December 16, 2022, expiration date.

We currently own the EEM January 19, 2024, 30 call LEAPS contract at $11.50. You must own LEAPS in order to use this strategy.

Shares of Treace Medical (TMCI) have sold off this morning following the publishing of a short report from Culper Research.

I will be exiting the Home Depot (HD) trade today. I will discuss the trade in greater detail in our upcoming subscriber-exclusive webinar, at noon ET this Friday.

The market is pulling in today, though given the rally last week, the action among the indexes is still normal. On the market timing front, the Cabot Tides green light is still in effect, though our Cabot Trend Lines remain bearish, as does our Aggression Index. The Two-Second Indicator did record “only” 35 new lows on Friday, so we’ll see if that continues.

As discussed in our weekly issue last week, and on our weekly call, I will be taking a position in Walmart (WMT) today.

Election results set up some key potential catalysts for our cannabis stocks, both near term and further down the road.


Above all, a Republican takeover of control of the House of Representatives increases the odds that we will see very near-term passage of favorable banking reform, known as the Secure and Fair Enforcement Act, or SAFE Banking Act.

This morning’s “less bad” CPI report (what a difference 0.2% makes!) is just what the market needed to get off its knees.

Given that we are in profitable territory with 16 days left until November expiration, I’ve decided to take off all exposure and reestablish trades for December expiration after the Fed event today.

We currently own the TLT January 19, 2024, 85 call LEAPS contract at $29.10. You must own LEAPS in order to use this strategy.

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.