As we enter the last and one of the slowest trading weeks of the year, I wanted to wish everyone a happy, prosperous and exciting year ahead!

Since all of our current open positions are in great shape with several weeks left until the January 19 expiration cycle, I’m going to keep it short today. While I might add one new position this week, I don’t really plan on making any other trades.

Despite an ugly day for the market on Wednesday, the buyers again bought the dip, and as of the close Friday, the S&P 500 is now approximately 1% from all-time highs. For the week, the S&P 500 gained 0.57%, and the Dow and Nasdaq rallied approximately 0.2%.

I hope everyone had a joyous and memorable holiday season!

As we move into the last trading week of the year, it should be no surprise that there is little in the way of earnings announcements this week. As a result, let’s take a moment to appreciate the time spent with loved ones, the delicious meals shared, and the special traditions celebrated. Wishing you all a happy and prosperous New Year!

Despite an ugly day for the market on Wednesday, the buyers again bought the dip, and as of the close Friday, the S&P 500 is now approximately 1% from all-time highs. For the week, the S&P 500 gained 0.57%, and the Dow and Nasdaq rallied approximately 0.2%.

In our final Explorer issue of 2023, we add a new artificial intelligence play whose revenues are on track to expand by nearly 50% this year, and whose share price has more than tripled YTD - and yet trades well below its July highs. Back on the upswing, it’s worth buying now.

Enjoy, and happy holidays!

In the December Issue of Cabot Early Opportunities, we continue to lean into the market’s bullish trend. We dig into five modest growth companies with exposure to AI, social media/advertising, footwear, HR software and the exciting world of road paving.

As always, there’s something for everybody!

In terms of the market, with the Federal Reserve signaling that the interest rate hiking cycle is over and that there may even be rate cuts in 2024 the bulls cheered this news as the S&P 500 gained 2.5% last week, the Dow rallied 2.9%, and the Nasdaq added 2.85%.

The market has had seven consecutive higher weeks. And the positive momentum should continue into the new year.

The S&P 500 is up 12.5% in the last seven weeks and 23% for 2023. But those returns are deceiving. Until the market rally broadened out recently, only seven large technology company stocks accounted for nearly all the gains.

Many stocks are still in a bear market. In fact, certain more interest rate-sensitive stocks recently fell to the lowest level since the trough of the pandemic market more than three years ago, although they have rebounded with falling interest rates recently.

Buying stocks in the throes of a bear market has proven to be a winning strategy over time. Buying stocks after they have already started to climb out of the lows has proven to be a winning strategy sooner.

The timing may be perfect for a rare opportunity to generate much higher returns than can normally be expected from stocks of defensive companies. In this issue, I highlight a defensive stock that had been a stellar performer before inflation and rising interest rates took hold. It is priced near the lowest valuations in its history and has recently been generating upward momentum.

Note: We will have a Movers & Shakers update later this week, but just a heads up, there will be no Top Ten issue next week (December 26), as it’s the second of our two weeks off all year. For those that celebrate, we hope you have a very, very Merry Christmas!

On to the market, things can always change, but after two years of rate hikes and hawkishness, it looks like the Fed is finally “officially” off the market’s back. Interest rates have been the tail that’s wagged the market for two years, so that’s obviously good, and it’s no surprise that stocks (especially the broad market) catapulted on that news. With all of that said, it’s important to keep your feet on the ground; we’re not expecting a major dip, but it’s certainly possible stocks could wobble a bit or we could see some rotation now that the good news is out. Even so, the rubber-meets-the-road evidence is strongly positive; we’re moving up our Market Monitor to a level 8.

This week’s list is a balanced one, with some growth, some cheap names coming back from the depths, some cyclicals and more. Our Top Pick is a Bull Market stock that should do very well if this advance continues. Try to buy on dips.

In our final issue of 2023, we try and capitalize on the red-hot, Fed-fueled (for once) market by adding a growth play that is resurgent in a post-Covid world. It’s a brand-new recommendation from Mike Cintolo in Cabot Top Ten Trader. It should be a nice addition to a Stock of the Week portfolio that has plenty of shiny objects as we close out the year. Enjoy – and happy holidays!

We currently have one open position, a SPY bear call spread due to expire in the January 19, 2024, expiration cycle. My hope is to add one, if not two more trades for the January 31, 2024, expiration cycle. The challenge is finding a highly liquid ETF or stock with a decent IV rank, and therefore, at least in most cases, some decent options premium. If premium just isn’t there, we might have to extend the duration on the trade, possibly going out to the February 16, 2024, expiration cycle. Either way, I intend on adding an iron condor, and hopefully a bull put spread to the mix. Of course, a slight pullback would make things easier.

We allowed our PFE calls to expire worthless at expiration last Friday, locked in some decent premium and plan to sell more call premium early this week. Expect to see a trade alert either today or tomorrow.

We also allowed our DKNG puts to carry through expiration and as a result, per our income wheel approach, we were assigned shares of DKNG. Now that we are in the covered call phase of the income wheel approach in DKNG, like PFE, we plan to sell calls against our newly acquired shares today or tomorrow.

Additionally, I intend on introducing a new position in WFC, or another fairly low-priced big bank stock, by selling puts early this week. My hope is we get a short-term pullback before entering a new position.

Only three months ago, the financial community, including investors, analysts, economists, commentators and others, despaired that the Fed’s rate tightening program would produce a hard landing. The resulting combination, of higher interest rates and slowing/negative earnings and economic growth, is toxic for stock markets. Not surprisingly, the S&P 500 tumbled 27% from its highs to touch 3,500 in mid-October.



With the turn of the calendar and minimal discouraging economic news, the same financial community is now optimistic that we’re headed for a soft landing, or possibly no landing at all (economic growth remains positive). Worries that the Fed will inexorably keep raising interest rates have been replaced with the view that perhaps only 25 or 50 basis points of further increases are ahead. The outlook previously labeled as “toxic” has been transformed into “supportive” for equities. In the three short weeks since year’s end, the S&P has lifted 5%.

With today’s note, we offer more clarity on last week’s earnings report from Wells Fargo & Company (WFC) and provide updates on several recommended stocks.

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: Remain cautious but keep your eyes open. The evidence as a whole remains mostly negative, with the long-term trend down, the intermediate-term trend sideways and most stocks struggling to hold breakouts. But we are seeing legitimate strength in the broad market (our Two-Second Indicator remains bullish), which is a clear positive. We’re not going to rush things—we’re still holding around three-quarters in cash—but should the market firm up there could be a lot of opportunities. We have no changes tonight.

The S&P 600 Small Cap Index hit a 2022 closing low of 1,064 on September 26. On November 11 it moved back above its 200-day moving average line and closed at 1,232. That was a 16% move off the low.

The index then moved sideways for a few weeks before dropping back below both its 50- and 200-day moving average lines in mid-December. At that point, the index found support at 1,135, roughly 7% above the November lows.

A key theme of the Explorer is that there is always a bull market somewhere in the world. Today we offer a quick update on two – nuclear energy and electric vehicles.

All in all, the track record of nuclear energy is very good, especially when compared with the effects from comparable forms of energy.

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.

2023 is off to a good start! So far in January, the S&P 500 is up 4.2% and many of our micro-cap recommendations are also starting the year off on the right foot. We will see if the positive momentum can continue to close out the month. Earnings season is officially beginning for large-cap stocks.

Earnings season is here again. It’s that time of the quarter that has so often buoyed and reinvigorated the market. But this one is unusual because average earnings are expected to shrink.

Earnings boomed after the pandemic. But now there are much tougher year-over-year comparisons and a slowing economy. The average earnings for S&P 500 companies are expected to decline 3.9% from last year’s fourth quarter.

For many of your value stocks on the recommended list, the New Year’s rebound continues. Most of these shares were heavily over-sold late last year. Almost given up for dead, shares of Organon (OGN) have surged 38% since hitting an all-time low in mid-October. Similarly, shares of Barrick Gold (GOLD) are up over 43% since their nadir in November.

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

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

JPM is due to announce earnings Friday (10/14) prior to the opening bell. The stock is currently trading for 108.50.

With a new Issue of Cabot Early Opportunities dropping tomorrow, tax loss harvesting season in full swing and a market swinging between being up and down significantly day to day (not to mention intra-day), we’re slashing a few positions today.

Back on October 7 intraday, I recommended selling our entire position in Tilray Brands (TLRY) at 3.47; our entire position in ETFMG Alternative Harvest ETF (MJ) at 5.48; $7,000 of Curaleaf (CURLF) at 6.33; and $7,000 of Green Thumb (GTBIF) at 13.35.

Before I get started I want to make clear that in my last alert I am selling the 97 call in IEF, not the 97.5. I am selling the 97 call for roughly $0.92. Sorry for any confusion.

The October expiration cycle comes to an end next week so it’s time to roll a few of our call positions that have little to no time premium left. I’ll be rolling several more positions over the next few days.

Our cannabis stocks rose nicely yesterday on news that President Biden has asked the Justice Department (DOJ) and the Department of Health and Human Services (HHS) to review marijuana’s federal scheduling status.

Today I want to add some bearish exposure to mix for the November expiration cycle. We currently have an iron condor and a bull put spread on for November. Now it’s time to balance out our deltas by adding a bear call spread.

Montauk Renewables (MNTK) has closed below our sell-stop of “around 16.50” two consecutive days, and we’re recommending selling the position today.

The market has a solid start to the week, and there were some intriguing breadth measures during the pop. But our market timing indicators are still clearly negative, and more important, we’re actually seeing growth stocks either not participate much on the upside—or start to crack on today’s selling. This bulletin concerns Enphase (ENPH), which has been a port in the storm but is decisively breaking down today; we’re cutting bait here and holding the cash.

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.