August has been a slog for investors, as an uneven earnings season has given the sellers the full buckets they needed to throw a bit of cold water on the 2023 bull market. While high-flying growth stocks have certainly taken it on the chin, especially on earnings, the overall market pullback has been fairly modest, and probably healthy in the long run. With prices lower than they were in July, particularly among growth stocks, today we add a big name with a revolutionary product that many people already use regularly – though only about half the country has access to it. That will soon change, which is why Cabot Growth Investor’s Mike Cintolo is high on it.

The market rally in 2023 and recent pullback have left the All-Weather portfolio up a respectable 8.5%, with the Vanguard Total Stock Market ETF (VTI) continuing to do the heavy lifting, up 27.5%.

Nothing has changed from last expiration cycle, both bond funds (TLT and IEF) and the commodity fund (DBC) continue to lag behind, but that is the yin-yang protective nature of the All-Weather portfolio just doing its job. That being said, all of our positions are outperforming their respective ETF benchmarks, once again showing the power of using a poor man’s covered call approach.

Not too much to report this week as we simply allow our August positions to erode in value, which as options premium sellers is a good thing. We enter earnings season this week, so I fully expect to add several positions to the portfolio over the coming weeks. We currently have six open position with the intent of getting up between eight and 10.

We finally had the opportunity to take off our August 18, 2023 462/466 bear call spread for a decent 7.8% gain. Certainly nothing to write home about, but given the rise in the SPY since we opened our 462/466 bear call spread back on June 30, we were more than happy to lock in a profitable trade. We were in the trade for 37 days.

Several days after we locked in our profit in the SPY 462/466 bear call spread we were given the opportunity to lock in another winner, a 9.9% profit in our SPY September 15, 470/475 bear call spread. We were in the trade for 7 days.

As earnings season winds down, we are greeted with several nice trading opportunities in some big names including Home Depot (HD), Target (TGT), Cisco Systems (CSCO) and Walmart (WMT).

After a slow earnings week last week things pick back up on the earning front this week. My hope is that we are able to make two, if not three trades this week with the focus being on the four trades in the Weekly Watchlist below. As we discussed on our subscriber call last week (out last call for this earnings cycle), we have several quality opportunities in front of us. Now let’s hope Mr. Market offers us some decent probabilities and premium so that we can take on a few short-term earnings trades.

Stop me if you have heard this before, but inflation data and the moves in the bond market continue to be the major drivers of the market’s moves. And last week traders weren’t thrilled with these inputs as the S&P 500 fell by 1%, the Dow gained 0.5% and the Nasdaq continued its recent weakness with a further decline of 2%.

The overall market has started to pull back, and the encouraging news is that, from a top-down perspective, things are under control--our trend-following indicators are positive and the retreat to this point has shown little, if any, abnormal qualities. The problem, though, is growth stocks, as many of them haven’t just fallen, but decisively cracked their intermediate-term uptrends, often after quarterly results--that’s not something we can ignore, and so we’ve been selling and have quickly built up a big (50%-ish) cash position. Near-term, we expect this correction to go further, but the odds continue to favor a resumption of the bull trend once the selling finishes up.

In tonight’s issue, we write a lot about this earnings season and some slightly different tactics we may use going ahead, aiming to still give us long-term upside but better protect ourselves against trends that don’t persist. We also review a bunch of new names and offer plenty of commentary about the good, bad and ugly of the stocks we own and are watching.

In this week’s Cabot Explorer issue, Novo Nordisk (NVO) stock surges on the back of positive data on its best-selling weight loss drug Wegovy, U.S.-China tensions rise again, and we add one of the signature growth stocks on the market to our portfolio. Enjoy!

The markets traded sideways through most of April. But since then, the choppiness has returned—along with worries about the uncertainty regarding the debt ceiling, the expiration of the immigration-limiting legislation, and ongoing debate about the possibility of a recession.

Yet, economically speaking, the trends are still healthy. Manufacturing has held up, employment continues to rise, and job openings are still underutilized (as you can tell if you’ve been in a restaurant lately!).

The market looks great right now. Inflation is falling fast, the Fed is just about done hiking rates, and there is no recession in sight. It looks like we will get through the steepest rate-hike cycle in decades without much economic pain.

But nothing is certain. Inflation could rise again. The Fed may keep rates high for longer than the market expects. The economy may turn south in the quarters ahead. There could be more trouble with bank failures or the war in Ukraine. S&P earnings have been contracting for three straight quarters.

We’ll see if the market can add to the 30% rally from the low, or if it turns south again. A reasonable argument can be made for either scenario. Instead of trying to guess the possible short-term gyrations, let’s look to investments that should be longer-term winners no matter what.

In this issue, I highlight a stock that diversifies the portfolio into the consumer space. The company operates in an incredible niche market that has provided earnings growth for 31 consecutive years and enabled the stock to outperform the market in every measurable period over the last 15 years. The company is positioned for strong growth in the years ahead and the stock has a long track record of delivering stellar returns in all kinds of markets.

Today, I’m recommending a company that has been on my watch list for several months. It looks too compelling to ignore.

Key points:

• No debt and 37% of its market cap in cash.
• Cheap valuation. Good dividend yield and share buyback program.
• High insider ownership.

All the details are inside this month’s Issue. Enjoy!

It was a relatively quiet day on Wall Street, with the major indexes staying mostly range bound. At day’s end, the Dow up 19 points and the Nasdaq up 27 points

We had a one year old in 2013 and took a trip to Nevis, an island in the West Indies where my grandfather had retired in the 1980s.

Is this a bear market rally or a new bull market?

That’s the question investors are grappling with. Is this the end of the crummy market or is this 17% rally off the lows just a head fake? Let’s examine each possibility.

Over the past three years, special purpose acquisition companies, or SPACs, went from an obscure way for sketchy companies to become publicly traded to an extraordinarily trendy way for sketchy companies to become publicly traded.

It’s starting to feel like a bull market. But let’s not bank on it just yet.

Inflation is moderating, and many see an end to the Fed tightening cycle by early next year. The Fed part is probably true. The Central Bank will likely raise the Fed Funds rate to around 3.5% and then stop. Higher than that would probably plunge the country and the world into a deeper recession. I doubt this Fed will have the belly to do that.

As I touched on last week, the market has been on tear!
It’s unclear whether this is a “bear market rally” or the start of a new bull market.

In the last six weeks, metals and mining stocks have been on the comeback trail along with the broad equity market. Short-covering activity has unquestionably served as a major catalyst behind the recent gains in the metals, but now that much of those short positions have been covered, it’s time to ask the question many investors have been dreading, namely: “What—if anything—will fuel the next leg of the recovery?”

This note includes our review of earnings from Berkshire Hathaway (BRK/B), Elanco Animal Health (ELAN), ESAB Corporation (ESAB), TreeHouse Foods (THS), Viatris (VTRS), Vodafone (VOD) and ZimVie (ZIMV).

There were no ratings changes or price target changes this week.

Kronos Worldwide (KRO) is now up 18% from our initial entry point as of Thursday, which means it’s time to take some profit off the table per the rules of our trading discipline.

Bitcoin is rallying today up 4.61% when compared to the broader market which is flat. The Nasdaq is up slightly, with small caps leading today’s modest rally.

We are moving shares of Altria (MO) from Buy to Sell. While the shares remain 21% below our $66 price target, the risk/return trade-off has become unfavorable.

We’ve held on to a small stake in Endava (DAVA) hoping the market would turn around before our gain dwindled too much.

CS Disco (LAW) reported Q1 numbers that surpassed expectations. Revenue rose 63.5% to $34.5 million (beating by $3.8 million), while adjusted EPS of -$0.15 beat by $0.06.

Today we are adding Arista Networks (ANET) to our Watchlist.

There’s no doubt about it: this market stinks.


Every major index has been hitting new lows, the news is terrible (raging inflation and soaring interest rates), and investors have grown increasingly fearful, as the profits of 2021 have quickly evaporated in the bear market of 2022.

Xometry (XMTR) delivered quarterly results ahead of expectations this morning.

We launched Cabot SX Crypto Advisor during a time of extreme global uncertainty.

Earnings Updates: Shockwave (SWAV) Remains a HOLD. TaskUs (TASK) Moves to SELL.

Based on market conditions and to limit losses, I suggest you sell the following two Explorer recommendations:

We’re going to take profits on Archaea Energy (LFG) today, after shares tripped our stop-loss of ‘under 20’ with a close at 19.80 Monday. We should book a profit of around 8%. There is more support for LFG below here, particularly at 18.70, but with sectors broadly breaking support levels yesterday, we prefer to get out with a profit now.

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.