After a non-stop run for two-plus months, we’re finally seeing a bit of sloppiness in the Nasdaq and some growth stocks that have had huge runs— combining the recent action with the fact that the advance has been going on 12 weeks and earnings season is upon us, and further stumbles are certainly possible in growth. All that said, it’s been more about rotation than outright selling, as the broad market has actually picked up steam, and none of this alters our big-picture bullish thoughts, as the top-down evidence remains overwhelmingly positive. Put it together, and we’re still bullish, but we’ll pull in our Market Monitor a notch to a level 7 to reflect some of the near-term wobbles.

This week’s list reflects the market action, with more non-tech names, be it cyclical plays, drug firms or even a bull market-related business. Our Top Pick is a bull market stock that has just come alive after a long bottoming effort.

The bull market keeps rolling along, though both the Fed and a busy, star-studded earnings slate could provide a couple speed bumps this week. Still, I wouldn’t bet against this market right now, at least not in the intermediate or long term, so today we’re adding another high-upside pick. It’s a mid-cap software stock that’s trading well below its post-IPO highs, but that has built up a full head of steam the last two-plus months. It’s a new addition from Cabot Early Opportunities Chief Analyst Tyler Laundon.

Details inside.

As I stated on our subscriber-only call last week, expect to see several trades this week. On the call I went over several trades, bullish, bearish and neutral, and I expect to add at least one of each over the next week or so.

We need to ramp up positions and now that July expiration has passed, we start selling premium going out roughly 30 to 60 days, but given the low-volatility environment that has taken over the market, I would expect to sell premium going out towards a longer duration trade. Just know that even though we place a trade going out further in duration, say 60 days, it doesn’t mean that we are going to be in a trade for that long. As we discussed on our call, our average hold time per trade duration is 20.5 days, regardless of the duration of the trade at the point of entry.

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.

It’s been just over a week since the big banks announced earnings and during that time we’ve been fortunate to make an 8.0% return in JPM, and more recently, 6.4% in IBM using the Earnings Trader strategy.

Earnings announcements really ramp up this week with a long list of well-known blue-chip stocks due to announce. As I stated on our call last Friday, I hope to make at least two to three trades this week. During each earnings cycle we aim to make somewhere between 8 to 12 trades and given the opportunities ahead I don’t see any reason why we wouldn’t fall within our typical range.

Sector and index rotation was the name of the game last week as money raced out of tech to end the week and into sectors that had not been participating in the market’s advance recently. That being said, this is not necessarily a bad sign as the S&P 500 gained 0.7%, the Dow rallied 2.08% and the Nasdaq lost 0.6%.

Sector and index rotation was the name of the game last week as money raced out of tech to end the week and into sectors that had not been participating in the market’s advance recently. That being said, this is not necessarily a bad sign as the S&P 500 gained 0.7%, the Dow rallied 2.08% and the Nasdaq lost 0.6%.

In the July Issue of Cabot Early Opportunities, we take a quick look at earnings expectations for each of our positions. And we dig into five opportunities spanning AI, HVAC services, retail, real estate and quantum computing.

This may just be our most diverse group of stocks ever.

Enjoy!

Ahead of the long holiday weekend the market had yet another good week. The S&P 500 gained 1.75%, the Dow rallied 1.5%, and the Nasdaq rose another 1.9%.

This week in an attempt to diversify the portfolio we are adding an energy play.

There’s no doubt the market continues to keep investors on their toes, and some further discomfort in the short term is certainly possible after the recent run. It’s also a decent bet that earnings season, which is now ramping up, will present a few potholes. But those are the trees—if you look at the forest, all of the bullish factors are still in place, whether it’s the uptrend in the major indexes, the solid action among most leading stocks, the sluggishness of defensive stocks and, more recently, the strength of the broad market (including five straight days of 2-to-1 NYSE breadth). We remain bullish and expect higher prices—we’ll leave our Market Monitor at a level 8.

This week’s list has a very broad mix of names, including everything from giant blue chips to more speculative small caps. Our Top Pick is in the right area (big-cap growth) and is trying to emerge from a tight consolidation. Earnings are out in a couple of weeks, so start small and build if the breakout works.

The new bull market went into hyperdrive last week, fueled by lower-than-expected inflation and an encouraging start to earnings season. With another interest rate hike and weak Q2 earnings expectations looming in the back half of this month and beyond, there could be some speed bumps ahead. But for now, the good times are rolling, and that means taking more big swings. This week, we do so in a small-cap, Canada-based rare earths producer that is a brand new recommendation from Cabot Explorer Chief Analyst Carl Delfeld.

We enter the week with several trading opportunities on the horizon. My plan is to add two trades this week, an iron condor and the potential for another bear call spread.

Implied volatility ranks, otherwise known as IV ranks, are low across the board. IV rank is where the current implied volatility (IV) sits in comparison to the last 12 months of readings. This makes sense given the recent surge in the market, right? And while macro conditions seem to be improving, with more indicators showing a bullish bias and numerous other bullish signals, we have to remember, we place trades going out 45 to 60 days in Quant Trader with the average trade lasting 20.5 days.

This note includes our review of earnings from Mattel (MAT) and Nokia (NOK). Next week starts the deluge, with Vodafone (VOD), Dril-Quip (DRQ), General Electric (GE), Xerox (XRX), Polaris Industries (PII), Holcim (HCMLY), Kraft Heinz (KHC), M/I Homes (MHO), Lamb Weston (LW), Janus Henderson Group (JHG), Shell (SHEL) and Newell Brands (NWL) reporting.

There were no ratings or price target changes this week.

The major indexes had another good day, today—both the Dow and Nasdaq rose 162 points.

This is the million-dollar question: With incoming data anything but straightforward the Fed is trying to thread the needle ever so gently to guide the economy down to a soft landing.

The market has been strong over the last month. In fact, the S&P 500 has rebounded more than 9% from the June lows. Is this rally for real?

I doubt it.



There was the normal bounce off the lows and now investors can focus on earnings. The bad inflation report is out of the way and the Fed has tipped its hand that there will be a 0.75% rate hike later this month, which is better than the 1% hike that was expected after the 9.1% June inflation report.

Earnings season is coming!
We didn’t have much news this week, but our companies will start reporting in late July and August.

Other than Citigroup’s earnings release and Barrick Gold’s release of preliminary sales data, no other company produced meaningful news. Perhaps this is to be expected when investors are putting immense weight on company-specific results and their respective outlooks.

The beauty of dividends is that cash keeps rolling in no matter how bad the market stinks.

The market has rebounded off the lows of June, for now. There is a window where investors can focus on earnings. The bad 9.1% inflation number came out last week and the Fed appears to have tipped its hand on a 0.75% rate hike later this month. That’s an improvement form speculation of a 1.0% hike after the inflation report.

A recent addition to the Undiscovered Portfolio is the Renaissance IPO ETF (IPO).

The name and the ticker are pretty much dead giveaways as to the nature of this fund. It tracks the largest, most liquid, newly listed U.S. IPOs.

It’s no secret that gold is, historically, the world’s most widely preferred safe-haven asset in times of economic turmoil. Gold’s polar opposite is copper, which typically benefits the most when the global economy is strong.

By looking at both metals—separately and together—we can get a “snap shot” view of the market’s expectations for the economy’s near-term (six-to-12-month) performance. We can also get some potentially useful trading clues for both metals—and even for silver—when we look at the copper-to-gold ratio.

This note includes our review of earnings from Wells Fargo (WFC) and our ratings change from yesterday for Credit Suisse (CS) from Buy to Sell.

Next week, Mattel (MAT) and Nokia (NOK) report earnings, followed by the earnings deluge which starts the week of July 25^th when 13 companies report.

The Cabot Turnaround Letter is traveling this week, so we will not be including a podcast in this update.

On March 22, we purchased a conservative position in Sigma Lithium (SGML), a Canadian company that develops, through its subsidiary Sigma Mineracao S.A., hard-rock lithium deposits in the Americas.

The good news today is that the broad market is looking healthier than it has in many months, thanks to a resurgence by growth stocks.
The bad news is that we still can’t say that cannabis stocks are truly in an uptrend yet—but they might be!

Despite the market falling dramatically the past month, the Cabot Profit Booster portfolio had a great March expiration cycle as three trades will close for full profits, while one is at a loss.

Clif Droke, Chief Analyst for Cabot’s SX Gold & Metals Advisor, advised me that he had traded out of our latest recommendation, the iPath Series B Bloomberg Tin Subindex Total Return ETN (JJT).

Joann Stores (JOAN) reported Q4 results after the bell yesterday that beat on the bottom line and missed on the top line. Revenue was down 13% to $735.3 million (missing by $17 million) while adjusted EPS of $1.16 beat by $0.12. Adjusted EBITDA of $88.9 million was below consensus of $94.2 million and adjusted gross margin of 48.9% was in line (up 1.9% from the year-ago quarter).

We are moving shares of Baker Hughes (BKR) to a Sell. The shares have surged above our previously raised 31 price target (originally 23). Using optimistic yet realistic assumptions, we are hard-pressed to justify a BKR share price meaningfully above the current price.

Cactus (WHD) moves to sell today. After a quick trip to north of 60, shares of WHD have been somewhat volatile and downside risks seems to be creeping in as investors weigh the relatively high valuation and potential for slower ramp up of onshore U.S. production even in the face of soaring oil prices.

In my issue two weeks ago, the day before Russia invaded Ukraine, I told you that my favorite three cannabis stocks for buying (not that there was any hurry) were Cresco Labs (CRLBF) for its value and chart; Curaleaf (CURLF) for its size and speed of growth; and Verano (VRNOF) for its speed of growth and chart.



Those are still my favorites. Not much has changed. And while so many of the world’s economic connections have been affected by the actions in Ukraine, the elements of the U.S. cannabis economy, which is heavily domestic, seem fairly immune.

Procept Biorobotics (PRCT) reported official Q4 results this morning (preliminary results came out on January 11). Revenue of $10.1 million (up 216%) was at the high end of the preliminary range, as was full-year revenue (up 347% to $34.5 million).

The market was down earlier today but, after testing the January lows yet again, the major indexes are perking up somewhat, with the Dow up 440 points and the Nasdaq up 230.

Today, we are recommending an Indian ETF whose five largest holdings are: Reliance Industries Ltd Shs Dematerialised (RELIANCE.B, 9.07% of assets); Infosys Ltd (INFY.BO, 8.58%); Housing Development Finance Corp Ltd (HDFC.BO, 6.54%); (ICICI Bank Ltd (ICICIBANK. 5.46%); and Tata Consultancy Services Ltd (TCS.BO, 4.58%). We are also taking profits in a previous idea.

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.