The good times for the bulls continued as the S&P 500 rose for a fifth consecutive week, its longest such streak since November 2021, and it was also the best week for the S&P 500 since March.

The market has been following a very bullish script for the past few weeks, doing just about everything it “needed” to do -- our Cabot Tides have turned positive, as has our Two-Second Indicator, while our Aggression Index tells us growth-ier names are in favor. And more important, individual names are now breaking out (not failing) and following through on the upside. Obviously, the market has come a long way in a short time, and we are starting to see a few strong names wobble a bit, so we’re not going whole hog right here, but we are continuing with our plan of steadily putting money to work -- tonight, we’re filling out our position in one current holding and starting a new half-sized position in a new name. That should leave us with around 40% in cash.

Elsewhere in tonight’s issue, we go over all our new stocks and our watch list, write about one strong sector outside of growth and dive into some solid longer-term positive signs for the market as a whole.

Yesterday’s Federal Reserve meeting and Tuesday’s consumer price index data showed inflation and interest rate hikes are pausing but remains well above what markets would like.

Overall inflation is cooling in large part because energy prices have fallen sharply — a huge relief for consumers. But the core gauge, which excludes energy and food prices, shows inflation is still too high.

Nevertheless, investors welcomed the news as it spurred markets and confidence that the market performance might advance beyond big tech and the artificial intelligence (AI) story.

Despite all the current issues, the market is doing gangbusters.

The S&P 500 is up over 12% YTD. And the year isn’t even half over. The index has also rallied more than 20% from the bear market low in October. That’s the definition of a bull market.

But things aren’t as rosy as they seem. This is the thinnest rally I’ve ever seen. Just ten stocks account for the entire YTD rise in the S&P 500 index. The other 490 stocks have collectively gone nowhere.

Today, I’m recommending a biotech that is well capitalized and has an approved drug that is growing 100%.

Key points about the company:

• Over $300MM of cash on its balance sheet
• Key drug to hit $500MM in annual sales in 2023
• Obscure tax law points to an acquisition offer in November or December.

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

Ahead of a big week for the market, the S&P 500, Dow and Nasdaq all rose marginally last week.

If you had written a script of what you wanted to see from the market a few weeks back, most of that has come true; simply put, the evidence continues to improve. Now, of course, things aren’t perfect—we’re seeing a bit of rotation out there that could continue to play out, and there are some potential leaders that are getting wobbly; throw in the fact people are feeling more comfortable and we’re not advising anyone to go hog wild. But with the evidence continuing to impress, we’ll bump our Market Monitor up another notch to a level 7.

This week’s list is heavy on medical and infrastructure-type names, with a smattering of other areas, too. Our Top Pick won’t be the fastest horse but should be a straight-on play on what is looking like a building, construction and infrastructure boom.

We’ve entered a new bull market, and boy are those fun words to type!

Sure, the rally has been thin, led by seven or eight mega-cap tech stocks and, more recently, artificial intelligence. And yes, with inflation and another Fed meeting on the docket this week, a huge bucket of cold water could be thrown in the market’s face in the next 48 hours. But as of this moment, stocks are the healthiest they’ve been since 2021, and that means we’re keeping our foot on the growth pedal. So today we’re adding another potential technology leader that’s a very recent recommendation from Mike Cintolo in Cabot Growth Investor.

Nothing new here. I’m going to keep it fairly short this week. We are firmly in the doldrums of earnings season and will be for the next several weeks.

Of course, what might seem like a slow crawl to the next earnings season, it’s only a month away. JPMorgan (JPM) and Wells Fargo (WFC) are just a couple of the notable names that report earnings July 14.

The June 16, 2023 expiration cycle is finally upon us and we have several positions due to expire. However, since we are using an income wheel approach, we will remain mechanical and allow our KO short put, GDX short and PFE 40 covered call to carry through expiration. Unless any drastic price action occurs prior to expiration, I will look to sell more options premium in each of the aforementioned stocks at the onset of next week.

Other than handling a few trades at expiration, nothing has changed: I continue to search for positions to add to the mix. I would love to see a pullback, preferably a close of the numerous price gaps below in the major indices, before placing a trade.

Before we get started, our next Live Analyst Briefing with Q&A is scheduled for June 15, 2023, at 12 p.m. ET, where we will be discussing the options market, giving a detailed look at open positions, strategies used, and will have a follow-up with live questions and answers.

The market sits at a pivotal juncture with volatility sitting at the lowest levels in a few years. The week ahead is littered with market-moving events. But Wednesday is the day that offers up the most intriguing and potentially market-moving event. Wednesday at 2:00 ET we have the Fed’s rate decision, FOMC statement, and economic projections followed by Chairman Jerome Powell speaking at 2:30. I would expect to see price action vacillate widely immediately after the event. I’ll be paying close attention to see how the VIX reacts prior to and after the statement.

With the market rallying as of late, the All-Weather portfolio is now up 6.0%, with the Vanguard Total Stock Market ETF (VTI) and SPDR GLD Shares ETF (GLD) doing the heavy lifting, up 19.3% and 6.5%, respectively.


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.



Only one of our positions has been rolled so far. We still have four June 16, 2023 calls due to expire this week, As a result, expect to see quite a few alerts come through early in the week as we roll our positions and sell more premium going out 30 to 60 days.

After trading as low as 1139 on May 12 the S&P 600 Small Cap Index has staged a modest recovery, crossing back above the January and February lows of around 1230 two weeks ago.

There’s reason to be heartened this week, as the market and Greentech continue to improve, extending on the hints of a turnaround we discussed in our issue last week. In fact, Greentech is looking better than the broader market right now, as it sits over the 20-day and 40-day moving averages (the S&P 500 and Nasdaq Tech 100 are below their 40-day) and we’re seeing Greentech’s 40-day line start to make a turn higher.

Things are looking better. The market stopped going down. Now it’s going sideways. That’s better.

Stocks have moved above the bear market precipice as investors have apparently priced in the fact that inflation will be persistent and the Fed will have to raise rates aggressively this year. That’s a major bummer to factor in. The market appears to have absorbed that shock, at least for now.

Our weekly note usually follows the theme of “what’s on our minds.” The topics range from discussions about individual stocks to the overall market to inflation and other matters. We usually have a lot on our minds, so it’s mostly a matter of picking one.

The Undiscovered Portfolio within ETF Strategist is delivering exactly the kind of return we’d hope to see in a down market, with three of four funds showing gains as of Thursday.

As you see in the table below, even the fourth fund has only a small loss of less than 2%. That’s well ahead of recent performance in the major indexes.

Hurricane season is upon us, a time of year that normally sees increased storm activity along America’s coasts. If a prediction by a major investment bank is correct, the U.S and other major countries will also experience an “economic hurricane” at some point in the coming months.

The “hurricane” prediction made headlines last week after JPMorgan Chase (JPM) CEO Jamie Dimon used the term to describe what he sees as a precarious balancing act the Federal Reserve must perform in trying to control inflation by raising interest rates without pushing the economy into recession.

We reiterate our bullish call that the highest-quality names have likely bottomed. This thesis stems from the fundamental financial performance of the names we have been tracking. As these companies have delivered high-quality earnings reports, their positive financial results have de-risked the process of investing in these great businesses. They are worth owning today, to hold well into the future, making it a compelling time to invest in areas like cloud computing, enterprise and SME software, semiconductors, financial technology, and cryptocurrency.

This week’s Friday Update includes comments on earnings from Duluth Holdings (DLTH). Two stocks are at or near our price targets and we summarize the podcast.

Explorer positions had an up week as the S&P 500 has begun a turnaround from bear market territory and is now down “only” about 13% for the year. This means it is up around 6% since hitting its recent low on May 19 as the Fed has softened its tone and China tries to get growth going.

Electric vehicle sales are set to more than triple to just over 20 million in 2025, according to BloombergNEF. This is up from a previous estimate of 15 million.

Things have gotten a little better in the market. The situation has gone from bad to crummy.

The S&P 500 rallied from the lows to move away from the bear market precipice. The index also closed the week in positive territory for the first time in eight weeks and actually managed to eke out a very slight gain for the month of May. It’s not much. But it beats spiraling downhill.



For the first time in ages, inflation numbers were better than expected. There were also some positive numbers for the economy today. There seems to be a feeling that stocks have priced in the current negative environment for now. And there is some faint hope that inflation will recede all by itself and therefore the Fed won’t have to drive the economy into recession.

This week, there wasn’t a whole lot of news. Last week, I closed out my BBX Capital (BBX) recommendation for a profit of +172%.

Is the market improving? There are some reasons to believe it might be.
The broader S&P 500 index has come right up to the precipice of a bear market, down 20% or more from the high on a closing basis. It closed down 19% and actually crossed the 20% on an intraday basis. The market had done a similar thing twice in the last bull market but stayed above the line and went on to rally from there.

Onsemi (ON) closed beneath 60 yesterday. That triggers our tiered sell-stop for the position, of sell half ‘near 60.’

A couple of quick notes are in order. We exited our trading position in U.S. Steel (X) today after our stop-loss at 23.50 was violated on an intraday basis.

This gold miner is expected to grow earnings by more than 37% this year.

As we continue to balance the pursuit of opportunities with the desire to preserve capital/current gains we’re intently focused on stocks that are breaking down to new lows. Today we’ll take partial profits on another name and step completely away from one stock.

This company has had its issues, but analysts and insiders are betting on a turnaround. Earnings will be announced February 1, and the stock is trading at a P/E of just 9.15. The shares offer a current annual dividend yield of 4.80%, paid quarterly.

Both Sprout Social (SPT) and Kornit Digital (KRNT) have made fresh lows today so we’re going to take partial profits by selling one quarter of each position.

In the past 30 days, four analysts have raised their EPS estimates for this Real Estate Investment Trust. The shares have a current annual dividend yield of 2.72%, paid quarterly.

In a recent update, I used the phrase, “It’s always darkest before the dawn,” as I reasoned that the marijuana sector’s dreadful performance in 2021 was likely the prelude to a well-deserved rebound in 2022. And the news is still pretty dark.

This eco-friendly water management company is expected to post annual earnings growth of 49.5% over the next five years.

Analysts expect this money remittance company to grow earnings by more than 20% next year.

The market meltdown is continuing today, and while it’s being led by growth stocks, the selling is spreading out to every nook and cranny of the market—as of 12:30 eastern, the Dow is down 511 points while the Nasdaq is cratering another 350 points.

This global electrical equipment maker is expected to grow earnings by more than 14% annually, over the next five years. It pays a current dividend yield of 2.28%, paid annually.

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.