Okay, we are back at it after the holiday-shortened week.


The plan this week is to add another iron condor to the portfolio and potentially a bull put spread. Both positions, particularly the bull put spread, will help to balance out the deltas of our portfolio. Currently our open positions consist of two bear call spreads and as a result, the overall leaning is to the short side. While I’m not opposed to the slight bearish leaning, I would like to bring it back closer to a neutral state. Of course, if we manage to take off both of our bear call spreads for profits, which I think we all hope that will be the case, our current state of short deltas won’t be an issue.

The earnings doldrums are finally behind us as earnings season officially kicks off this week with several of the big banks due to announce towards the latter part of the week.

On Friday, prior to the opening bell, JPMorgan Chase (JPM), Wells Fargo (WFC) and Citigroup (C) are due to announce and will be the focus of our attention this week. I’ve discussed below a potential trade in JPM, but it wouldn’t surprise me if Citigroup and Wells Fargo enter the trading fray this week. That being said, we’ve had decent success with JPM since starting Earnings Trader, with 3 out of 3 winning trades for an average one-day return of 5.3%, so I will most likely stick to the script this week.

The market came under some pressure last week as the S&P 500 fell 1.16%, the Dow lost 2% and the Nasdaq declined by 1%. And while the market lost ground, I would note that it was a holiday-shortened week, and option volumes were down dramatically.

The market came under some pressure last week as the S&P 500 fell 1.16%, the Dow lost 2% and the Nasdaq declined by 1%. And while the market lost ground, I would note that it was a holiday-shortened week, and option volumes were down dramatically.

This month we’re digging into a recovering healthcare specialist that is both a self-help and an AI automation story.

After a few missteps in 2022, a significant acquisition and a new management team have the stock on the right track again.

Moreover, high healthcare utilization and a rapid acceleration in the company’s automation capabilities suggest strong revenue and profit margin growth throughout 2023 and into 2024. Enjoy!

I hope everyone had a wonderful Fourth of July! On Wall Street, the celebration continues, as stocks have stretched to new 2023 highs as we enter the second half of the year. Several of our stocks are hitting new 52-week or even all-time highs, as the bull market is no longer just a mega-cap tech or AI stocks phenomenon, with many sectors and subsectors now along for the ride. So today, we add a cyclical stock that has been acting like a growth stock – so much so that it caught the attention of Mike Cintolo, who recommended it to his Cabot Top Ten Trader readers.

Thank you for subscribing to the Cabot Value Investor. We hope you enjoy reading the July 2023 issue.

Almost like an annual rite of passage, major banks reported their Federal Reserve stress test results last week. All major banks passed, in that their capital levels were in excess of the minimum requirements under the Doomsday Scenario conditions outlined in the test assumptions. We’re not the biggest fans of these tests, for reasons outlined in our monthly letter.

Citigroup remains a riskier bank relative to other majors, but also has a higher return-potential share valuation, plus a 4.5% dividend yield to reward patient investors.

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.

Due to the holiday-shortened week I am going to keep it short today.

We added a new stock to the mix last week, the DKNG August 18, 2023, 22.5 puts. Our total now stands at six stocks, but I don’t plan on stopping there. This week I intend to add one more stock/ETF to the mix, but unlike our other positions, this position will be a short-term trade lasting roughly 30 to 60 days.

Due to the holiday-shortened week I am going to keep the report short this week.


I am excited to inform everyone that I will be adding educational videos to the mix, focusing on all assets of the service. So, if you have anything, and I mean anything, that you would like for me to discuss or explain in greater detail please do not hesitate to email me with your requests.

Due to the holiday-shortened week I am going to keep it short today.


Earnings are slim to none this week. However, that all changes next week when the big banks kick off. JPMorgan Chase (JPM), Citigroup (C), Wells Fargo (WFC) as well as several other big banks are due to report in a little over a week. Yes, that’s right, the wait is almost over…earnings season kicks off Friday, July 14 and I fully anticipate making one if not two trades that day.



Until then, we patiently wait.

Overall, the market’s action remains as close to pristine as you could hope for. Under the hood, there has been a touch of rotation, with some growth stocks chopping around while cyclical, construction and materials names perk up. All in all, we wouldn’t be surprised if growth continued to catch its breath, as the recent pullback was very brief, but that’s short-term nitpicking: While dips and potholes will come, the bottom line is that the vast majority of evidence is bullish, so you should be, too. We’ll bump our Market Monitor up to a level 8, and think adding exposure (ideally on dips) makes sense.

This week’s list reflects the broadening we’re seeing out there, with a few tech names but many others from other corners of the market. Our Top Pick is a long-term winner in the aerospace and defense field whose stock just broke out.

Legendary investor J.P. Morgan was often asked what the stock market would do. “It will fluctuate,” replied the taciturn Morgan.

The psychology of the markets can be puzzling. On Wednesday, the Federal Reserve, America’s Central Bank, raised its benchmark interest rates 75 basis points, the most since 1994. And the market liked it because it was way overdue and will hopefully help stem inflationary pressures in the economy. Will it slow growth, housing sales, consumer spending, and raise the carrying cost of U.S. debt? Yes, of course.

It’s happened. The market’s flirtation with the bear market precipice is over. It’s now a full-blown tawdry affair. The S&P 500 officially crossed into a bear market at Monday’s close (down 20% or more from the high on a closing basis).

That means the bull market that began in March of 2020 has ended after 2 years and 3 months. The culprit is inflation, and the Fed’s likely reaction to it. It had been hoped that inflation was peaking and would recede all by itself without the Fed having to be as aggressive as feared. But those hopes were dashed when May inflation came in at a worse-than-expected 8.6%, the highest yet and the worst in more than forty years.

The bull market lasted from March 2020 to June 13, 2022.


But now, we are officially in a bear market.

After the sharp selloff yesterday, the S&P 500 officially fell into bear market territory, down 20% or more from the high on a closing basis.
That means the bull market that began in March of 2020 has officially ended. The previous bull market lasted 11 years. This one lasted just under two years and three months. The culprit is inflation.

The speed and magnitude of changes in securities prices in the past 5½ months has been breathtaking. A quick recap: S&P500 down 20%, Nasdaq Composite down 31%, dozens of former mega-cap, hyper-growth tech stocks down 75%, investment-grade corporate bond prices down 16%, crude oil up 62% and the U.S. dollar index up 9%.

The Federal Reserve will meet on June 15, where it is expected they will raise interest rates by half of a percentage point for a consecutive time.

Rate hikes historically are seen as a way to fight inflation, as May consumer prices rose 8.6% y/y. This number was slightly higher than expected, resulting in price declines across global markets.

This week’s Friday Update includes comments on our companies. There were no ratings changes or earnings reports.

The major indexes are down modestly today after the European Central Bank laid out a plan to tighten policy. As of 215 pm, the Dow was down 157 points and the Nasdaq was off 129 points.

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.

This food producer is a good turnaround candidate, with double-digit earnings expected next year.

Earnings estimates have been boosted by 13 analysts for this automaker.

This medical diagnostics company has a habit of being underestimated by Wall Street. The company beat earnings estimates by $0.58 in the last quarter.

This energy company is forecast to grow at an annual rate of 56.96% over the next five years. Its current annual dividend yield is 1.89%, paid quarterly.

The earnings of this biotech company are forecasted to grow by 49.3% next year.

This financial services company reported record revenue, net income, and earnings per share for the first nine months of the year.

Our warrants for LiCycle (LICY.WS) are being redeemed by the company.

This software company just posted a 43% increase in quarterly revenue, and Jim Cramer has recently recommended it.

Last Friday the Goodyear Tire (GT) December 23 call that we sold in late November for $1.17 expired worthless, leaving us with a stock position, and without a new call sale.

Aluminum prices have risen almost 8% in the past week as the global supply situation continues to tighten.

In the past 30 days, 20 analysts have raised their EPS targets on this tech stock.

Aspen Aerogels (ASPN) triggered our sell-stop. Let’s take our profits and sell today.

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.