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.

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.

Fortunately, the start of earnings season started off on the right foot. On Thursday, we placed our first trade of the season in JPMorgan Chase (JPM), our standard, outside-of-the-expected-move, iron condor. On Friday, JPM opened up slightly, well within our chosen range and as a result, all uncertainty around the announcement diminished, volatility was immediately crushed, and we were given the opportunity to take off the trade for a profit. Shortly after the opening bell we locked in a quick one-day gain of 8.0%.

The market continues to rally and the All-Weather portfolio is now up 10.2%, with the Vanguard Total Stock Market ETF (VTI) and SPDR GLD Shares ETF (GLD) doing the heavy lifting, up 26.0% and 8.6%, respectively.

Nothing has changed from last month, 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.

The market surged higher yet again last week, and traders are beginning to wonder if a run at new highs is in the cards in 2023. While there is a way to go until we reach those peaks, last week’s gains of 2.4% for the S&P 500, 2.3% for the Dow, and 3.32% for the Nasdaq gives the bulls hope.

The market surged higher yet again last week, and traders are beginning to wonder if a run at new highs is in the cards in 2023. While there is a way to go until we reach those peaks, last week’s gains of 2.4% for the S&P 500, 2.3% for the Dow, and 3.32% for the Nasdaq gives the bulls hope.

There’s not much to say: The market and leading stocks continue to act in a textbook fashion, with not just more up than down but tame pullbacks that respect logical support and big volume on the advances--all signs that big investors are accumulating stock. We still want to be selective on new buys, and we’re sure earnings season will throw everyone a few curveballs, but we continue to put money to work--today we’re adding a few more shares to one of our positions and adding a full-sized stake in a new name.

Elsewhere tonight, we write about another bullish long-term market indicator, what the recent action in interest rates mean, and go over many leading and potential leading stocks that are enjoying the market’s newfound uptrend.

Inflation cooled last month to its slowest pace in more than two years, buoying markets even though the Fed may raise interest rates later this month.

While the Nasdaq composite is a basket of more than 3,000 stocks listed on the Nasdaq exchange, the Nasdaq 100 is the basis for the QQQ – the second-most heavily traded ETF in America, after the SPY ETF which tracks the S&P 500.

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.

In our view, the best, quality assets bottomed last week. After months of heavy selling across a myriad of asset classes, BITO is up 10% today on heavy volume. We reiterate this ETF as a BUY and feel this is an attractive entry point to own Bitcoin.
In the coming months, we expect to be more aggressive in our portfolio allocation, gaining exposure to high-quality U.S. equities and crypto assets. The multi-month decline in prices have increased the expected return of these assets.

With the gold price just slightly above its lowest level of the year, it has been difficult to be upbeat on the gold mining stocks.

The PHLX Gold/Silver Index (XAU), the industry benchmark for the actively traded North American miners, is also near a multi-month low and still below its 50-day moving average. In fact, almost every actively traded U.S.-listed gold stock is under the 50-day line—a feat seldom achieved except in the most voracious of bear markets.

In this week’s update, I’ll focus on how ETFs are responding to the Federal Reserve minutes, released last week. These kindled some optimism in the stock market, as you see here on a chart of the S&P 500. One reason for the market uptick? The Fed gave no surprises, and the market doesn’t like surprises!

This week’s Friday Update includes a summary of the recent Cabot Turnaround Letter, and comments on earnings at Macy’s (M). We also summarize the podcast and include The Catalyst Report.

After a rough week last week small caps have bounced back over the last two sessions and have the potential to close at a three-week high today. I’d like to see the S&P 600 Index close back above 1230 (at 1224 now) before turning more bullish.

The market is having one of its better days in a few weeks—as of 2 pm ET, the Dow is up 578 points and the Nasdaq is up 329 points

It’s a bear market and there’s a lot of confusion among the various pundits about what’s next. As tempting as it may be to say we’ve hit bottom and are rebounding, it’s just too risky right now to say so. When things get confusing and sentiment swings too much one way or the other, I like to simplify my decision process.
For Greentech, I’m looking at where prices are relative to the 200-day moving average, my favorite gauge of long-term sentiment, as well as the 40-day average, which is quick enough to suggest a turnaround while filtering out near-term noise.

It’s one step forward and two steps back in this crummy market.
The indexes seem to stage an impressive rally at some point every week. But the S&P 500 has fallen for seven consecutive weeks, the longest such streak since 2001. It came within a whisker of a bear market (down 20% from the high on a closing basis) before the latest temporary rally on Monday.

The S&P 500 has almost officially entered a bear market. The somewhat arbitrary definition of a bear market is a 20% decline. The S&P 500 peaked on January 3, 2022 at 4,797. Therefore, if the Index closes at or below 3,837, we will officially be in a bear market.

The media, including highly reputable sources like Bloomberg, Barron’s and The Wall Street Journal, have written that “real” interest rates are now positive. As such, they imply that the Fed’s interest rate policy is already restrictive and so interest rates may not need to be raised much more. Our view is that the journalists are mistaken.

This tech company beat analysts’ estimates by two cents last quarter, but weaker forward guidance has provided an opportunity to buy at a discount.

This morning, GCP Applied Technologies (GCP) announced a definitive agreement to be acquired by French construction materials company St. Gobain for $32/share in cash. This price is 14% above our $28 price target.

This business services company is forecast to grow 24.8% annually over the next five years.

Suffice to say it’s been a tough week. As we head into a weekend that can’t come quickly enough, the main market indices are down over 2.5% and many, many stocks are 20%, 30% or 40% off their highs (some are better, some are worse).

JOANN (JOAN) reported Q3 fiscal 2022 results after the close yesterday. This quarter was for the period ending on October 30. Revenue missed expectations slightly but adjusted EBITDA and adjusted EPS surpassed expectations. The high-level take away is that supply-chain challenges persist (no surprise there) but JOANN is doing what it can and appears to have the pricing power necessary to maintain a strong underlying business and pursue the growth strategy it has embarked upon to extend its lead in the arts and crafts retail market.

Suffice to say it’s been a tough week. As we head into a weekend that can’t come quickly enough, the main market indices are down over 2.5% and many, many stocks are 20%, 30% or 40% off their highs (some are better, some are worse).

This medical device company—despite COVID-19 headwinds—is expected to grow by more than 100% annually over the next five years.

Shares of Fiverr (FVRR) continue to slide, despite a beat-and-raise Q3 report and the threat of Omicron, which in theory should be good for some work-from-home (WFH) stocks.

Wolfspeed (WOLF) closed at 104.60 Thursday, below our recommended stop-loss level of 107. We recommend selling today.

This semiconductor company beat analysts’ earnings estimates by $0.13 last quarter.

More bad news on the virus front caused a huge reversal yesterday, with the Dow down 462 points, the Nasdaq off another 284 and growth stocks faring even worse.

Array Technologies (ARRY) triggered our sell-stop with its close at 17.65 Wednesday, and we recommend selling 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 Momentum 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 Momentum Trader features.