At the May 19, 2023 expiration cycle we were able to lock in 10.8% in Wells Fargo (WFC). Our total return since initiating the Income Trader service just under one year ago stands at 90.8%.


My goal this week is to start selling puts in WFC and potentially introduce one or two new positions by sticking with a similar strategy of selling puts. Otherwise, we will simply allow time decay to work its magic as we move closer to the June 16, 2023 expiration cycle.

Our focus this week will be on Lowe’s (LOW), Nvidia (NVDA) and Costco (COST).


We had another successful trade last week, albeit a small one, a one-day 4.2% gain in Walmart (WMT). In total we’ve placed seven trades this earnings season, with a cumulative loss of -6.7%. With one week left on the earnings calendar, we have two to three more opportunities to bring our near earnings cycle return back to breakeven for this cycle or possibly into positive territory.



Our overall return is 38.8% – as I stated last week, certainly nothing to write home about, but also no complaints as we thankfully sit in positive territory during what has been an incredibly challenging market for all participants over the past year.

Not to repeat the intro from the previous week, but mega-cap tech again led the charge higher last week as the Nasdaq gained 3.38%, while the S&P 500 rose 1.55% and the Dow added a modest 0.32%.

Not to repeat the intro from the previous week, but mega-cap tech again led the charge higher last week as the Nasdaq gained 3.38%, while the S&P 500 rose 1.55% and the Dow added a modest 0.32%.

We continue to keep things simple, and when you do that, you see that the overall market remains mixed (strong big-cap indexes, weak broad market, etc.) and individual stocks are extremely tricky ... though there remain many setups and it’s not hard to fill up our watch list. Still, we remain cautious overall, holding lots of cash and a few small positions, while waiting patiently for the next big move to start. We are encouraged by the action of the past two days, but it’s far too soon to tell if it’s the real McCoy.

In the Model Portfolio, we’ve sold two small positions since the last issue, though we’re adding one new one tonight (a familiar name that we think is finally ready to perk up). We’ll remain flexible going ahead, willing to jump in or stay mostly on the sideline (68% cash) depending what comes.

Elsewhere in tonight’s issue, we write about a bunch of new ideas, a sector that’s reasserting itself after a two-month rest and remind you to think big -- yes, right now, the news is bad and the market is tedious, but when things get going, there should be big profits to be had.

Explorer stocks were steady or slightly down this week but don’t get discouraged. It is likely that Fed interest rate hikes have ended and, combined with a debt ceiling deal, could ignite a rally. Next week I will give an update on our three Explorer ETF positions.

The unemployment rate for Chinese people ages 16 to 24 rose to a record of 20.4% last month. The rate of youth unemployment in China has consistently been two or three times higher than the general population. Not a good sign.

In the May Issue of Cabot Early Opportunities, I profile a potential turnaround story in a well-known stock that is returning to its roots.

We also take a closer look at one of the highest-end luxury brands in the world, an unknown green tech company, an emerging MedTech star and a construction materials specialist that’s spreading across the U.S.

Enjoy!

This week is the expiration of eight of our positions. Expect to hear from me on how we will manage these trades Thursday afternoon or Friday morning.

Big picture, the factors that have been in place for the past few weeks are still hanging around, but we’re also starting to see more names give it a go on the upside—after a rough start to earnings season, more and more are starting to react well and push through some resistance, with others that did get hit snapping back impressively. (Indeed, today’s list is as growth-y as we’ve seen it in a while.) Is it enough to change our stance? No, as we’re leaving our Market Monitor at a level 4, but we’re keeping our antennae up in case the buying pressures spread and more real leaders emerge.

This week’s list has a bunch of strong names with solid numbers and stories, from a variety of industries, too. Our Top Pick is toyed with new highs a couple of times in recent months and now looks to have decisively broken through.

It’s tough to make money in a sideways market like this one. But soon enough, a breakout is coming – history tells us that this bear market (18 months old in the Nasdaq) is on borrowed time. When it does, it will happen fast, and that’s when the real money is made – at the onset of a new bull market. To be prepared for its eventual arrival, we maintain a full 20-stock portfolio. And today, we add a familiar growth stock that got pummeled last year but is on the fast track to recovery in 2023. It’s a new recommendation from Mike Cintolo in his Cabot Top Ten Trader advisory.

Details inside.

After the recent pullback, the All-Weather portfolio is now up 9.88%, with the Vanguard Total Stock Market ETF (VTI) doing the heavy lifting, up 25.36% since it was introduced to the portfolio back on 6/15/22.

I will be rolling all of our LEAPS positions to the 2025 expiration cycle this week. So, be prepared to make a few trades this week as we increase the duration of our LEAPS while simultaneously continuing to sell more call premium.

Mega-cap tech again outperformed last week, while the banks continued to look suspect/horrible, and the action under the surface is flashing warning signs.

For more than a year, gold remained stuck in a holding pattern while other metals roared higher in response to global manufacturing demand and supply shortages. All the while, the global economic and geopolitical situation was becoming increasingly tenuous, prompting us to repeatedly wonder when a flight to the safety of gold would transpire.

Our comments on recommended companies that reported earnings, news on several companies and some brief thoughts about the effects of the war in Ukraine on investments.

It has felt like a horrible week, but the reality is that, despite both the Nasdaq and the Dow both falling into correction territory, all but two of our stocks have held above their previous lows.

After a four-day losing streak, stocks surged and oil prices fell yesterday, as volatility continued. Wary investors lack conviction as they track the economic fallout of the war in Ukraine. Higher inflationary expectations and lower growth are leading to investors hedging risks and buying opportunistically.

Isn’t this fun? The market is up big today. But things have been very ugly. And we might not be out of the woods yet.

As of yesterday’s close, the S&P 500 was down 12.49% YTD. The technology stock-heavy Nasdaq was about 19% lower for the year and more than 20% below the November high, officially in bear market territory. The latest down leg is because the Russia/Ukraine situation is getting worse.

By the looks of the market, skyrocketing fossil fuel prices have recently made Greentech the growth stock safe harbor. Since Russia’s invasion of Ukraine began on February 24, oil, as represented by the U.S. Oil Fund ETF (USO) is up 24%, a spike to be expected from the uncertainty around the supply of fuel commodities.

The market fell today, led by growth stocks, with many resilient names taking on water. At day’s end, the Dow fell 97 points but the Nasdaq was off 214 points and most growth funds were off more than 2%, with some much more.

The market is bouncing around a lot on a road to nowhere.

It rallies one day and then sells off again the next. The indexes fell into correction territory when Russia invaded Ukraine and have bounced around the same level since. The invasion didn’t cause much of a selloff. But the market can’t get any real traction as long as the uncertainly remains.

The market hit correction territory last week. And it’s gone nowhere since.

The Russia/Ukraine situation continues to plague stocks. But the crisis really hasn’t dragged the market down much. Sure, it pulled stocks into correction territory, but they didn’t have far to go.

The events recently in Russia re-enforced a valuable lesson: stay within your circle of competence. Last week, many were calling Russia a generational buying opportunity, as Russian shares plummeted. It looked moderately tempting given that the VanEck Russia ETF (RSX) had plunged ~40% in a week.

After being stuck in a lateral range for the past year, gold was finally able to overcome the psychological $1,900 an ounce barrier that has held back all previous rallies since early 2021.

In today’s ETF Strategist update, I’ll answer two questions that came in this week. Here is a summary, and I go into further detail in the short podcast that accompanies this update.

Persistent strength in the dollar is putting downward pressure on most metals right now in varying degrees. Some, like tin and aluminum, are resisting the greenback’s strength. Others, like gold and silver, are taking it on the chin as a result.

Analysts expect this insurance online marketplace to grow at an annual pace of 151% over the next five years.

Yesterday the major indexes finished mixed, with the Dow up 71 points and the Nasdaq down 78 points. But the story of the day (and the prior Friday) was a renewed rotation out of growth stocks, with most leading titles down 2% to 3% yesterday alone and a couple more cracking near-term support.

The shares of this mining company were recently upgraded at BMO Capital to ‘Outperform.’

This food company is expected to grow by 13.5% next year. Its shares have a current dividend yield of 2.40%, paid quarterly.

The shares of this food equipment manufacturer are being scooped up by hedge funds, with 35 total funds now owning stock in the company.

Our interest in oil and natural gas exploration and production (E&P) companies has been warming up lately. Many of these stocks are beaten down, yet oil prices have remained resilient, leaving producers like ConocoPhillips meaningfully undervalued.

Sell USB November 19th $60 calls at $2.30 or better

This athletic wear company beat analysts’ earnings estimates by $0.46 last quarter, and 26 analysts have recently boosted the company’s EPS forecasts.

This medical supply company is forecast to grow by 29.6% this year.

This morning we found out that Endava (DAVA) has postponed its Q4 earnings report from tomorrow (September 23) until next Tuesday (September 28).

Monday’s big, sharp market pullback was shocking to some investors, and scary enough to cause many to sell stocks in the fear that the correction would go deeper. It certainly might—the September/October period often brings major corrections—and maybe it should, though should is a word that I try to avoid when writing about the market.

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.