In the January issue of Cabot Early Opportunities, we take heed of the improving market breadth and dig into five companies from different industries that look compelling now.

Our top pick this month is a small-cap oil and gas equipment company that’s a leader in the offshore market. I also feature an online retailer specializing in the luxury market, an emerging MedTech name, a customer experience specialist and an online learning marketplace that’s poised to recover nicely.

As always, there should be something for everyone in this month’s issue!

The broad market began to show strength in late December, and last week we saw further progress, with new lows continuing to shrink to very bullish levels while a granddaddy blastoff measure (the 2-to-1 Blastoff Indicator) turned green. It’s all very encouraging, but now we need to see more “primary” evidence turn positive, including the trends of the major indexes and many more “real” breakouts from high relative strength stocks. We’re optimistic, but are in a trust-but-verify mode; for now we’ll move our Market Monitor to a level 5.

This week’s list is heavy on many themes that are working, including solar, metals, infrastructure, China and travel. Our Top Pick is from the latter area and has turned the corner in a decisive manner.

The new year is off to a good start, with stocks across the board showing true signs of momentum and very few still in the doldrums. Several of our Stock of the Week positions, in fact, are hitting either all-time highs or 52-week highs! But just in case this is yet another bear market rally, today we’re covering our bases by adding a big, well-known bank trading at bargain prices. It’s a longtime recommendation from Cabot Undervalued Stocks Advisor Chief Analyst Bruce Kaser – and one that Bruce says has more than 60% upside.

We finally added our Dogs (and Small Dogs) of the Dow portfolio to the mix! As it stands, we have five portfolios in the Fundamentals service, three passive portfolios and two active. While our passive portfolios are fully up and running, we still need to add several more positions to our active portfolios to get them fully situated.

The market raced higher again last week and is now officially in a short-term overbought state. In fact, all of the major indices stand in a short-term overbought state. Historically, this type of situation leads to a mean-reversion event, but if we are indeed in a “new” bullish market environment, an overbought state can lead to extended moves. It’s always the transitions from high to low IV environments or vice versa that give high-probability spreads challenges. And while our positions are okay at the moment, another round of bullishness over the next week or two will force us to make either an adjustment or simply take off our trades for a small loss. Of course, I’m also still looking to add a position or two to the mix, but I don’t want to lean too heavily in one direction.

Our BITO and KO are all due to expire this week. I will allow our BITO calls to carry through expiration, but plan to buy back our KO puts and immediately sell more puts, thereby collecting more premium for our position in KO.

Surprisingly, if BITO does close above our 11.5 strike at expiration this week, we should see a nice overall profit in the position. I’m not sure many can say they’ve been able to scratch and claw a profit out of BITO, especially when you consider we took on the position back in early June when BITO was trading for around $18. Again, another reason why premium selling should be an integral part of everyone’s investment plan.

Last week we entered our first trade of the earnings season. Last Friday, JPM announced earnings, and the stock immediately pushed lower after the release. The stock opened at 135 and tested the short 133 put of our iron condor. As a result, we decided to exit the one-day trade for just over 4%, not too bad for a one-day gain. Of course, JPM continued to trade higher, giving those that decided to hold on to the trade a little longer the opportunity to take the trade off the table for roughly double the return.

Very impressively, the rally that started late in 2022 continued last week, as the S&P 500 gained 2.7%, the Dow rose 1.8%, and the Nasdaq tacked on another 4.5% of gains.

Very impressively, the rally that started late in 2022 continued last week, as the S&P 500 gained 2.7%, the Dow rose 1.8%, and the Nasdaq tacked on another 4.5% of gains.

The market is ending the year a lot like it began it -- by going down, led mostly by growth stocks, and that’s keeping us defensive. We do think better times are ahead, and we even saw a positive broad market divergence this week as the Nasdaq retested its lows. But as has been the case all year, we’ll refrain from any major buying until the buyers truly show up.

Tonight’s issue talks about some puke action from individual investors (a good thing) and the fact that, after this bear ends, the market is likely set to resume its advance (not a long-term top), plus we fine tune our watch list (one name broke out today) and dive into some potential leaders, too.

Last but not least, all of us here wish you and yours a happy, healthy and prosperous 2023. Cheers to better times ahead!

As we move into 2023, Explorer stocks are performing well as volatility is muted. My goal is to seek a balance between conservative and aggressive ideas so that you can select a blend that is appropriate for your circumstances and goals. I believe at some point in the first half of this year, markets will turn upward as more reasonable valuations will reignite investor interest. Today we return to a synthetic graphite idea that was a profitable trade about a year ago.

Welcome to our first annual TOP PICKS issue! For this month, I asked the Cabot analysts to give me a couple of their top picks for 2023. I think you will find they have produced a nice selection of companies in diverse sectors. And just as I did in my previous newsletter, Wall Street’s Best Stocks, I’ll keep track of their picks and let you know how they fare.

As we move closer to earnings season for our portfolio holdings (really gets underway the week after next) we see many small-cap growth names (and growth stocks in general) recovering nicely from the drawdowns in late September.

In a person, company, country, or stock, resiliency matters. For example, with disruptions related to the pandemic and supply-chain chaos all around us, some will navigate better than others. U.S. stocks have been rising despite coping with the effects of inflation, a slowing Chinese economy and supply-chain disruptions on the technology industry. Stocks have gained in recent days on strong earnings reports. Labor shortages, higher prices for raw materials and supply-chain issues haven’t substantially impacted profits.

Forget the virus. Forget about the Fed tightening. It’s all about earnings now.

After pulling back in September, the S&P 500 is back to flirting with all-time highs. My favorite strategist, Ryan Detrick, recently shared that the market is typically weak now before starting to run into the “Santa rally.”

A few weeks ago, at the annual Morningstar Investment Conference in Chicago, two investing icons debated the merits of value versus growth. On the value side was Rob Arnott, founder and head of Research Affiliates, with Cathie Wood, founder and head of ARK Investment Management, on the growth side.

It was a rough September in the market. But so far, October is making up for it.

It’s still not a bull market yet, but gold just posted its best week since late August as investors have begun to realize that inflation isn’t going away any time soon.

This week’s update includes our comments on earnings from Walgreens Boots Alliance (WBA) and Wells Fargo & Company (WFC) as well as commentary on several stocks.

The biggest stories this week weren’t all that different from last week, namely supply chains, interest rates/inflation, and Covid. But this week has a decidedly different feel to it, possibly because we’ve added earnings season into the mix and, so far, that’s going pretty well.

As of 10 a.m. ET this morning, the market is solidly green, with a broad advance taking both the Dow (up 386 points) and Nasdaq (up 192 points) nicely higher.

So far, October looks better than September for the market. After falling 4.8% in September, the worst month since the pandemic recovery began, the S&P 500 is up slightly for October.

Greentech held the support levels this past week we wanted and, yesterday and today, have rallied back over the sector’s 40-day moving average, a bullish sign.

The top five holders of this fund are Fort Pitt Capital Group, LLC, 2.12%; Morgan Stanley, 1.85%; Wells Fargo & Company, 1.39%; and Invesco Ltd., 1.35%; and 1607 Capital Partners, LLC, 1.19%. The fund has a current annual dividend yield of 5.22%, paid monthly.

Due to escalating regulatory risk by Chinese authorities, please sell Pinduoduo stock. I will have more in this Thursday’s update but, in short, the Chinese are exerting their authority on Chinese companies that have used offshore entities to list on U.S. markets. China wants these companies to list in Hong Kong or Shanghai. There may be some trading and arbitrage opportunities developing, but the risk for Pinduoduo is now too high.

Bank of America just raised its price target to $194 for this used car dealer.

This ETF utilizes a covered call strategy, in which investors sell call options while owning an equivalent amount of the underlying security.

Our first idea is a utility that is growing its renewable energy sources and has a current annual dividend yield of 3.94%, paid quarterly. And we are selling an insurance company with a great dividend but mediocre performance.

Last week there was no Cabot Marijuana Investor update, and I apologize to those readers who expected one and were disappointed. Officially, there is no update schedule; my goal is to give you whatever’s needed whenever it’s needed. But I’ve got into the habit of doing updates on Wednesdays, and a lot of readers have got into the habit of expecting them. Last week, however, there was no news and no change in my advice, so no update.

Although this stock has steadily climbed, its focus on higher margin products should keep its momentum going.

This flooring retailer is due to announce earnings on August 5. Current estimates are for an EPS of $0.61 on revenues of $836.85M.

Today is a wild day in the market, with supposed fears over the Delta variant of the virus causing weakness in the major indexes. As of 2:45 pm EST, the Dow is off 919 points while the Nasdaq is down 212 points. Of course, today’s move comes after a growing amount of worrisome evidence, including a narrowing of the advance (most stocks below their 50-day lines even as the big-cap indexes were near new highs) and severe selling in many growth areas last week, and now we have our Cabot Tides turning red.

On Friday our MRO and SGMS call positions expired worthless, leaving us with only our stock positions. And while I debated selling new calls to lower our cost basis, the market is weak, and these stocks have fallen below our initial stop levels.

Investing in silver is reaching a six-year high. This company is seeing a rise in hedge fund interest, and recent selling of its shares after the Roxgold acquisition, looks overdone.

While copper futures prices remain firm, copper ETFs have come under renewed selling pressure late this week, thanks in part to persistent strength in the U.S. dollar and in spite of widespread hopes of additional monetary easing measures in China.

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.