While the action under the surface was hardly encouraging, in the face of plenty of hawkish headlines from the Fed it was impressive that the S&P 500 gained 1.4%, the Dow rallied 1.44%, and the Nasdaq added 1% last week.

While the action under the surface was hardly encouraging, in the face of plenty of hawkish headlines from the Fed it was impressive that the S&P 500 gained 1.4%, the Dow rallied 1.44%, and the Nasdaq added 1% last week.

The broad markets have improved nicely in the past month, albeit with a recent pullback. Leading sectors were Communication Services, Consumer Staples, Healthcare, Technology, and Utilities. Style-wise, large-cap growth stocks beat their value peers, gaining 3.64% for the month.

The employment picture remains healthy, with 236,000 jobs added in March, taking the unemployment rate down to 3.5%. This was the slowest job growth in two years, so economists are hoping that will slow inflation—and the Fed’s rate hikes!

So far, this has been a positive year for the market. But an enormous amount of uncertainty remains.

The painful high inflation/hawkish Fed conundrum that caused last year’s bear market appears to be ending. But a high risk of recession is taking over. It will be difficult for stocks to rally into the next bull market without knowing the timing, severity, or duration of a possible recession.

Inflation could remain sticky. A recession could hit in any of the next three quarters. A recovery may be lame when it finally arrives because the Fed may have to keep interest rates high. We don’t know if six months from now we will face more inflation, a recession or even stagflation.

Today, I’m recommending a failed biotech that is undergoing a strategic review.

Key points:
· Based on conservative assumptions, I see 30% to 92% upside within 12 months.
· Low downside risk given stock market cap is 51% of net cash.
· High insider / institutional ownership assures incentives are aligned.

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

The holiday-shortened week was mostly a non-event as the S&P 500, Dow and Nasdaq were mixed. And while the week was quiet, under the surface there was selling pressure in growth stocks and materials that raised some yellow flags.

After a couple of good weeks, some pullback was half-expected—and, when looking at the big-cap indexes, nothing out of the ordinary has been seen. That said, digging deeper, we saw a good amount of selling in resilient stocks, another round of selling in the broad market all while defensive names found buyers. To this point, the potential leaders that took on water are still holding onto intermediate-term support, so we’re not advising any major change in stance. That said, the next couple of weeks will be key (for good or bad), especially as earnings season gets started. We’ll leave our Market Monitor at a level 5 today.

This week’s list has an interesting mix of names, including more than a few turnaround-type actors that remain under accumulation. Our Top Pick is a former winner that offers a mix of growth and defensiveness in this environment.

The market took a deep breath last week on the cusp of an eventful upcoming stretch. This week alone we get the latest CPI and PPI numbers before a very pivotal earnings season kicks off on Friday. Potential catalysts – and potholes – abound, so chances are the coming weeks won’t be as calm as the first week of April was. With that in mind, in today’s issue, we’re adding a stock fit to weather any further storms. It’s a century-old company that pays a dividend, trades at a mere 12 times forward earnings, and yet is up 14% year to date – and has been a mainstay in the portfolio of Bruce Kaser’s Cabot Undervalued Stocks Advisor.

The message is consistent this week with all five of our open positions: All there is to do at the moment is allow time decay to work its magic. And that is exactly what we plan to do.

All five of our positions are in great shape at the moment, so our focus turns to adding a few positions to the mix, a topic of discussion for, well, weeks. Earnings season rears its head this week with several of the big banks due to announce Friday. As a result, I expect to see several short-term positions (30 to 60 days ‘til expiration) being added to the mix. I’ve been very conservative about adding new positions to the mix and I don’t necessarily think all is clear ahead, but I do think we have an opportunity during this earnings season to add a few selective positions to the portfolio.

Earnings season 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.

Nothing has changed from last week. We currently have two open positions, a bear call spread in DIA and an iron condor in IWM. Our deltas continue to be skewed towards the bearish side of things, so we will need to balance out our deltas by adding a bull put spread or some other bullish leaning strategy…potentially a bullish leaning iron condor? So, the focus this week, like last week, will be adding some positive deltas to the mix to bring the portfolio closer to a delta-neutral state. My focus will be on expiration cycles ranging from 35 to 60 days until expiration.

The holiday-shortened week was mostly a non-event as the S&P 500, Dow and Nasdaq were mostly mixed. And while the week was quiet, under the surface there was selling pressure in growth stocks and materials that raised some yellow flags.

The U.S. stock market rebounded on Tuesday, following testimony from Chair Powell at his Senate confirmation hearing. Investors liked what he said, implying that the three anticipated quarter-point rate increases, which could start in March, would likely be enough to quell inflation (along with a hoped-for return to normal supply conditions).

So far, 2022 is playing out as expected. But of course, this is only the eighth trading day of the year.

In late December, prior to the holiday, we published the January edition of the Cabot Turnaround Letter. Our first article, “Top Five Stocks for 2022,” we highlighted Credit Suisse (CS), Dril-Quip (DRQ), Lamb Weston Holdings (LW), Nokia (NOK) and TreeHouse Foods (THS).

Stocks failed to even bounce today despite all the selling of late. At day’s end, the Dow was off 171 points and the Nasdaq dropped 19 points.

It’s a new year, and a new attitude. Investors tend to sober up after weeks of holiday slacking and refocus on the market. What are they saying?

The market finished the year strong, with the S&P 500 up 26.9%. And so far, 2022 is off to a good start.

In two days, the S&P 500 has set two new all-time highs. Last year’s momentum is spilling over so far. But will it last?

It’s a new year, and a new attitude. Investors tend to sober up after weeks of holiday slacking and refocus on the market. What are they saying?

It’s the worry that just won’t go away, and while it’s disconcerting to equity investors, gold is clearly benefiting from it.

As we approach the final trading day of 2021, we see a market in a period of relative calm after what felt like a very volatile November and December, especially for those invested in individual stocks.

It’s the end of remarkable year. With just two more full market days left, the S&P 500 is up 28% for 2021.

Another year has come and gone. I can’t believe it. They never used to go by this fast. Anyway, it was a terrific year for stocks. The market is up 28% for the year.

This software company posted EPS of $0.16 per share in its recent quarter, beating analysts’ estimates of $0.14 per share. Revenues of $209.74 million also beat by 3.41%.

This tech stock is expected to grow earnings by more than 28% this year. The current annual dividend yield is 2.15%, paid quarterly.

Shares of this utility were recently upgraded by B of A Securities, to ‘Buy.’ The shares have a current annual dividend yield of 3.33%, paid quarterly.

This afternoon we are moving Albertsons (ACI) from BUY to SELL.

ONTF, CRNC and EVBG Report.

Today I want to address our BBWI and VSCO stock holdings, as well as the BBWI1 option from the LB spin-off.

Most of our stocks continue to build bases, so I remain patient, waiting for a renewed advance by the sector. The standout stock in our portfolio is Innovative Industrial Properties (IIPR), which broke out to a new high last week after a great report.

These preferred shares are issued by one of the largest banks in the nation. Emerging from some of its legal woes, the bank has a fairly new management team.

Time to Take Some Profit in Nucor

**NOTE: Due to time constraints from the Cabot Wealth Summit, the Cabot Early Opportunities issue scheduled for Wednesday, August 18, 2021 will instead be published on Thursday August 19.**
It’s been a busy earnings season and we have a lot to cover. I don’t have reports on every company that has released results just yet, but I have most of them.

This utility beat both earnings and revenue estimates for the last quarter. The shares have a current annual dividend yield of 2.12%, paid quarterly.

This small bank beat analysts’ EPS estimates by $0.03 last quarter, earning $0.31 per share. The bank has a current annual dividend yield of 4.15%, paid quarterly.

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.