The major indexes quickly retreated after the prior couple of good weeks, with growth-oriented areas falling the most, a lot of stocks being rejected near resistance and some old winners being taken out and shot. Despite that, there are some green shoots out there—by the letter of the law, some broad indexes (like small- and mid-caps) are in intermediate-term uptrends, and we’re also seeing some sectors assert themselves, especially in the commodity space. We’re not bullish, and will leave our Market Monitor at a level 4, though our overall advice remains basically unchanged: Hold plenty of cash, honor your stops and, if you do some buying, keep it small.


This week’s list is again heavy on commodity-type names, though we’re also seeing a few recent earnings winners that have some growth to them. Our Top Pick straddles the line between growth and commodity and is one of the few names to move out to recently all-time highs.

A better-than-expected inflation rate saved the day last week, and stocks are back on the rise after their single best day since April 2020. Will the latest rally last, or is it yet another bear market fake-out? Time will tell. In the meantime, we’re adding a stock that should prosper regardless of which way the market heads next because the company improves access around the world to one thing everyone needs: food. It’s a recent recommendation from Cabot Explorer Chief Analyst Carl Delfeld, and it’s already up more than 40% year to date.

Details inside.

There really isn’t too much to report at the moment. Our passive portfolios continue to impress in the midst of a challenging market which displays the overall power of the passive approach. And I continue to mostly sit on the sidelines in our active portfolios, although that approach will be changing soon. I intend on adding several new positions to the active portfolios this expiration cycle as we are starting to see some good entry prices for several of the companies on our watchlist.

As I discussed in our subscribers-only webinar on Friday, this week should be the busiest trading week of the earnings cycle.

Several of the big box retailers are due to report including Home Depot (HD), Walmart (WMT), Lowe’s (LOW), Target (TGT), Cisco Systems (CSCO) and a few other notable names. All offer good volume and all are currently offering some decent premium for trades with at least an 85% probability of success, if not slightly higher.

I expect that we will see at least three trades, if not more, this week before we enter the doldrums of another earnings off-season that begins in earnest next week.

We decided to stay on the sidelines last week given the market action, but intend to add several new positions for each of our portfolios this week. As I’ve stated in the past, I don’t plan on ramping up positions quickly; rather, I take a methodical approach to slowly adding a few new positions to the mix. As for our current positions, they remain in good shape. Other than BITO we’ve had a good stretch over the past few months and if all goes well BITO might even join the club, if we continue to allow it.

We added a bear call spread last week in SPY and plan to add an iron condor and bull put spread, if the market cooperates, this week. I’m still hopeful to sell premium for the December 16 expiration cycle, but have no issue kicking it out a week or two if it makes sense. The most important part is that we want the deltas of our portfolio to be balanced so we aren’t leaning too far in one direction.

Sparked by an inflation data point that showed some signs of cooling, the market surged higher last week. The S&P 500 gained 6%, the Dow rose 4% and the Nasdaq gained a whopping 8.8%.

Sparked by an inflation data point that showed some signs of cooling, the market surged higher last week. The S&P 500 gained 6%, the Dow rose 4% and the Nasdaq gained a whopping 8.8%.

Last week’s “big” market-moving events (Federal Reserve and Jobs Report) brought further selling as the S&P 500 fell 3.25%, the Dow lost 2.25%, and the Nasdaq dropped 5.88%.

Last week’s “big” market-moving events (Federal Reserve and Jobs Report) brought further selling as the S&P 500 fell 3.25%, the Dow lost 2.25%, and the Nasdaq dropped 5.88%.

One of our stocks surprised markets on the downside with poor third-quarter numbers while two others were up 15% and 16%. Crypto hit heavy turbulence as the stock market slipped rather than soared on the midterm election results of an underwhelming GOP wave, uncertainty, and expected gridlock over the next two years. Elsewhere, the United Nations projects that next week, the world’s population will exceed 8 billion, and this leads to a new Explorer, recession-resistant, agribusiness idea this week.

The market had a nice run in October, with the Dow Jones Industrial Average gaining 14% for the month.

The economy continues to look pretty good, with manufacturing steady, construction spending up, and employment still healthy, despite a 200-basis point increase in the unemployment rate, now 3.7%.

The Federal Reserve once again boosted the Fed Funds rate by 0.75% this month, which the markets had already built in. Right now, it looks like Fed Chair Jerome Powell may target rates even higher than the 4.5-4.75% initially projected, but the rate increases might come in smaller doses.

Last week, we wrote about how the damp Boston-area weather matched the soggy stock market. Pressing our literary luck today, the market is following another New England weather meme: “if you don’t like the weather, wait a few minutes.”

Pullbacks in the market are never fun. It’s way more fun when we are all making money together and stocks are going up. But it’s important to keep the recent market action in perspective. LPL Strategist Ryan Detrick recently shared a couple charts that helped put the recent volatility in perspective.

The market hasn’t seen ugliness on this scale since October. Indexes had been somewhat flat and bouncing around near the highs as investors weighed the booming economy against inflation fears, a falling 10-year rate and growth concerns after the pandemic recovery.

As we discussed last week, the latest surge in U.S. Covid cases is increasingly likely to be the “fear catalyst” that gold desperately needs to attract the attention of safety-conscious investors. August gold was up $5 an ounce last week which, while not much, adds to the metal’s gains in the last couple of weeks and is another step in the right direction (especially in the wake of last month’s sharp decline). And importantly from a technical perspective, gold managed to close the latest week above its key 25-day moving average for the first time in over a month.

Today’s note includes an update on Wells Fargo’s (WFC) earnings. There were no ratings changes.

The big picture this week is much the same as last week. In fact, the S&P 600 Small Cap Index closed today just a fraction off where it closed last Thursday. The same applies to the Nasdaq, while the S&P 500 is up modestly.

After last weekend’s successful space flight of Sir Richard Branson, one would have expected Virgin Galactic (SPCE) stock to soar on Monday. Instead, it lost altitude. Sure, the announcement of a $500 million secondary offering leading to dilution was not welcome news, but part of the reason the stock fell is that investors asked, “what next?” and sold some shares. What comes next is indeed the right question since markets always look forward.

It’s another week of more of the same. The three major indexes are very near the all-time highs, but still not really going anywhere.

In the Boston area, we’ve had nearly 8 inches of rain so far this month. This 0.7 inches-per-day average compares to the 0.6 inches-per-day average for a monsoon rainforest, the type found in the tropics along the equator. Sounds a lot like the dampened mood of the stock market. Compared to the crisp 19% return for the average stock in the first half of the year, the 1% return so far this month seems soggy. Part of the reason is that there are too many mixed macro signals – rising inflation but falling bond yields, murkiness over whether the Biden administration’s large spending proposals will be passed, surging Covid cases despite what appeared to be the end of the pandemic, incredibly strong economic and profit growth which may be rolling over. Investors also are stuck in the mud of pre-earnings season, wondering whether high expectations will be exceeded or merely matched and worried that companies missing their estimates will be harshly punished.

Today’s note includes a brief update on a preliminary earnings summary, a price target increase and the podcast.

The major indexes got hit today, though damage among growth stocks wasn’t too bad. At day’s end, the Dow was off 260 points while the Nasdaq slid 105 points.

The market, and especially the small-cap index, has been a little soft after the Fourth of July holiday weekend, but all things considered it’s hard to say anything is wrong. The move down in U.S. Treasury yields is a bit of a head-scratcher and the noise in the oil market is potentially of interest as consumers ponder charges at the pump. These are noteworthy items but not changing any big-picture thinking at this point.

Coverage of the shares of this motorcycle manufacturer have been initiated and upgraded by three brokerage houses.

The company’s turnaround from its modest difficulties yet overly-depressed stock appears complete

Recent days have seen substantial selling pressures in the broad market, with growth stocks being particularly hard hit. But the good news is that stocks in the marijuana sector, which had previously corrected 50% from their February peak to their bottom in late March or early April, are not seeing the same selling pressures.

The market remains in the dumps, and while some beaten-down growth names have found support, many are still getting hit on earnings and we’re even seeing selling spread to the broad market.

The shares of this chemical company were just upgraded to ‘Strong Buy’ at Zacks, due to rising earnings estimates.

EVBG, KRNT and CRNC Report. Sell GSHD and CDLX

Although, as expected, this cruise line lost money last quarter, it still beat analysts’ estimates on the top and bottom line.

This tech company just completed the acquisition of Inphi Corporation, and our contributor says this purchase will turn Marvell into a U.S. semiconductor powerhouse positioned for end-to-end technology leadership in data infrastructure.

Yesterday was a bloodbath for growth stocks as concerns of rising rates and high valuations continue to put pressure on these types of stocks. Earnings season has also been a disaster for many growth stocks as “sell the news” has been the trend. Part of me thinks there is programmatic trading going on here as a negative reaction has just become too consistent. But still, overall, the positive momentum from April has been wiped out here in May for many players.

After yesterday’s bloodbath in growth stocks, today feels pretty good. We may be able to thank a downright terrible April jobs number this morning (266,000 added versus expectation of 1 million), which may have temporarily quelled concerns over rising rates.

This northeastern bank beat analysts’ earnings forecast by $0.10 last quarter. The shares have a current dividend yield of 4.61%, paid quarterly.

This week feels a lot like March. In other words, it’s pretty awful for growth stocks both big and small. The positive momentum from April has seemingly evaporated. There’s no sugar coating it – we’re taking a hit this week. The chatter around higher rates and inflation is getting amplified out there and it’s just a crusher on high valuation/growth stocks.

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.