We locked in an 11.86% return in our DIA March 17, 2023, 355/360 bear call spread last week. The return marks our second winning trade for the March expiration cycle for a total of 22.48%. Our average holding time for both trades was 12 days.

As it stands, we currently have two iron condor positions, and my hope is to add another position, preferably a bear call spread, early this week. If we see even a mild bounce in IWM we should be able to take off our IWM iron condor for another nice return, thereby building upon our current profits for the March expiration cycle. If our IWM trade works out we could see March expiration bring in close to, if not exceeding, 40% on a cumulative basis.

We added four new positions last week, which brings us to five open trades. Our PFE position is due to expire this week and the four (KO, BITO, WFC, GDX) we added last week are due to expire on March 31, 2023.

Our PFE calls are essentially worthless, so I plan on buying them back today or tomorrow and immediately selling more calls against our shares. Otherwise there really isn’t much to do with our existing open positions as we are early in the trades.

We had the good fortune to lock in a gain in Home Depot (HD) early last week. The win marked our sixth this earnings season for a cumulative total of 36.9%. That’s a healthy return for this earnings season, especially when you consider the S&P 500 is basically flat since our first trade in JPM back on January 12, 2023. Hopefully the market offers up a few more opportunities to increase our current totals.

Following another week of hotter-than-expected inflation data and hawkish Fed speak, the leading indexes had their worst week of 2023. The S&P 500 fell 2.75%, the Dow lost 3%, and the Nasdaq declined by another 3.3%.

Following another week of hotter-than-expected inflation data and hawkish Fed speak, the leading indexes had their worst week of 2023. The S&P 500 fell 2.75%, the Dow lost 3%, and the Nasdaq declined by another 3.3%.

A renewed bout of worry over how much tightening the Fed has left to do has taken the market lower over the past two weeks, taking most stocks down in the process. Even so, to this point, we’re looking at the pullback at tedious, yes, but also acceptable--all of the indicators that turned positive in January have taken on some water, but remain positive, as have the vast majority of potential leaders. We’re far from complacent, and if the weakness spreads, we’ll pare back, but we remain optimistic and are standing pat tonight.

Tonight’s issue is heavy on new ideas, including some enticing names in Other Stocks of Interest and two chip stocks that we’re very high on--both quack like fresh leaders, and it’s good to see the (growthy) chip sector itself act well, too. Bottom line, our antennae are up, but going with the evidence, we’re still leaning bullish, though also remaining flexible if something definitive changes.

America’s economy has been resilient in the face of rising interest rates, pushing the 10-year Treasury to the cusp of 4%. Earnings have been pretty good but ironically, the threat of too strong an economy, or a recession, seems to be weighing on markets. Our Exscienta (EXAI) was stopped out while Centrus Energy (LEU) was up 14% yesterday after positive earnings.

What started out looking like another positive week for the market later turned into a week of little gains or losses, as economic data and Fed speak weighed on stocks on Thursday and Friday. For the week the S&P 500 and Dow fell marginally, while the Nasdaq rose just over 0.5%.

Though cannabis sector sentiment is extremely dark because of price compression and lingering bitterness after the December drubbing, there are several reasons to be bullish on the group.

This suggests that it’s a good time to add to cannabis names as a contrarian investment. Warren Buffett tells us that the market should serve us, rather than influence our moods. If I am right about the underlying bullish trends, the market is serving up an opportunity in cannabis. But you have to look at this as a medium-term play.

We know about all the negativity in the space – declining wholesale prices, overproduction, the failure of politicians to get the ball over the line in banking reform in December. But what about the positives?

Thank you for subscribing to the Cabot Turnaround Letter. We hope you enjoy reading the March 2023 issue.

While large restaurant companies cruised through the pandemic, smaller companies struggled. Some, however, are now undertaking promising turnarounds. We highlight four new ideas and provide updates on two previously discussed small-cap restaurants.

For struggling companies, free cash flow is their lifeblood. By using free cash flow yield, we can identify undervalued companies with plenty of cash flow that provides a margin of safety. We discuss three interesting stocks.

Our feature recommendation this month is a high free cash flow yield situation. Retailer Kohl’s (KSS) is viewed by investors as a broken company left behind by time, trends and technology, with unsettled leadership, further pressured by bloated inventory, a possible recession, and rising labor and goods costs. We see a company with a history of stable revenues and cash flows, that now has a highly capable operator at the helm, whose shares have a free cash flow yield of 13%. The generous dividend pays out close to half of this cash flow, producing a 6.2% dividend yield.

Stop us if you’ve heard this scenario before: The market gets a head of steam going, but after some inflationary reports, the Fed begins to jawbone the market, which leads to the market giving up the ghost. That happened at least a couple of times in 2022, so our antennae are up given the recent inflation reports and some tough talk from Fedheads last week. That said, once again, the bottom line is that most of the key evidence is still bullish, so while we’re honoring stops and aren’t piling in here, but we’re also holding onto names that are acting normally. We will drop our Market Monitor down a notch (to a level 6) to respect the recent dip, but we’re most interested in how the market responds now that it’s down near support.

This week’s list again has something for everyone, with our Top Pick a well-situated firm that’s helping to lead a group move and just reacted well to earnings.

The market has hit its first real rough patch of 2023, but so far the damage has been fairly limited. Still, it makes sense to add some protection, so today we’re adding a value stock that’s been one of the better performers in Bruce Kaser’s Cabot Undervalued Stocks Advisor portfolio for the past six months – but still has plenty of upside. Also, with the Stock of the Week portfolio at max capacity, we are parting ways with several positions to clear out some room for better opportunities in the coming weeks.

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.

This tech company—a perennial investor favorite—is forecasted to grow its earnings at an annual rate of 21% over the next five years.

Shortly after I sent this week’s Profit Booster idea to execute a covered call on Scientific Games (SGMS), the stock rallied $1, and I missed my buy price. I am going to raise my net price to 72, so that we can get into the trade.

This electric auto maker is forecasted to grow earnings at an annual rate of 44.51% over the next five years.

The market got hit hard on Friday, which sent three of our stocks (FNKO, IGT, RRC) below their strike prices on expiration Friday.

The five largest holdings in this ETF are: Cisco Systems Inc (CSCO, 3.57% of assets), Proofpoint Inc (PFPT, 3.16%), Fortinet Inc (FTNT, 2.93%), NortonLifeLock Inc (NLOK, 2.93%), and Cloudflare Inc (NET, 2.77%).

Following testimony from the Federal Reserve Chairmen on Wednesday there has been wild rotation in the markets, which has impacted some of our positions expiring today.

In the past 30 days, five analysts have raised their EPS analysts for this gold producer. The shares have a current annual dividend yield of 3.15%, paid quarterly.

Gold futures prices were down around 5% on Thursday afternoon, leading a nearly across-the-board rout in most precious and industrial metals. Platinum took the brunt of the selling pressure, falling 8%, while silver was down 7%.

This bank has restored its dividend, and now is paying $0.03 annually. It’s a start! And it is a very positive bet on the future.

This is just a quick message regarding today’s action in Roblox (RBLX)—the stock had been correctly normally in recent days, but last night, it gave its May business update, and the numbers left a lot to be desired, with users actually shrinking from the prior month (though revenues were still up triple digits from the year before).

Since bottoming at the end of March, stocks in the marijuana sector have been building a base, with the best stocks in our portfolio still showing a healthy pattern of higher lows. But we still don’t have a renewed uptrend, and that’s OK. We’re patient. What we do have are 200-day moving averages that are coming close to our stocks and that, ideally, will provide support.

The top five holders of this closed-end fund are: Morgan Stanley, McGowan Group Asset Management, Inc., UBS Group AG, Wells Fargo & Company, and Invesco Ltd. The fund pays a current annual dividend yield of 7.19%, paid monthly.

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.