There really isn’t much to say at this juncture. All of our positions are in good shape at the moment and my goal, as stated last week, is to add a few short-term positions to the mix. I’ve been hesitant to add short-term positions over the past few months due to the ongoing market environment, but if we could see a slight pullback this week, I think we might just be in business for a few new trades. Here’s hoping!

We are officially in the earnings doldrums, but that certainly doesn’t mean that opportunities won’t present themselves. For instance, this week Costco (COST) announces earnings after the close Thursday and offers a decent opportunity for an iron condor and potentially another candidate for a short strangle.

We locked in another winning trade last week. Our IWM iron condor had pushed to $0.24 so we decided to lock in over 50% of the original premium sold for an 11.4% return. The trade marked the 15th out of 16 winning trades for the service since we started Quant Trader back in June. If all goes well this week, we should be able to add to our winners by locking in our December bear call spread.

After a negative start to the week last Monday, the market surged higher on Wednesday, following what many traders view as a “less hawkish” speech by Federal Reserve Chairman Jerome Powell.

After a negative start to the week last Monday, the market surged higher on Wednesday, following what many traders view as a “less hawkish” speech by Federal Reserve Chairman Jerome Powell.

Not much has officially changed with the market since our last issue, with the Cabot Tides positive, but the other indicators still down and with most growth stocks still having trouble making any real progress. That said, we are seeing a gradual improvement in the evidence, with other indicators closing in on green lights and, even among individual stocks, some better, more proper action.

Overall, we remain defensive, but we are making a couple of small moves tonight, adding two half-sized positions, including one in a stock we already own.

In tonight’s issue, we go over all our stocks, highlight some new names and even talk about one non-growth sector that intrigues us. Ideally, the market is ready for a real rally, and if so, we’ll be aiming to put our remaining 70% cash position to work. But for now, going slow remains your best course.

Centrus Energy (LEU) shares were largely unchanged as the company is well positioned to benefit from growth in next-generation nuclear technology, helping provide reliable and carbon-free electricity. This is still a buy for aggressive investors.

This month we’re going with a little-known consulting company that’s growing revenue and EPS in the double digits as it helps organizations adapt to the changing times.

It is growing especially quickly in areas like digital transformation, which is challenging for lumbering organizations in the healthcare and education segments where the firm generates the bulk of its revenue.

With a fresh revenue and profit growth strategy and a plan to return more money to shareholders, this little company’s stock looks great.

Enjoy!

The high-growth cannabis sector continues to be full of rapidly evolving developments that could move our stocks significantly at any moment.

Beyond the potentially transformative changes in the works on legalization, almost all our companies just reported solid third-quarter revenue growth.

That means this issue of the Cabot SX Cannabis Advisor focuses heavily on corporate trends and developments in the company update section, below. The updates are longer than usual, covering the key news events and developments at our companies revealed in quarterly results and other news flow.

Thank you for subscribing to the Cabot Turnaround Letter. We hope you enjoy reading the December 2022 issue.

While investment losses are everywhere this year, we highlight two ways to harvest these losses and discuss seven stocks that have strong appeal as year-end bounce trades.

We also highlight four attractive stocks held by highly-regarded long-term value investment funds that we found in our analysis of the recent 13F regulatory filings.

Our feature recommendation this month is theme park operator Six Flags Entertainment (SIX). This company is aggressively working to improve its profit structure under a completely new leadership team but the turnaround is taking longer than investors would prefer, leaving its shares overly depressed. For patient long-term investors, the shares offer an attractive, asymmetric potential return.

With one month left to go in this miserable year, the stock market picture is the brightest it’s been in some time. The S&P 500 is up 11% since its mid-October bottom, volatility is way down, and December is traditionally (though not always) one of the better months on the calendar for investors. The next Fed meeting or inflation data point could throw cold water on all that, but for now the water is at least lukewarm, which means it’s time to take a chance and dive in head-first with a new small-cap financial recommendation courtesy of Cabot Early Opportunities Chief Analyst Tyler Laundon.

Details inside.

Not much has changed in the past week. We currently have two open positions: a bear call spread in SPY and an IWM iron condor. Both are due to expire December 16, 2022, and both are currently in a profitable state. My hope is that we can take both of our trades off this week for nice profits.

I also plan on adding another bear call spread to the mix this week, this time for the January expiration cycle. And if we see a decent pullback this week, I’ll follow that trade with a bull put spread in January.

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.

There is a Fed meeting today. The ultimate oracle of wisdom will bestow their current thinking upon anxious traders.

Before we get into this week’s update, I want to share a few thoughts on my favorite free investing resource: Twitter. From 2006 to 2018, I worked at Eaton Vance and then at Citi, and didn’t really see the use for Twitter. It just seemed like a bunch of people arguing with one another.

Cyclical stocks are getting creamed today. Energy is down the most. But industrials, materials, and financials are getting hit too.

After declining 6% in June, gold enters what is historically one of its most lackadaisical months from a seasonal standpoint.

The market has hit an air pocket over the last few sessions and SPAC IPOs have been particularly soft for a few weeks now. Today we’re taking partial gains in a few positions and cutting losses short in another.

Friday afternoon several of the April covered calls that we sold expired worthless, leaving us with “uncovered” stock positions.

This bank is undervalued, and has profited during the pandemic.

The shares of this insurance business were recently upgraded to ‘Buy’ at Goldman Sachs.

The expiration of our April covered calls is tomorrow, and our positions are working very well, though several are now trading below the strike price of our covered call options.

We’ve seen a big improvement in the way many growth and early-stage stocks are acting over the last two weeks. Many of our stocks that sold off in March have been gaining some altitude back, and many of those that were acting well continue to do so.

Six analysts have boosted the EPS estimates for this financial research company in the past 30 days.

Nine weeks ago, as the marijuana sector was completing what looked like a climax top, I took the risky step of taking partial profits in ten of our stocks, moving to a 45% cash position.

In the last 30 days, four analysts have raised their EPS estimates for this bank. The shares have a current annual dividend yield of 3.25%, paid quarterly.

The top five holdings in this healthcare fund are: Pacific Biosciences of California Inc (PACB, 7.19% of assets), Danaher Corp (DHR, 4.72%), TG Therapeutics Inc (TGTX, 4.58%(, Fulgent Genetics Inc (FLGT, 4.10%), and Repligen Corp (RGEN, 3.89%).

Activist board members and a recession-proof business may push this company to a nice turnaround.

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 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.