As we head into the holiday season, there really isn’t much to do with our existing positions. I do plan on buying back our BITO calls this week and selling more calls against our shares, but other than that I don’t have any plans, at least at the moment, to place any trades in our Income Wheel portfolio. That being said, after the sell-off last week there are several good candidates for our shorter-term Income Trades portfolio. If all goes as planned, we could have at least one, if not two trades for our one-off, short-term (30 to 60 days) Income Trades portfolio.

The sell-off late last week led to us taking off our SPY bear call spread after just three days. We locked in 8% on the bear call spread which added to our cumulative total return of better than 112% since starting the portfolio back in early June.

In the last three weeks alone we’ve locked in returns of 11.4%, 10.9%, 11.4% and 8.0%. Now we are left with just one open position, an iron condor in IWM, which at the moment looks to be a profitable trade.

Patience remains a virtue in this market, as the major indexes and individual stocks have been unable to get going, though for the most part, sellers have failed to take control, too. We’ll see if today changes that; today’s post-Fed selling was ugly, though it hasn’t cracked our Tides buy signal or most stocks that were setting up. Either way, we’re remaining defensive, with nearly three quarters of the portfolio in cash.

Tonight’s issue is very stock heavy, with a big watch list and write-ups on on a variety of names (including some recent IPOs) that are acting well and have great stories. We continue to think a few good days could make all the difference, but until we see it happen, less remains more as we keep our eyes open for signs the buyers are showing up and the sellers have left the building.

The Fed raised benchmark interest rates a half a point and signaled more to come. Elsewhere, scientists studying fusion energy at Lawrence Livermore National Laboratory have crossed a huge milestone in reproducing the power of the sun in a laboratory. Explorer positions showed relative strength, led again by Kraken (KRNKF). Today we go to Britain for a historic and strategically important company, brand, and stock selling for a bit over $1 a share.

It is reasonable to expect a significant market turnaround sometime next year. The market trends higher over time. And bear markets always give way to bull markets. Things should get a lot better in 2023. But there is a strong chance they get worse first given the current uncertainties regarding inflation, the Fed, and a recession.

Of course, a recovery and new bull market should reward the short-term pain handsomely over time. As a longer-term investor, which dividend investors should be, it should just be short-term noise on the way to long-term profits. But we can do better than just riding out the storm. We can exploit another possible market downturn to our advantage.

It’s a fact that many stocks that get hurt the worst in a bear market are the first to recover when the market turns. In this issue, I highlight a phenomenal cyclical stock that had been a market superstar but has been clobbered in this bear market. The stock is targeted at a low, low price that may be reached if the market falls to a new low. It could provide incredible upside leverage ahead of a market recovery.

Today, I’m recommending an energy company that is gushing free cash flow and is likely to be sold in the near future.

Key points:

· 33% of market cap in cash (downside protection)
· High insider ownership
· Trading at a price to free cash flow multiple of 4.3x

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

Once again, the sellers stepped in last week and at least in the short term dented the bulls’ optimism. By week’s end the S&P 500 had fallen 3.35%, the Dow had lost 2.71%, and the Nasdaq had declined by 3.57%.

As has been the case for the past few weeks, the evidence hasn’t changed much, with an on-the-one hand, on-the-other-hand situation: The intermediate-term trend has remained stubbornly up (good), but the longer-term trend is down and no real progress has been made for a few weeks (bad). Stocks are still being mostly rejected by resistance (bad), but the selling pressures haven’t followed through in most cases (better). And many timing indicators have improved (good), but not enough to tell us the sellers have truly run out of ammo (bad). As always, we’ll take it as it comes, leaving our Market Monitor at a level 5 for now.

The good news is that we’re continuing to come up with solid-looking charts from a variety of areas. Our Top Pick this week a turnaround play in the chip equipment field, which itself is acting surprisingly well.

The last two market-driving events of 2022 arrive this week with the latest CPI data (Tuesday) and the Fed’s latest interest rate hike (Wednesday). How those numbers look versus expectations will largely determine how this week, and the rest of December, goes. To have all our bases covered, we continue to add a blend of investment types and sectors. And this week we add something we don’t currently have in the Stock of the Week portfolio: a biotech, recommended by our resident growth investing expert, Mike Cintolo.

Last week we locked in more profits in PFE. We bought back our December 16, 2022 45 puts for $0.02, thereby locking in a profit of $1.06, or 2.36%. We’ve locked in a total profit of 8.6% in PFE since introducing it to the Income Cycle portfolio back in early June—not bad considering PFE stock is slightly negative over the same timeframe.

We locked in two additional profits last week, both bear call spreads and both in SPY. The returns were 11.36% and 10.86%. And this is one week after locking in 11.36% in our IWM iron condor.


Our cumulative total return since introducing Quant Trader back in early June stands at 104.88%.

We have some exciting times ahead as our Dogs and Small Dogs portfolios will be coming on board at the beginning of 2023. I will be discussing the details of the approach, strategy, positions and potential trades in our subscriber-only webinar tomorrow so you will not want to miss the event. If you do happen to miss, no worries, if you sign up at least you can immediately receive the recording once it’s available.

The dominant theme for precious and base metals in June has been the dollar short squeeze. This month’s sizable rally in the U.S. dollar index (USD) put heavy selling pressure on most industrial and precious metals that are priced in dollars. Gold and silver pulled back around 7% during the dollar’s rally, while copper suffered a 13% decline and platinum led the way down with an 18% drop.

This was a quiet week, with no earnings reports or ratings changes.

There remain a few yellow flags in this environment, especially as many indexes are chopping around and trends in individual stocks and sectors remain fleeting. But there’s no question that the action in growth stocks has improved, so we’re going to put a bit more of our large cash hoard to work—we’re going to add half-sized positions in both DocuSign (DOCU) and Cloudflare (NET), which are two of the best-looking growth names in terms of story, numbers and charts.

Despite some wobbles last Friday it has been a constructive week for the market, and especially for growth stocks. Since last Thursday’s close and through yesterday’s close the S&P 500 has inched up 0.5% (back near record closing highs), the Nasdaq has hit a record high and the S&P 600 Small Cap Index is up 0.3%.

The market is hovering at a high level within bad breath distance of the all-time high. But that factoid is deceiving. The market really has not gone anywhere but sideways for about two months.

Greentech managed last week’s market downturn well, with a huge-volume day Friday that left the index we watch most closely, the Wilderhill Clean Energy, with a spinning top doji.

Last week, we started our multi-part discussion on position sizes, and looked at the benefits and weaknesses of an equal-weighted approach. Let’s look at perhaps the most common weighting used by fund managers: relative weighting.

Do you consider yourself a growth stock investor or a value stock investor? I think growth or value framework is a false dichotomy. Warren Buffett summed it up well when he said: “Most analysts feel they must choose between two approaches customarily thought to be in opposition: ‘value’ and ‘growth.’... In our opinion, the two approaches are joined at the hip: Growth is always a component in the calculation of value.”

This was a quiet week, with no earnings reports or ratings changes.

Small caps have pulled back ever so slightly from the all-time highs of last week. But that’s not the big news of the week. The larger event was yesterday’s Fed meeting, during which Chairman Jerome Powell suggested that a start to tapering of asset purchases was still a “ways off” but that this was a “talking about talking about meeting.”

The Federal Open Market Committee (FOMC) convened on Wednesday and Chairman Jerome Powell and colleagues seem to be inclined to raise benchmark rates sometime next year. At least for now, the Fed kept rates on hold and signaled it would continue its quantitative easing.

Sideways is a good thing. The market had a huge recovery from the pandemic and really soared between November and May. After such a rapid move higher in a short amount of time, a correction would be normal.

The shares of this airline were recently upgraded by Deutsche Bank to ‘Buy.’

BioLife (BLFS) reported Q4 results yesterday after the close that surpassed revenue expectations. Revenue was up 77.5% to $14.7 million (beating by $1.2 million) while adjusted EPS of -$0.01 was in-line. For the full-year 2020 revenue was up 76% to $48.1 million, driven largely by Media products, which grew by 32% to $31 million.

This containership company beat analysts’ estimates by $0.05 last quarter, and it is expected to grow earnings at an annual rate of 16.5% over the next five years.

The Dynatrace (DT) March 55 call that we sold last month for $4.60 expired worthless on Friday. This was a totally fine situation, and our position is at a small profit.

New business is pushing shares of this flight simulator up, up, and away.

Today is the expiration of March options, including five positions in the Cabot Profit Booster portfolio. And I’m happy to report, despite the market being a bit “crazy” the last three weeks, four of our positions will very likely expire today for profits ranging from 4.5% to 18.6%, and one will expire mostly at breakeven. Here is the full breakdown:

Hedge funds are diving into this e-commerce company’s shares; their interest is at an all-time high.

This preferred stock has above average yields, and is issued by an insurance company that beat quarterly earnings estimates by almost 11%.

We are moving Volkswagen AG (VWAGY) to a SELL.

The good news is that one of our stocks, Trulieve (TCNNF), closed at a record high yesterday. The bad news is that none of our other stocks did. The sector as a whole remains in the moderate correction that began five weeks ago, and I continue to think that we are likely to see lower prices in the near future.

This home goods retailer is getting ready to launch eight new private-label brands. The stock is showing good momentum, as investors applaud this news.

It’s been a week or so of comparatively calm market action, which has given us a chance to evaluate how our current roster of stocks is behaving. With that evidence, and a new batch of stocks coming tomorrow in the March Issue, we’re going to step aside from a few of our weaker performing positions today.

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.