From a top-down perspective, there are some rays of light out there--some of this week’s up volume has been very rare, and it comes on the heels of an onslaught of pessimism. That said, none of our indicators have flashed green, and the biggest thing we’re still seeing is selling on strength--this week, Enphase cracked and forced us to sell. We are adding two half-sized positions tonight in stocks from our watch list, but we’re remaining defensive with 78% in cash.

Elsewhere in this issue, we write about our Aggression Index and how it usually leads market bottoms--and how it’s showing interesting action in recent months. We also highlight many stocks that we’d love to own if the market gets going--we have our shopping list ready, but as always, have to see it first before any major buying.

It’s going to be a fairly busy week for trading.

We have four positions that are due to expire at the October 21, 2022 expiration cycle, three of which have little to no premium. As a result, I intend to buy back our calls in GDX, BITO, and KO on Monday or Tuesday. I’ll plan on doing the same in our PFE calls that are due to expire October 28.

My hope is to add several more positions to the Income Wheel portfolio this week as opportunities are plentiful.

I’m going to keep the intro short today as we have an upcoming subscriber-only webinar this week when I plan to touch on the current state of the market, our current trades, and some potential upcoming trades. If you wish to attend or receive the recording of the webinar, please click here to sign up.

Earnings season is finally upon us.

This week offers up a few potential trading opportunities, particularly in the big banks. JPMorgan (JPM), Morgan Stanley (MS), Citigroup (C), Wells Fargo (WFC) and US Bank (USB) are the big announcements on the docket and the companies I will be focusing on.

I also want to remind everyone that we will have a subscriber-exclusive webinar every Friday during earnings season, so make sure to sign-up when you get an opportunity.

As earnings season ramps up in the coming week, I wanted to note a couple items.

As earnings season ramps up in the coming week, I wanted to note a couple items.

The current market is giving investors headaches, but it’s not unusual in Greentech to find savvy investors looking past the near-term economic fears and focusing on companies that are tapping into what promises to be terrific growth from de-carbonizing the economy.

This issue, we highlight a small cap stock with amazing engineering savvy at a minor, but essential, feature of electric vehicles. Management expects it can grow revenue about 50% every year through the rest of the decade as automaker customers begin to churn out EVs. It’s in the early stages of growth and is seeing strong fund buying as well as exceptional technicals.



We also highlight three ESG stocks showing the best technicals in the group, as part of our recurring ESG Three, give the current sector outlook indicated by our Greentech Timer, and provide a detailed rundown of the stocks in our current portfolios. We have some ratings changes and refreshed sell-stop recommendations for many of our holdings.



Read through for more details.

In the October Issue of Cabot Early Opportunities, we try to interpret some of the latest commentary from Fed officials and look at the future cadence of expected interest rate hikes.

Then we dive into five stocks that seem poised for gains into the end of the year. On balance, we’re still optimistic the worst is behind us. But it’s not (yet) time to be overly aggressive. We try to balance the risks and possible rewards by managing position sizes and continuing to build up our Watch List.

In the October Issue of Cabot Early Opportunities, we try to interpret some of the latest commentary from Fed officials and look at the future cadence of expected interest rate hikes.

Then we dive into five stocks that seem poised for gains into the end of the year. On balance, we’re still optimistic the worst is behind us. But it’s not (yet) time to be overly aggressive. We try to balance the risks and possible rewards by managing position sizes and continuing to build up our Watch List.

The market has had many ups and downs in recent days, though stepping back, the indexes have been trending lower. Essentially, while there have been some strong days for the indexes, we are in a bear market until proven otherwise.

At the close of the August expiration cycle, back on the 19^th, the SPDR S&P 500 ETF (SPY) was trading for 422.14. Now it’s trading 3.7% lower at 406.60.

For the year the S&P 500 (SPY) is down 14.7%, while the tech-heavy Nasdaq 100 (QQQ) and small-cap Russell 2000 (IWM) indexes are lower by 22.8% and 15.7%, respectively.

Nothing has changed from last month’s issue. I still expect to see bouts of volatility going forward. I would like to say that most of the weakness is behind us, but unfortunately, I don’t have a crystal ball. Although, I will say that barring any real setbacks in inflation data or ongoing geopolitical concerns, I expect the market to hold the 2022 lows and potentially rally, particularly if inflation data subsides.

Last week was another doozy for the bulls, with the major indexes suffering a good-sized decline and many growth stocks taking it on the chin. With the major evidence still pointed down, we continue to advise holding plenty of cash and doing little on the buy side. That said, it’s also important to remain flexible, as there remains plenty of underlying potential positives, including another round of hugely pessimistic sentiment measures and a positive divergence in the broad market. As we’ve written before, if something actually goes right in the world, it’s possible the bulls could make a run at things, but we have to see it for more than a day or two to believe it. Our Market Monitor remains at a level 3.

This week’s list actually has a lot of names that look poised for intermediate-term moves … if the market can get out of its own way. Our Top Pick is an old friend in the medical device space that actually has four months of positive momentum on its chart.

It remains a very tricky environment for growth stocks, with most names near new highs finding sellers and earnings reactions (so far) being underwhelming (Pinterest is now on a tight leash). That said, we do see a lot of high-quality setups, so we’re ready to put some money to work, but we need to see buyers actually step up before stepping further into the meat-grinder environment.

The market just keeps marching higher despite increasing skepticism.

When looking at an investment idea, investors may want to replicate this intake process, tweaked of course for a clearly different (and less urgent) task. By using a consistent process, regardless of whether the idea comes from a friend, that off-beat relative, an investment broker or a newsletter, you can better categorize and screen incoming ideas.

The big news this week is taxes. President Biden proposed to raise the capital gains income tax on long-term capital gains from 20% to 39.6% for millionaires. Who knows if this law will actually get passed. I have my doubts. For years, Republican and Democratic politicians have tried unsuccessfully to close the carried interest loophole which allows private equity and hedge fund managers to treat profit windfalls as long-term capital gains not ordinary income.

Today’s note includes earnings updates and the podcast.

In the last 48 hours I have received two unsolicited offers to buy property we own. The first was for our second home in Vermont, a handyman’s special I bought in 2004 and sank nearly a decade of blood, sweat and tears into while completing a significant remodel, most of which I did myself. Now that it is pretty much done (as far as any house ever is) I’m in no mood to sell. We use it frequently to ski, and like knowing we have a store of value if our college savings plans go awry.

I believe the market’s churn over the last month or so is understandable given its sharp rebound over the last year. Investors and analysts alike are now assessing valuations of stocks relative to expected growth. In some cases it is giving pause; in others it is spurring action.

The market still looks strong. But it’s getting a little harder to figure out.

Proxy season is moving into full gear. As a shareholder, you are one of the owners of your companies, so you get to vote on major decisions. Shareholder votes are, of course, much like public government elections, but in most cases your vote has a bigger impact.

Even the S&P 500 is back near all-time highs. So why does it feel like there’s been a pullback in the market? Because there has … if you’re a micro-cap investor. The Russell Micro-cap index has pulled back and has underperformed the S&P 500 by 13% in the past month.

It’s earnings season. So far, it has mainly been just the big banks that have reported. And the results have been largely positive.

Today’s note includes earnings updates and the podcast.

Sprout Social (SPT) reported Q4 results yesterday that surpassed expectations. Revenue was up 32.6% to $37.3 million (beating by $1.4 million) while adjusted EPS of -$0.06 beat by $0.05. Guidance for 2021 looks solid with management calling for 2021 revenue of $172.5 million (up 30%), modestly ahead of estimates for $170 million.

Upwork (UPWK) reported Q4 results yesterday that surpassed expectations on the top and bottom lines. Revenue was up 32% to $106.2 million (beating by $8.8 million) while adjusted EPS of $0.06 beat by $0.06. Guidance for 2021 also surpassed consensus.

This power solution company beat EPS estimates by $0.14 last quarter and set record annual earnings.

Last week wasn’t great for growth stocks and so far, this week is just plain awful. The primary culprits are known; risk of inflation and higher interest rates have pushed cyclical stocks up and growth stocks down (generally speaking).

The overall market isn’t cracking yet, but growth stocks are beginning to flash lots of abnormal action. With our trend-following indicators still positive, we wouldn’t sell wholesale, especially if you came into this week with some cash (we had 20% in the Model Portfolio).

With the shares continuing to surge past our recently raised 65 price target and now being priced at a premium to even our upgraded valuation metrics

With the shares continuing to surge past our recently raised 65 price target, and now being priced at a premium to even our upgraded valuation metrics

This Canadian telecom company’s shares were recently upgraded by Canaccord Genuity to ‘Buy.” The shares have a current annual dividend yield of 4.75%, paid quarterly.

This preferred stock is issued by a North Carolina bank that is expected to increase earnings by 65.5% next year.

Sell CVX April 1 $95.50 call at $4.30 or better

Everbridge (EVBG) reported Q4 results yesterday that exceeded expectations on both the top and bottom lines and have sent shares soaring over 20% to a new all-time high this morning. Part of the reason is that the stock has been consolidating forever and is one of the few high-growth software stocks that has not traded at a crazy valuation. Today’s move may be the beginning of a reset to a sustained higher valuation (hopefully).

The expiration of our February covered calls is today, and we have two positions (KSS and SNAP) that are deep-in-the-money and will almost certainly be called away for maximum gains (great scenario) and another (AA) that is just in-the-money and likely to be called, but it will come down to the close (good scenario).

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.