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.

Things are still great. The market indexes are either making new all-time highs or within a whisker of them. The uptrend continues ahead of what is sure to be a booming economy in the months ahead.

We at Cabot Micro-cap Insider are long-term investors and try not to time the market. However, we are aware that there is seasonality to market returns. You have probably heard the term, “Sell in May and Go Away.” That’s because on average, the six months from May to October are the worst performing months for the S&P 500 Index.

It’s earnings season. And it’s a weird one.

Today’s note includes earnings updates, ratings changes, the podcast and the Catalyst Report.

Even though stocks have been wobbly today the last week has been very constructive for our portfolio. As of mid-day today, our portfolio is up an average of 4% from last Thursday’s close, and only two positions are down (neither by more than 2%).

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.

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).

Our first recommendation is a security tech company that is expected to grow earnings by 152.4% this year. Our second is some nice partial profit-taking of a previous idea.

This food company just announced its new Accelerate growth strategy, which will focus on five categories that, together, account for 45% of its revenues: cereal, pet food, ice cream, snack bars and Mexican food. The shares have a current annual yield of 3.57%, paid quarterly.

We are raising our price target on ViacomCBS (VIAC) from 54 to 65 and moving to HOLD.

Coverage of the shares of this electric vehicle maker were just initiated at Morgan Stanley with an ‘Overweight’ rating.

Earnings for this navigation/information company are expected on February 17, with estimates of $1.39 EPS on revenues of $1.18 billion. The shares have a current dividend yield of 1.93%, paid quarterly.

This bank is joining the digital asset (think Bitcoin) business rapidly, boosting its attractiveness to investors.

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.