Tuesday there were some rays of sunlight amidst the storm, but until proven otherwise, we are in a bear market and should proceed with caution. This brings me to this week’s trade, which is a defensive trade on a recent outperformer, that we recently traded successfully

There is overwhelming historical evidence that buying good stocks in bear markets is a highly successful long-term strategy. After all, it’s better to buy stocks cheap. And the market always trends higher over time. The truth is that buying stocks in a bear market is the most successful investment strategy ever devised.
Of course, the market may fall further before it recovers. You don’t have to pick one day and invest all your cash. You can trickle in over time. You can invest just a little right now. If the low is already in, you got a great price. If the market falls more, you put more money in later. Over time it will work out.


In this issue, I highlight a portfolio position in the technology sector. The sector plunged into a bear market before the S&P and will likely be one of the first sectors to lead the way back up. The sector was already down less than the overall market in last week’s tumult.

The market is enjoying a big bounce today, but that’s not unexpected given last week’s washout; the main trend is still down.

And that means continued caution is the prescription, which is filled this week with an old-school vehicle parts company that pays a solid dividend and has a nearly bulletproof business.



As for the current portfolio, which is 25% in cash, there’s one Sell and a couple of downgrades to Hold.


Details in the issue.

It’s about at this point in a bear phase where investors start to throw up their hands. But it’s important to stay in touch: While the past two weeks brought most stocks lower, the selling was focused on areas that hadn’t yet gotten hit, while some of the “leaders” of this bear phase are actually trying to hold up. If you want to play a bounce, we actually think some of those areas could prove fruitful, though of course we’d keep things small and stay in an overall defensive stance.



This week’s list reflects all of this, with names from a handful of areas that have been forming higher lows in recent weeks (or months) and even showed some solid support (or even upside volume) of late. Our Top Pick is a Chinese EV player that’s showing excellent power and sports fantastic growth.

Not much to say this week. We are now four weeks away from the next round of earnings and there is no doubt it will be an interesting one. I will continue to share any ideas that come our way and possibly make a trade or two in the process. This week, we actually have a potential trade on our hands in FedEx (FDX). I will discuss the trade in the “Trade Ideas” section below.

We recognize opportunities are scarce; they always are when we are in between earnings cycles. However, when earnings season is in full swing, we will often see 20 to 30 trade ideas per week, with the potential to send out alerts on two to five each week. Of course, if you wish to trade more (beyond our alerts), other ideas will be there for you to peruse and trade as you wish.



We try to place trades on at least 10-15 trades per earnings cycle, sometimes more, sometimes less.

Before I get started, I wanted to thank everyone that wrote in this week. I appreciate all of the kind words during and after our first subscriber-exclusive webinar. If you didn’t get a chance and want to check it out, click here or go to your subscriber page at your leisure. As I stated in the webinar, if you have any feedback, comments or questions please do not hesitate to email me at andy@cabotwealth.com. I’m more than happy to help in any way I can.

Monday saw a historic amount of selling pressure. In fact, fewer than five stocks in the S&P 500 were able to eke out a gain on the day.



And it only got worse.

Before I get started, I wanted to thank all of you that wrote in this week. I’ve received kind words across all four of my services and I greatly appreciate it. I hope you will all find my services and statistical approach to options useful for years to come. As I stated in our most recent webinar, if you have any feedback, comments or question please do not hesitate to email me at andy@cabotwealth.com.

Monday saw a historic amount of selling pressure. In fact, fewer than five stocks in the S&P 500 were able to eke out a gain on the day.



And it only got worse.

After a modest bounce in May and early June, another thunderstorm has hit the market, driving the indexes and most stocks to fresh lows. Of course, the Federal Reserve is on everyone’s mind these days, but really, you don’t need to guess about what they’ll do and what effect it will have--just following the market’s trends has kept us mostly on the sideline in recent weeks and months, and they’ll be your best guides going forward. In the meantime, we’re actually trimming one of our two positions tonight, but we’re keeping our eyes open for signs the buyers are putting up a fight.



In tonight’s issue, we write about the energy sector, our current holdings and a few new ideas, too. We offer no predictions and remain mostly safe on the sideline, but the environment is certainly ripe for a turn given how everyone’s predicting doom, so it’s important to keep your head up and be ready should the evidence improve.

In the June issue of Cabot Early Opportunities we add a conservative stock from our Watch List that’s acted well over the last month and also take a partial position in an emerging player in the energy space. We also refresh the Watch List with a pure-play beverage stock, a biotech stock with a big date in November and another emerging energy name.
Enjoy!

This week’s covered call trade is a defensive play on a retailer that has outperformed its peers amidst the market mayhem.

After several weeks of underperformance, gold is once again showing promise after the latest round of global equity market weakness. As we’ll discuss here, it’s looking like safety demand for the metal is rising.

Titanium, meanwhile, remains strong and is currently the top-performing metal.



Lithium was shaken by a bearish Goldman Sachs call, but the metal’s trend is still up.



All told, I continue to recommend that we stay on our toes as market turbulence is very high right now.

The S&P 500 is now in bear territory, which should not be particularly surprising to anyone.

The economy is slowing, inflation is high, war is still raging in Ukraine and China’s economy is not in good shape.



For investors, the trick is to not get discouraged about the current market, but instead, to seek opportunities to profit.



That’s exactly the point of the Undiscovered Portfolio (more about that below). If you’ve invested in that portfolio, you know we’ve been able to identify exchange-traded funds with higher probabilities of delivering positive returns in this market.

While the market action has been somewhat exciting this week (though in the wrong direction), it was fairly dull for Cabot Undervalued Stocks Advisor recommended stocks in terms of news. This news drought will fade as five companies report later this week, with six more the following week.

What does this have to do with investing? I think Fraser’s approach can translate quite well to the way we invest.

Earnings season is in full gear this week, with six companies reporting.

Anyway, the market doesn’t seem to be fazed by all the incredible things going on in the world these days. Stepping back, that makes some sense.

Stocks trading on U.S. markets faced some resistance as hopes for some sort of stimulus bill fade and as mixed earnings report begin rolling in. A key question is whether the pandemic boom stocks will have the revenue and earnings growth to support their sharp advances.

I expect a strong bull market on the other side of the election and pandemic, but things could be dicey in the near term.

The market is still solid. The bad news and uncertainty hasn’t dragged it down in any significant way. Investors still see the prize of a rapidly recovering economy and the pandemic fading. While I see very good days ahead for the post election and post pandemic market, there may be some rough seas ahead in the near term.

Many great investors including Peter Lynch and Warren Buffett recommend ignoring macro and politics and focusing on bottom up company analysis. They argue that anything else is a waste of time. Focus on things that are more predictable.

With low interest rates and easy borrowing terms, and some supportive jaw-boning and incremental buying by the Federal Reserve, new corporate debt issuance in the United States is reaching record highs.

This week is the start of earnings season. We review Wells Fargo’s (WFC) earnings and provide updates on several Cabot Turnaround Letter recommended stocks.

The market took a hit today, which wasn’t totally unexpected; overall, the damage was contained, with the Cabot Tides remaining positive and most growth stocks still in good shape

I don’t anticipate any major changes in our portfolio leading into earnings as I’d prefer to hear what’s new and then go from there. That said, we have a couple of minor adjustments based on stock price action.

This portfolio stock reported Q3 results yesterday that came in ahead of expectations.

This consumer products company beat earnings estimates by $0.21 last quarter.

This preferred stock is issued by a Chicago-based regional bank.

With all five states that voted on marijuana proposals last week saying “Yes,” the trend toward nationwide legalization is now clearer than ever—and marijuana investors have been acting accordingly.

Rich is recommending a sell for this portfolio stock.

Tyler reports on three stocks in the portfolio.

Tyler updates us on one more stock that reported earnings recently.

The major indexes are bouncing this morning, and growth stocks are stabilizing, which is a good first step. As of 9:55 am the Dow is up 75 points and the Nasdaq is up 169 points.

This toy manufacturer beat analysts’ EPS estimates by $0.25 last quarter.

Tyler updates us on two more stocks that reported earnings recently.

Growth stocks have taken a beating so far this week as a sharp rotation is underway. Given that the Model Portfolio was 41% cash coming into this week, we’re not craving more cash, but we are making one small move tonight

We have four earnings reports from last night to get to today (ARNA, APPF, RPAY, SPT). Right now, I’m getting the first two out and will follow up with the other two shortly.

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.