A very promising start to the trading week, which saw the indexes surge higher by 5%, was somewhat washed away by last Friday’s post Jobs Report sell-off. And while the steep declines Friday were worrisome, big picture the S&P 500 still managed to gain 1.5% on the week, the Dow rallied 2%, and the Nasdaq added 0.7%.

Gold and silver have been under pressure from a strong dollar and higher interest rates, but there are signs that the metals’ dollar-related woes may be in the process of changing for the better. The global de-dollarization trend is a case in point, as we’ll discuss here.

Elsewhere, steel and copper are both trying to establish bottoms and are getting some help from a resurgent auto industry.


In the trading portfolio, no new positions are recommended for now as the broad financial market remains unsettled (with increased spillover risk into the metals).

A very promising start to the trading week, which saw the indexes surge higher by 5%, was somewhat washed away by Friday’s post Jobs Report sell-off. And while the steep declines Friday were worrisome, big picture the S&P 500 still managed to gain 1.5% on the week, the Dow rallied 2%, and the Nasdaq added 0.7%.

A very promising start to the trading week, which saw the indexes surge higher by 5%, was somewhat washed away by Friday’s post Jobs Report sell-off. And while the steep declines Friday were worrisome, big picture the S&P 500 still managed to gain 1.5% on the week, the Dow rallied 2%, and the Nasdaq added 0.7%.

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.

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.

Stocks continue to slide, prompting us to add some more safety to the Stock of the Week portfolio in the form of a gold mining stock recommended by Sector Xpress Gold & Metals Advisor analyst Clif Droke this week. It’s one of the few gold miners that’s actually growing revenues, and is in fact the only stock Clif is currently recommending. It also may benefit from ongoing global efforts at “de-dollarization.”


Details below.

There were a few positives last week, including some intriguing early-week strength, with some very powerful breadth, and, even with the slide of the past couple of sessions, far fewer stocks were hitting new lows compared to a couple of weeks ago. Given how everyone is leaning bearish, there’s plenty of upside potential if the market can catch a spark, but the jobs report-induced selling reinforces the pattern of selling on each and every rally. Long story short: While our eyes are open, nothing has changed with the major evidence. We’ll stick with a level 3 on our Market Monitor.


This week’s list is heavier on energy and medical areas, though our Top Pick is a name that should benefit from higher rates. As usual, though, we think aiming for dips is the right move.

Nothing new here. The song remains the same; the market continues to suffer. But, as I stated last week, while most portfolios across the investment universe have taken a turn for the worse, our Quant Trader portfolio continues to demonstrate why it’s a necessity to have exposure to options selling strategies.

Our win ratio stands at 90.9% and our cumulative return stands at over 40%.



We now have one open position for the October expiration cycle, our IWM iron condor, and three new positions due to expire November 18, 2022. Of course, I have no intent of holding on for that long and will gladly take profits early if possible.

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.

The market has been trying to climb off its knees this week as we’re finally getting some solid evidence that both inflation and the job market are cooling.

In a seemingly odd twist, in the short term what’s bad for the economy is probably good for the stock market. While that doesn’t mean we’re out of the woods just yet, I’m going to up our risk profile slightly with a potential big winner in the battery industry.

This company is currently qualifying batteries for wearable technologies and expects to move into more consumer markets, as well as the EV market, in the coming years. All the details are inside the October Issue.

Enjoy!

You may have seen that a relatively new Explorer idea, Fisker (FSR), was up 38% yesterday. It turns out that my analogy of comparing the company to Apple’s relationship to Foxconn was truer than even I could imagine. The news yesterday was that Foxconn will be making a future Fisker model electric vehicle, and even better, it may be doing so in my home state of Wisconsin.

The stock market is clearly accelerating the “reopening” trade. Small cap and cyclical stocks as well as commodity prices are surging, interest rates continue to tick up (the 10-year Treasury yield is now 1.38%, up from 0.92% at year-end), and novel financial vehicles like SPACs, Bitcoin and Reddit are attracting a stunning amount of attention. With the government plying the market with endless quantities of free money (drinks?), investors are giddy and going “all in.” The pot is now huge.

Judging by some headlines and my Twitter feed, you would think the markets are in meltdown mode. But I just checked and the S&P 500 is only 1.9% down from its all-time high. And the Russell Micro-Cap Index is down 4.0% from its all-time high. It’s important to remember that it would be totally normal if the market did continue to pull back, judging by previous bull markets.

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

The market took another hit this morning, but like yesterday, the major indexes have found support as the day has progressed—just after 3 pm EST, the Dow was down 70 points while the Nasdaq was off 66 points. Part of the reason for the recent selling is supposedly due to inflation fears and higher interest rates—indeed, the 10-year note reached north of 1.30%, which is low historically, but up 30 basis points (0.3%) since late January and 50 basis points (0.5%) from the start of December.

As mentioned last week, today’s Weekly Update will be an abbreviated version owing to the short work week and because of family commitments as our kids are out of school and I am solo parenting, making free writing time hard to come by. That said, to help you keep track of the latest guidance on all positions I’ve maintained our normal formatting and included short notes on all positions.

Earnings have been sensational. Reported earnings for S&P 500 companies have grown an average of 2% in the fourth quarter, compared to an expected -11%.

With the stock market regularly surging to record highs, it may seem like an unusual time to focus on valuation. After all, many stocks are remarkably expensive on traditional measures, and even somewhat lofty on non-traditional measures. But valuation still matters, especially if the market loses its current luster (assuming that is even possible)!

The market continues to perform incredibly well with the S&P 500 at an all-time high. And there continues to be signs of froth. The latest data point that I’ve found is the average SPAC is trading at a 26.4% premium to its cash value.

While the rest of the year looks very good for the market, a pullback is likely, if not inevitable, in the weeks and months ahead.

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

Suffice to say we are in a bull market. Areas of it are most definitely frothy. But stepping back and thinking about where we are in a bigger cycle I continue to feel as though we are entering a more sustained economic recovery and (hopefully) sustained market run-up broadly similar to what happened coming out of other major shocks, like the dot-com bubble and Great Financial Crisis.

This week, this biotech reported that its full-year 2020 net sales exceeded the high end of the company’s guidance range of $2.12 billion to $2.14 billion, growing more than 65%.

Karyopharm (KPTI) pre-announced Q4 2020 results yesterday morning and I watched the stock, which was weak (closed down 8%) throughout the day as I pondered the results. I’ll get to my thoughts in a minute. First, the numbers.

This Top Pick is a speculative buy, but has recently become more buyable after the company announced its plans to offer up to $35 million in additional shares.

This tech company beat analysts’ EPS estimates by $0.10 last quarter.

Yesterday after the close Accolade (ACCD) reported Q3 results that surpassed expectations on both the top and bottom lines.

This Canadian pharma company is forecasted to grow 111.5% next year.

The top five holdings are in this ETF.

Marijuana stocks exploded higher this morning as investors speculated that the solid Democratic federal government resulting from yesterday’s Georgia election would be favorable to this fast-growing industry.

This tech behemoth is forecasted to grow at an annual rate of 18.76% over the next five years.

Included are the top five holdings in this technology ETF.

What is the one investment that is shunned and denigrated as a waste for your money? Cash. No one advises owning cash or short-term U.S. T-bills because they provide little in the way of interest income.

The top five countries in which this fund invests are: United States, 45.11% of assets; Mexico, 10.73%; Argentina, 8.27%; Brazil, 5.26%; and Cayman Islands, 5.05%. The fund has a current dividend yield of 8.07%, paid monthly.

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.