There’s little doubt the market’s evidence has worsened of late, with our Cabot Tides and Two-Second Indicator re-joining the Cabot Trend Lines on the bearish side of the fence; thankfully, we went slow on the buy side in July and early August, and today, stand with about 65% in cash. But we’re also not completely in the storm cellar, as we still see signs the market could be in a bottoming effort (and in-between phase between bear and bull), so we’re happy to hold onto some resilient stocks and aim to nibble on potential leaders if the market can find its footing.


In tonight’s issue, we dive further into our thoughts on the market, but spend most of the time writing about future leaders, including a few from one sector that’s clearly in pole position to do well if the bulls can step up to the plate

The traditional last week of summer on Wall Street went out with a whimper, as the market fell for a third straight week. The numbers weren’t pretty for the bulls as the S&P 500 fell 3.3%, the Dow declined 3%, and the Nasdaq fell another 4.2%.

Thank you for subscribing to the Cabot Undervalued Stocks Advisor. We hope you enjoy reading the September 2022 issue.

We’re not in the predictions business, so we have little use for predictions or forecasts. Our commentary includes perspectives from Warren Buffett and Yogi Berra.



This past month we covered a complicated earnings season and added two new stocks (State Street Corporation and Gates Industrial Corporation) while selling our position in The Coca-Cola Company.



Please feel free to send me your questions and comments. This newsletter is written for you and the best way to get more out of the letter is to let me know what you are looking for.



I’m best reachable at Bruce@CabotWealth.com. I’ll do my best to respond as quickly as possible.

The traditional last week of summer on Wall Street went out with a whimper, as the market fell for a third straight week. The numbers weren’t pretty for the bulls as the S&P 500 fell 3.3%, the Dow declined 3%, and the Nasdaq fell another 4.2%.

The traditional last week of summer on Wall Street went out with a whimper, as the market fell for a third straight week. The numbers weren’t pretty for the bulls as the S&P 500 fell 3.3%, the Dow declined 3%, and the Nasdaq fell another 4.2%.

We’re still thinking there’s a decent chance that the market’s action since May and June is part of a big bottoming process, but it’s also pretty clear that, even if that’s true, the market has more work to do—the selling of the past three weeks has erased many of the positive top-down signals from the prior month or two, with the intermediate-term trend of the major indexes pointed down, the broad market unhealthy and growth stocks in general again underperforming. We’re still aiming to hold onto resilient names, but having plenty of cash is also a must, as is staying flexible.


This week’s list has a bunch of good charts, reflecting the fact that many nooks and crannies of the market are still looking somewhat solid. Our Top Pick is a leader in a commodity niche that has a good launching pad and has come under strong accumulation.

The selling continued on Wall Street this past week, which has us trimming two more positions in the Stock of the Week portfolio. But most of our stocks are holding up well, and two in particular – Centrus Energy (LEU) and Ulta Beauty (ULTA) – are thriving. Today, we add a stock that not only insulates us a bit from all the selling, but also broadens our international exposure. It’s a value play, courtesy of Bruce Kaser, that’s also growing – up 24% this year!

Details inside.

I’m going to push back my hedge trade for next week as I plan on buying back most of our current positions and immediately selling more premium. Once I have a better idea of the premium we are able to bring in by selling more premium, most likely for the October expiration cycle, I will send out an alert with my hedge-based trade followed by a detailed explanation of how the trade will work going forward.

We are two weeks into the earnings season doldrums and the opportunities are, at least for now, non-existent. But as I state almost every week, while the offseason earnings trades oftentimes lack all the necessities for an actual trade, it’s still worth looking at potential trades as we patiently wait for another earnings season, if only for educational purposes.

Since our last issue the market has pulled back sharply. No worries, as our portfolio was leaning bearish so the pullback gave us the opportunity to take off two of our bear call spreads. We took off both our SPY and DIA bear call spreads for returns of 14.42% and 15.47%, respectively.
Now we are left with our iron condor in IWM which I hope to take off for a small profit over the next week or so. But I also want to ramp up our positions again with implied volatility once again popping off near-term lows and now hovering above 25.

This was a tough week and major indexes slid between 4% and 5% in August, their worst monthly performances since June. Nuclear energy play Centrus Energy (LEU) was a standout Explorer stock, up 56% over the last month. Today, we go to Canada for an interesting and speculative maritime robotics play.

The market has been iffy since Fed Chair Jerome Powell’s “prepare for pain” speech at Jackson Hole last Friday.

With interest rates up and (most) stocks down since I’m going with a high-quality name this month.



This healthcare specialist just posted 44% growth in Q2 and has grown its covered lives by 80% over the last 12 months. It’s profitable, and with a bucket of new contracts in the first half of 2022 the business looks set up for a terrific 2023.



Enjoy!

It’s been said that the four most dangerous words in investing are “this time, it’s different.” The stock market’s behavior is clearly pointing to things being different this time.

As we approach Christmas, its important to remember that performance of the stock market tends to be quite strong around holidays.

It was a quiet week, with no companies reported earnings (no earnings reports scheduled for the rest of the year) and no changes in ratings or price targets.

Stick with the game plan of putting some money to work as opportunities arise. While the near-term path is a bit of a tossup, the major evidence remains bullish, and we’re seeing more and more leaders get moving in recent weeks.

As we move into the final weeks of 2020, I’m inclined to become a little more cautious with our buy ratings because, well, stocks have been en fuego! On that note, several stocks move from buy to hold today.

After having eclipsed the September high in mid November, the S&P 500 is continuing to make a series of new all time highs.

Over the past month or so, it seemed like stocks would continue their frenetic surge. This week, however, the market appears relatively lackluster with a lot less excitement. Some investors may yearn for more fireworks, but as a value investor, I find this calm to be more sane.

This week two companies reported: Signet Jewelers (SIG) and Duluth Holdings (DLTH).

The Explorer portfolio had another good week despite a sharp pullback by ElectraMeccanica (SOLO). We still have a big profit there, so I advise you to sell half your position and let the rest ride. As you review your stock portfolios going into 2021, I encourage you to take partial profits from your big winners.

November was quite a month in the market. It was one of the very best months for the market indexes in decades. The Dow was up 11.8%, the S&P 500 rose 10% and the Nasdaq gained another 11% in the month.

The final tally is in, and it was a November for the ages. The Dow Jones Industrial average was up 11.8% for November, making it the best month for the index since 1987. The S&P 500 climbed 10% while the Nasdaq gained another 11% for the month. History clearly shows that November was a spectacular month. What happened?

Investor sentiment is high these days. Just look at the Citi Panic/Euphoria Index

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.

The market continues to react to the good news on the vaccine front, but growth stocks continue to suffer. Today we’re taking another incremental step to wind down some of our exposure.

This mega-tech company is preparing to spin-off a subdivision.

Bruce is selling three portfolio stocks.

We are getting closer to clearing two of the biggest hurdles of uncertainty out there. I am, of course, talking about the U.S. presidential election and the Pfizer and BioNTech vaccine news.

The U.S. and the world has cleared two of the biggest hurdles of uncertainty out there. I am, of course, talking about the U.S. presidential election and the Pfizer and BioNTech vaccine news.

We are moving Peabody Energy (BTU) and Weyerhaueser (WY) to Sell.

We are moving Barrick Gold (GOLD) to Sell.

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.