This week’s GDP number should confirm that we are in a recession. That might be good news for the market.
The worst situation for stocks tends to be a “looming recession”. Stocks tend to fall most as a recession approaches and in the early phases of an actual recession. Stocks also tend to recover before the economy because the market anticipates six to nine months into future. In a typical recession, stocks fall before it hits and recover before it’s over.


If this week’s number confirms that we are in a recession that began at the beginning of the year, the market should be in a more desirable position than if a recession is anticipated later this year or early next year.<.p>


The recent rally in technology is encouraging. I mentioned in last month’s issue that technology stocks had fallen before the overall market and were likely to recover before most other sectors. Since then, portfolio position Qualcomm (QCOM) is up nearly 30%.


This month’s issue highlights another technology stock, Intel (INTC) . The stock is still very cheap with bright prospects in the future. If the market turns south again, the stock should hold up better than the technology sector and be a solid longer-term hold. But if this rally in technology proves to be lasting and QCOM gets called away, we will still have another tech stock that should move higher as well and provide a great call writing opportunity.

In recent months I’ve been telling you that cannabis stocks were incredibly cheap and overdue for a bounce and now it seems the world is starting to agree, as all our cannabis operators (not the REIT) have seen their stocks climb in the past month.

Of course, the broad market’s rebound has helped, but the broad market doesn’t have the compelling fundamentals of the cannabis industry’s top stocks.



Bottom line: the first six months of 2022 were rough. The past month brought us a small gain. And I expect far bigger gains over the remainder of the year.



Full details in the issue.



Yours for wealth and wisdom.

The precious metals remain near their yearly lows, but a window of opportunity still beckons. Specifically, recent commercial hedging activity points to a possible bottom ahead for the metals.

Elsewhere, titanium remains one of today’s strongest metals. Other industrial metals, meanwhile, are coming off major lows but have rebound potential.



In the trading portfolio, I’m adding a potential short-covering trade for a palladium ETF. Details inside.

This week we are going to make a play on Qualcomm (QCOM), which is due to report earnings on Wednesday. And while there is risk in executing a trade ahead of earnings, we are going to play it conservatively by selling an in-the-money call.

For the first time in months, stocks actually have a bit of momentum. Is it sustainable? Or another false start? Too early to tell. But it’s a good time to keep adding beaten-down names that are finally showing signs of life. This week’s new recommendation fits the bill, and has been a big winner for Carl Delfeld since he added it to his Cabot Explorer portfolio earlier this month.

Details inside.

The big event last week for the market was that, by our measures, the intermediate-term trend of the major indexes and many growth funds turned up, which is enough for us to extend our line a bit—but, at this time, just a bit, as there remain many headwinds, including the longer-term trend and (very important) the lack of upside breakouts quite yet. That tells us to go slow and keep our eyes peeled for further upside confirmation—if we see that, we’ll continue to put more money to work in fresh leaders, but should the nascent rally hit a wall, we’ll hold off. For now, we’ve nudged our Market Monitor up to a level 4 and will take it day by day from here.


This week’s list has a bunch of names that have shown solid power of late, though most do report earnings within the next two or three weeks, so be sure to keep things small and aim for dips.. Our Top Pick is an innovative software firm whose stock is actually tightening up after a good-looking bottoming process.

There really isn’t too much to say at the moment. Our positions keep chugging along and while they are all still in a healthy position the margins of error, particularly to the upside on our SPY and IWM iron condors, have narrowed a bit. No worries, we will make adjustments if necessary, but for now the probabilities on all our trades remain in reasonable territory.

As for next week, well, due to the rally over the past week, we are seeing numerous ETFs hit a short-term overbought extreme. We don’t want to react too quickly, but if we see a continuation of the current trend higher, I think a trade or two will be in the cards as we want to take advantage of ETFs in a short-term overbought extreme. SMH is already there, but I would like to see a few others join the group before taking on another position.

Earnings season is finally in full swing next week with an abundance of high-quality, blue-chip companies due to announce.

Microsoft (MSFT), Visa (V), Mastercard (MA), and Apple (AAPL) are just a few of the names I’ll be focusing on. As you can see in “The Week Ahead” section below there are more than 15 stocks that I’ll be watching closely next week with the intent of making at least two, three, if not four trades.

All of the major indices continued to rally this week, which helped all of our open positions.

We sold calls against our newly assigned shares of BITO and GDX early in the week and decided to sell more puts in WFC towards the latter part of the week. We currently have five open positions.



That being said, I plan to add at least two to three more as we move through earnings season. I really like to sell puts for an expiration cycle or two in large-cap equities with highly liquid options several days to a week after earnings are announced. I’m currently looking at a few of the big banks to sell puts on next week as well as a few credit card companies including AXP, V and MA.

Stocks are on track to post gains for July as Explorer recommendations have a good week with new pick Centrus Energy (LEU) up 20% followed by Cloudflare (NET), up 15%. Now, we head to Germany for today’s pick.

In the July Issue of Cabot Early Opportunities I snag two stocks from our Watch List and profile three fresh names that have caught my eye. Officially, we add three of these positions to our portfolio, including a rapid growth software stock, an oil and gas producer with a growing midstream asset base, and a rapidly expanding coffee shop.
Enjoy!

This week we are jumping right back into a position in Dollar Tree (DLTR), which is a stock we traded successfully last month.

The market finished mixed today, with the Dow up 36 points while the Nasdaq was up 159 points and most growth stocks acted well.

The environment for writing calls has deteriorated of late as the market uptrend has been interrupted. A market moving higher increases investors’ willingness to speculate on higher stock prices, and call premiums rise. A choppy market reduces demand and call premiums.

The furious market uptrend since the lows of March has experienced its rudest interruption so far. The S&P 500 got to within a whisker of a correction, falling 9.6% from the high on a closing basis. But it has since recovered nearly half of the downside.

With all of our stocks now having price targets assigned to them, we thought we’d share with you some of our process behind how we set those price targets.

Every so often, I get a question from a subscriber about a price move in one of my micro-cap recommendations. The first thing that I do is check the trading volume.

It’s been another week of mixed stock performance and assorted headlines that collectively give me the sense that, while a lot of investors may be shifting money around, there’s no real consensus yet on what will work and what won’t in the near-term.

That tech stocks would cool a bit has been one of my key themes over the past few issues; and September has seen it come to pass.

After pulling back over 8% from the high, the market is having trouble finding any traction. And the selling may not be over.

Through most of the summer, investors had become increasingly confident about the strength and direction of the economic recovery, the likelihood of the arrival of several promising Covid vaccines, another round of federal economic stimulus and other favorable indicators.

As we move closer to October, the S&P 500 is down about 8% from its peak and this is no longer the longest start to a bull market.

The market and big-winning growth stocks from this year remain iffy—today’s drop put our Cabot Tides on the fence and many growth stocks are still in a rough patch.

Our second recommendation is a sale of a previous pick that has been stopped out.

Our first idea is a food company that is undervalued and is paying a hefty annual dividend yield of 5.22%, paid quarterly

Eight weeks ago as marijuana stocks topped, I began selling and taking profits and that’s worked out well. We’ve lost less than the index, as the correction took down first marijuana stocks and then all stocks. At the same time, our strongest stocks have gained.

Shares of this oil refiner have perked up a bit lately; it still has a high dividend yield of 9.62%, paid quarterly and is in a renewable diesel joint venture.

One of our portfolio stocks moves to Hold

This internet gift company is expected to grow at an annual rate of 20% over the next five years.

I usually wait until the second Wednesday of the month to share my latest micro-cap recommendation with you, but in this case, I couldn’t wait.

Big Data is where a lot of past and future profits are being made.

We are moving Amplify Energy (AMPY) from HOLD to SELL.

In the past 30 days, 13 analysts have increased their EPS estimates for this tech company.

This healthcare company beat earnings estimates last quarter, posting EPS of $0.35 vs. the $0.16 that Wall Street forecasted.

Given the market pullback, a couple names on my watch list are looking particularly interesting. I haven’t completed my analysis yet, but stay tuned—all of these names could ultimately make their way into the Cabot Micro-Cap Insider portfolio.

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.