Despite a rally midweek to new all-time highs, last week finished on a soft note as profit-taking and macro uncertainty crept back into equities. Investors grappled with cooling tech leadership, mixed earnings reactions, and a fresh focus on monetary policy. By week’s end the S&P 500 was up 0.3%, the Dow Jones Industrial Average had slipped 0.4%, the Nasdaq Composite had fallen 0.9%, and the Russell 2000 had lost 1.5%.

Explorer stocks had a good week. MercadoLibre (MELI) shares were up 10.2% in their second week as an Explorer recommendation. Coeur Mining (CDE) shares are a juggernaut, up another 11.8% this week and more than 308% over the last year. TransAlta Corporation (TAC) shares were up 12.8% this week as the focus on energy stocks intensifies. Archer Aviation (ACHR) shares, however, declined 8.7% this week as the market is looking for clear signs the company is on track for FAA certification, so I’m moving this stock to a hold.

The last few years have been turbulent ones for passenger airliner JetBlue (JBLU) which, in spite of an industry-wide recovery, hasn’t experienced the lift that many of its peers have since 2024.

On an industry-wide basis, domestic passenger airlines fully recovered in 2024, even surpassing pre-Covid levels, with last year showing continued profitability, record traffic and strong demand. For JetBlue, however, the last couple of years have witnessed operational headwinds—underscored by a failed $3.8 billion merger with Spirit Airlines—forcing the airline to turn its focus inward to improve profitability.

Cannabis investors continue to await a significant catalyst which may hit inside the next month or two.

I expect Attorney General Pam Bondi to implement President Donald Trump’s executive order to reschedule cannabis in that time frame. That’s my best guess based on analysis from people close to the process. No one knows for sure, however.

The news would spark a sellable rally for traders. Long-term investors should hold through.

Rescheduling means moving cannabis to Schedule III from Schedule I under the Controlled Substances Act. That will save the larger publicly traded cannabis companies tens of millions of dollars each in annual tax expenses. That’s because rescheduling neutralizes an IRS rule that bars the deduction of operating expenses against the sale of Schedule I substances.

Critical metals like copper, aluminum and even silver are commanding headlines, thanks to their uses in high-demand applications pertaining to the AI datacenter/infrastructure buildout trends. But lost in the shuffle is what some analysts are calling the “forgotten metal”—nickel. The base metal is heavily used in high-energy battery applications, including for its use in boosting range in EV lithium-ion batteries—particularly with long-range or premium vehicles—with high-nickel batteries currently dominating EV markets in North America and Europe.

The market has been bouncy but slightly higher for the year so far, but it’s a different story under the hood.

Eight of the eleven S&P stock sectors are outperforming the market, and none of them is technology. That’s a stark difference from most of this bull market, where technology and AI drove the market higher while most other sectors underperformed. Now, the rally is broadening.

The market isn’t as expensive as it may seem, as the valuations of many stocks are below that of the overall market and don’t reflect the index returns of the bull market so far. Most of the expensive stocks are in technology, but those stocks are getting cheaper as well.

In this issue, I highlight two of the most promising dividend stocks for 2026. Both stocks have been in the portfolio before and have provided great income and total returns in a short period of time. They also can generate huge call premiums.

The market has rebounded encouragingly from last Monday’s Greenland/tariff fears—and, ideally, that shakeout will prove to be the last one for the big-cap indexes and for growth stocks before a sustained run higher. Still, to this point, while resilient, the evidence hasn’t changed, with the broad market doing well, but also with many areas of the market still lagging. Thus, we’ll again leave our Market Monitor at a level 7, but now’s the time to really pay attention—a reversal lower would obviously be iffy, but a rotation into many growth stocks that have rested for three months is possible.

This week’s list is again well-rounded, with many names acting well ahead of their reports. For our Top Pick, we’ll go with a commodity-ish name that’s finally hesitated the past couple of weeks as its moving averages start to catch up. A bit more weakness should lead to a solid entry.

More than half the country is buried in snow or ice today. And yet, stocks continue to hum along regardless of the weather, economic headwinds or myriad geopolitical worries. A big one was quickly stamped out last week, when renewed tariff threats caused a brief market shock before cooler heads prevailed in Davos. This week will be dominated by mega-cap earnings and another Fed meeting. Given the market’s resilience against all-comers of late, today we take another big swing with a mid-cap industrial stock that was the Top Pick from Tyler Laundon in the most recent edition of Cabot Early Opportunities advisory.

Details inside.

Please note this is an update focused solely on our open positions as I am away from my home office and stuck in travel limbo having been impacted by the snow/ice storm this past weekend. I HOPE to be back at the desk this evening, but that is in question. However, while I’m away from my desk, I am still able to monitor our positions if we need to make moves.

Please note this is an update focused solely on our open positions as I am away from my home office and stuck in travel limbo having been impacted by the snow/ice storm this past weekend. I HOPE to be back at the desk this evening, but that is in question. However, while I’m away from my desk, I am still able to monitor our positions if we need to make moves.

If you are a commodities or small-cap investor, you’d probably be heavily invested right now -- but, for growth stocks, the environment remains challenging, with lots of ups and downs but no real progress, and with most growth funds (including the Nasdaq) under performing even defensive stocks. The odds favor the next major move being up, but until that starts, we’re staying relatively close to shore and waiting for more stocks to get going, possibly during earnings season.

Momentum has broadened out to start 2026, with several previously under‑the‑radar groups (like industrials) showing powerful relative strength, even as last year’s market leaders take a breather.

This month’s issue leans into these emerging trends. I feature companies tied to infrastructure, building systems, aerospace engines, and industrial filtration. I’ve also included a fast‑moving biotech company with multiple near‑term catalysts.

Enjoy!

WHAT TO DO NOW: The market continues to hang in there, but growth stocks have been far trickier, with many pulling back sharply, others testing support and a few breaking down. Still, it’s mostly mixed, with some names perking up, so we’re staying flexible, especially as earnings season plows ahead. This week we sold two names that cracked—MP Materials (MP) and GE Vernova (GEV)—which leaves us with 43% in cash. We’ll stand pat tonight, though we could redeploy some of the money into stronger names if growth stocks continue to stabilize.

There’s been a jump in volatility among individual stocks and some sectors (gold, oil, retail investor favorites, etc.), but at an index level, things continue to be pretty smooth. The S&P 600 SmallCap Index is trading higher than it was a week ago.

Let’s talk about bubbles.

There’s been a whole lot of investor speculation of late over whether we’re near an artificial intelligence bubble, akin to what we saw from the dot-com bubble at the turn of the century or the housing bubble that led to the 2008-09 Great Recession. Indeed, with AI spending (an estimated $300 to $400 billion this year) outpacing revenue (an estimated $60 billion this year) by roughly a 6-to-1 ratio – about double the capital expenditures-to-revenue ratio just before the dot-com bubble burst – the angst over an AI bubble is understandable, and perhaps warranted.

Looking good. The bull market is enduring the historically troubling months of September and October with nary a sign of resistance.

The S&P 500 is up about 15% year to date and within a whisker of the all-time high, as investors are more excited about earnings than worried about tariffs or the government shutdown. And why shouldn’t they be? Government shutdowns are always temporary. And tariff negotiations always culminate in an arrangement that satisfies the market.

Stocks started this week on a strong note. After sluggish performance over the past month, the S&P 500 is gaining steam.

Investors are focusing on the promising earnings season and a tamping down of tensions with China. The Trump administration has moderated its stance on China and will meet with them in the weeks ahead. Meanwhile, earnings season is heating up with Tesla (TSLA), Intel (INTC), Netflix (NFLX), and Coca-Cola (KO) reporting this week.

The introduction of fear to the financial market can be either a good thing or a bad thing—but seldom is it neither.

In the first case, increasing fear among investors in an environment characterized by fairly limited public participation (i.e. an uncrowded market), relatively unstretched valuations and plenty of liquidity often results in the “wall of worry” phenomenon in which stocks actually benefit from the rising fear levels.

Both the S&P 600 SmallCap Index and the Russell 2000 are trading higher than they were a week ago, making the ugly selloff last Friday look like a one-off event.

That said, it’s totally valid to be at least a little concerned about the trade war heating up again. And while it sounds like progress could soon be made in the government shutdown (Senate Majority Leader Thune is rumored to be talking with Democrats about extending ACA subsidies in exchange for reopening the government), there’s little doubt that the longer the shutdown goes on the greater the risks are to the market.

Explorer stocks were mixed this week as Asian stocks struggled amidst increased U.S.-China economic tensions and concern over Chinese economic growth.

Commodities are back but something to keep in mind was mentioned to me by a friend in the energy business: “America is running out of shale oil.” This has big implications for world oil markets and America’s energy mix since if we are running out of the shale oil that can be extracted at about $60/barrel, higher oil and energy prices are around the corner.

Volatility is back, with the VIX spiking above 20 for the first time since early August and above 21 for the first time since June.

Tariffs are the reason. Specifically, escalating tariff rhetoric between the U.S. and China, which spooked the market into its worst one-day selloff since April last Friday, and has prompted wild intraday swings every trading session since. So far, the damage to the major indexes has been fairly limited (the S&P 500 is less than 2% off its highs, as of this writing), but under the surface, a few yellow flags have emerged, including the number of 52-week lows among NYSE-listed stocks topping the magic number of 40 (it’s up to 63) that typically precludes a more pronounced market pullback. We’ll see how much the just-underway third-quarter earnings season can act as a yin to tariffs’ yang and hopefully provide a relatively high floor for stocks in the coming weeks. As I wrote in this space last week, that may depend on whether companies can cross the relatively high bar of 8% earnings estimates.

China could be a problem.

After spending most of the summer and September making a series of new highs, stocks suddenly tumbled on Friday. The S&P 500 fell 2.71% and the Nasdaq fell 3.56% in one day. It was tariff news that caused the carnage.

The market took a big hit for the first time in quite a while last week. But it is recovering nicely so far this week.

After spending most of the summer and September making a series of new highs, stocks suddenly reverted to last April’s form on Friday. The S&P 500 fell 2.71% and the Nasdaq fell 3.56% in one day. It was tariff news that caused the carnage.

In a raging bull market that has benefited virtually every one of the S&P’s 11 sectors, the conspicuous laggard among them has been the consumer staples.


The staples sector is down 2.4% year-to-date, compared to positive net returns on the other 10 sectors. Leadership in recent quarters, which is illustrated in the following chart, includes: info tech (up 13%), communications services (up 12%), consumer discretionary (up 10%) and utilities (up 8%).

Today, a whopping eight Profit Booster positions will expire. Most are “slam-dunk,” full-profit trades, while others will go down to the wire.

The big takeaway, before we dive in, is we are going to let the situation play itself out, and come Monday/Tuesday of next week we will revisit our profits, as well as how we will manage the remaining positions.

Sell Apple (AAPL) and LandBridge (LB)

Right on the heels of yesterday’s Issue featuring new addition Byrna Technologies (BYRN) management released preliminary Q2 revenue. The press release came just after the closing bell yesterday.

Sell a Quarter Position in Pan American Silver (PAAS)

Hannan management was out with two updates this morning.

Sell a Quarter Position in Dollar Tree (DLTR)

Today, a whopping eight Profit Booster positions will expire. Most are “slam-dunk,” full-profit trades, while others will go down to the wire.

The big takeaway, before we dive in, is we are going to let the situation play itself out, and come Monday/Tuesday of next week we will revisit our profits, as well as how we will manage the remaining positions.

WHAT TO DO NOW: The market remains in good shape, but leadership is still developing, with many resilient stocks getting hit while buying moves elsewhere. Today we’re cutting bait with our small position in Penumbra (PEN), which is slicing through support, and replacing it with Rubrik (RBRK), which looks like a new leader in the strong cybersecurity group. Details below.

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 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.