I’m not going to sugar coat it: We are in a dodging rain drops type of market as every day a handful of stocks break down, and then continue to fall apart in the days that follow.

The same culprits continue to plague the market: historically heightened levels of inflation, upcoming Fed rate hikes, and escalating geopolitical tensions between Russia and Ukraine, with growth sectors taking the brunt of the pain. Last week the Dow lost 1.9%, the S&P 500 fell 1.6% and the tech-heavy Nasdaq dropped 1.8%. Year-to-date the Dow, S&P 500 and Nasdaq are lower by 6.2%, 8.8% and 13.4%, respectively.



Until we see some clarity in the areas of concern, the market could be in for some more rocky days/weeks like we have experienced since November, and that’s OK and normal.

The good news about the cannabis sector is that after a year-long decline, the stocks are cheap, and the sector is building a bottom.

The bad news is that we don’t have an uptrend yet.



But I do see a lot of constructive chart patterns, and as fourth-quarter reports are released in the weeks ahead (there’s one tonight), I’m optimistic that buyers will find their way back to the stocks of this great growth industry.



Full details in the issue.



Yours for wealth and wisdom.

Stocks remain under pressure as a mixture of geopolitical threats and inflation concerns weigh on the market’s growth-oriented segments. Meanwhile, as the major indexes test their January lows, we remain on the lookout for signs of bottoming and constructive setups—particularly in the tech sector. For now, though, we advise caution as this is still very much a stock picker’s market.



This week’s list includes a nice mix of key industries that are benefiting from current economic trends, including a few that have had excellent earnings reactions. Our Top Pick is a stock that should get a boost from a potential increase in travel and vacation demand in the coming months.

More Metals Join the Bull’s Parade
For the first time in recent memory, metals are looking good across most major categories. Base and precious metals are showing varying degrees of strength, while energy metals like uranium and lithium are trying to establish bottoms. Even gold is showing more sustained strength than we’ve seen in several months.

In the portfolio, we just added a new position in a blue-chip gold stock and have initiated an additional new buy in a platinum/palladium closed-end trust.

With many people watching the developments on the Ukraine front and the inflation front, my focus is on the broad market’s lows of late January, which serve as a line in the sand that we don’t want to see crossed. And because the market is technically in a downtrend, I continue to focus on lower-risk stocks, and hold a healthy cash position as well.
The only change to the portfolio today is the sale of Oracle (ORCL), which is going the wrong way.


As for the new recommendation, it’s a well-established American brand whose stock has shown great strength recently.


Details inside.

The potential for an accelerated timetable for the Fed to raise interest rates and the ongoing Russia-Ukraine situation led to volatility this week. As always, other events and news also moved stocks. In particular, Sea (SE), after bouncing back the previous two weeks, was off sharply on Monday following reports that India has banned its popular mobile hit “Free Fire”. The stock has since recovered half of this pullback to close Wednesday trading at 141.

In the February Issue of Cabot Early Opportunities we take a quick look at the big-picture events influencing the current market then dive into five names that keep jumping onto my radar.
This month we take another spin with two names that served us well in 2021 and add a software company that has the potential to be a massive player in the digital economy. We also take half a stake in a watch list name and refresh that list with an exciting IoT company.


Enjoy!

The $1.2 trillion infrastructure bill money should start flowing this year. This issue we feature two businesses that should benefit from the influx of capital into public spending on top of their already positive growth.

Action in Greentech has us cautiously optimistic that the sector is reversing the bearishness that has gripped tech stocks and renewables for the past few months. In this issue, too, is our ESG Three stocks to consider, a glance at what out Greentech Timer tells us and a full update on our Real Money and Excelsior portfolios.

The big news of last week was inflation data came in well above expectations on Thursday as the consumer price index (CPI) rose 7.5% year over year. This was the largest increase since 1982.
Shortly after, rumors of an emergency rate hike made the rounds on trading desks as the 10-year Treasury yield pierced the 2% mark for the first time in three years. Following this development, rate-sensitive sectors and growth stocks underperformed.

Note: Due to the Presidents’ Day holiday, when the stock market is closed, your next issue of Cabot Stock of the Week will be published on Tuesday, February 22.
This week’s stock comes from a recent issue of Cabot Top Ten Trader, which is always on top of the market’s strongest stocks—recently has included a lot of energy and financial stocks. This is one of them.



As for the current portfolio, we come into this week holding 16 out of a possible 20 stocks, and …


Details inside.

After a three-week rally, stocks hit resistance at logical levels, with the indexes backing off … though they still remain nicely above their January lows. It’s possible we’re starting a re-test phase, with the major indexes and many stocks set to attack their January lows. But, really, we’re less concerned with gaming out the daily action than with sticking to the overall evidence—until proven otherwise, the trends of the major indexes, of growth-oriented funds and of most stocks is pointed down, so we advise remaining generally defensive and patient as we allow more stocks to build bottoms and form legitimate setups.



That doesn’t mean, however, that the wheat isn’t starting to separate from the chaff among individual stocks. This week’s list has a bunch of stocks that have shown some great-volume accumulation during the past two or three weeks, though our Top Pick is a solid long-term setup ahead of earnings.

Welcome to the Inaugural Issue of Cabot Money Club Stock of The Month

Each month, in this advisory, we will be spotlighting a new recommendation from one of our Cabot experts. We will include an interview with the analyst and bring you his or her latest thoughts on the stock we pick as well as a summary of the analyst’s expertise and experience.

We will also include a brief market update, and a longer piece highlighting the macro industry—the pros and the cons—in which our stock pick resides.

And as is usual with our Cabot advisories, we will maintain a portfolio of our stock picks, to give you a one-shot picture of our holdings.

Welcome!

This week is a reminder that markets don’t always go up. The big surprise was that it took so long for global markets to wake up to the threat.

Since January, this market had been merrily whistling along through the coronavirus risk. It was enough to cause a selloff for a day or two but not enough to derail the bull move to new highs that had been in place since early December. This week that changed.

The COVID-19 problem, as it pertains to the U.S. stock markets, is compounded by the fact that the S&P 500 index had risen about 12% since October.

We’re mostly bullish, and are giving our winners room to keep running, but we’re also still looking for decent entry points in stocks that appear to be early-ish in their advances.

Regarding the here and now, we’re starting to see signals that we could have a market dip, which would be entirely normal given that it’s only had two small retreats since stocks began racing higher in September.

It is likely that a pullback in the market, as measured by the indexes, is increasingly likely in the near term. But that would be healthy and welcome. And it would set up things better for the rest of the year.

The coronavirus continues to make headlines, with this week’s victim being Apple Inc. (AAPL) which announced that 2020 revenues are going to take a hit from the work stoppages emanating from China.

Individual stocks continue to move around based on earnings reports and, for the most part, things appear to be quite good. Many management teams aren’t yet sticking their necks out and issuing rosy guidance for 2020, and that’s causing a few dips here and there.

The markets are demonstrating impressive resiliency in the face of the coronavirus. You can’t fight the market but I remain a bit more guarded since this disruption will have to hit profits down the road for some companies.

Our second recommendation is a sale of a restaurant company that will be slow to recover from the pandemic.

Hit by the slow economy, our first idea is a mortgage insurer is trading at a discount, and its addition to a visible index should help attract investors.

Yesterday, after the market closed, rumors emerged that this portfolio stock is once again in talks to sell their gas stations.

There are five holdings in this fund.

Yesterday we decided to sell a stock due to lackluster performance over the last month.

Tomorrow is the expiration of June options and we are going to close five positions for full profits ranging from 9.75% to 17.64%.

COVID-19 caused travel and destination companies to lose ground, but this ski resort is holding up well.

Nine analysts have increased their earnings estimates for this semiconductor manufacturer in the past 30 days.

Our next recommendation is profit-taking on a previous pick.

Our first idea today is a tobacco company that has an 8.55% dividend yield, paid monthly.

This portfolio stock reported good second-quarter results and moves from Hold to Buy.

This Canadian telecom company just launched its 1.5 gigabit TELUS PureFibre, the only 100% fiber-to-the-premise network widely available from a major carrier in Western Canada.

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.