Issues
So far, so good in September, as there’s no market correction in sight. The increasing likelihood of a Fed rate cut later this month is helping to counteract the negative effects of seasonality during the traditional “spooky season.” Let’s hope the Fed doesn’t disappoint when they convene next week. In the meantime, the investing waters are warm, so let’s take a bigger swing this week by adding one of the world’s greatest and highest-profile growth companies to our portfolio. It’s a recent recommendation from Carl Delfeld to his Cabot Explorer audience. And it’s a former market darling that, after a rough couple years, is starting to gain traction with investors again.
Details inside.
Details inside.
The market had another week of heavy sector and index rotation nearly every day, as hot money seemingly is chasing the new fad/theme based on every economic data point and earnings reaction. Yet despite the day-to-day market wiggles, by week’s end not much ground was made or lost as the S&P 500 gained 0.3%, the Dow lost 0.3% and the Nasdaq rose by 1.1%.
The market had another week of heavy sector and index rotation nearly every day, as hot money seemingly is chasing the new fad/theme based on every economic data point and earnings reaction. Yet despite the day-to-day market wiggles, by week’s end not much ground was made or lost as the S&P 500 gained 0.3%, the Dow lost 0.3% and the Nasdaq rose by 1.1%.
The bull market is alive and well, but the growth stock environment remains tricky at best, with more names either testing or cracking intermediate-term support during the past couple of weeks. Eventually, there will be another run in growth, possibly soon given the many stocks that have built launching pads during the past two-plus months; we do have an expanding watch list of solid setups. But for now, we’re playing things cautiously, trying to give our positions a chance but also holding a good chunk of cash until the meat-grinder environment shifts.
Rumors of the global economy’s imminent demise have been greatly exaggerated – at least so far. Indeed, the IMF estimates that worldwide GDP will expand by more than 3% both this year and next, which is in line with the normal GDP growth rate since the Great Recession. And yet, certain stocks are being treated like it’s 2009 out there. That includes this month’s addition to our Growth & Income Portfolio. It’s a big-cap, big-name company whose shares are nearly 30% off their highs, but the firm is on track for its best year in terms of sales and earnings outside of a Covid-era anomaly. It’s a company that flourishes when the global economy is healthy. And the stock is on sale, having not fully recovered from the spring tariff worries.
Details inside.
Details inside.
Today we’ll take a half-sized position in a small-cap company that’s like the Amazon of manufacturing. Its marketplace is revolutionizing this outdated industry and bringing it into the digital age.
Despite several years of depressed manufacturing in the U.S., the company is growing. That’s a testament to its platform. And there’s also a potential growth kicker … Trump’s tariff policies and desire to kick off an onshoring boom.
All the details are inside the September Issue of Cabot Small Cap Confidential.
Despite several years of depressed manufacturing in the U.S., the company is growing. That’s a testament to its platform. And there’s also a potential growth kicker … Trump’s tariff policies and desire to kick off an onshoring boom.
All the details are inside the September Issue of Cabot Small Cap Confidential.
Despite two big potential market-moving events (NVDA earnings and PCE inflation data), the S&P 500, Dow and Nasdaq all finished the week mostly unchanged to marginally lower, while the Russell 2000 (IWM) rose marginally.
For the past two months, the market has been positive by most top-down indicators, but it’s gotten a lot trickier as time has gone on, with many growth areas cracking intermediate-term support, with repeated bouts of rotation and with upward progress slowing down. The good news is that even after today’s broad selling, the intermediate-term trend remains pointed up and many Top Ten stocks are holding their own, but just going with what we’ve seen, it’s getting tougher to make (and keep) much money. Right here, we’ll keep our Market Monitor at a level 7, but we think holding some cash and taking some profits on the way up remains a good strategy.
Despite the rotation, we did see some earnings winners last week among growth stocks, and this week’s list has a few alongside names from other areas of the market. Our Top Pick is a smaller name that broke out powerfully last month and has a solid story—shares are a bit thinly traded, so start small and aim for dips.
Despite the rotation, we did see some earnings winners last week among growth stocks, and this week’s list has a few alongside names from other areas of the market. Our Top Pick is a smaller name that broke out powerfully last month and has a solid story—shares are a bit thinly traded, so start small and aim for dips.
The market’s traditional “spooky season” is here, and stocks are dutifully selling off as they normally do the first week of September. The selling could last a few days or a few weeks. But on the other side of it, there will be big buying opportunities. Until then, let’s try and limit the damage, which we do in today’s issue by selling off one underperformer that’s taken a beating after an underwhelming earnings report and buying a deep value consumer staple that’s too oversold. It’s a stock Clif Droke recommended to his Cabot Turnaround Letter audience last week, and we follow suit here today.
Details inside.
Details inside.
Despite two big potential market-moving events (NVDA earnings and PCE inflation data) the S&P 500, Dow and Nasdaq all finished the week mostly unchanged to marginally lower, while the Russell 2000 (IWM) rose marginally.
Despite two big potential market-moving events (NVDA earnings and PCE inflation data) the S&P 500, Dow and Nasdaq all finished the week mostly unchanged to marginally lower, while the Russell 2000 (IWM) rose marginally.
“Only the paranoid survive.” -Andy Grove
Nvidia (NVDA) met high expectations yesterday for the July quarter, hitting $46.7 billion in revenue, up 56% from the year-earlier period. However, it cautioned that third-quarter revenue growth will not be as impressive, disappointing analysts and investors.
Explorer stocks did not disappoint this week, with many of our positions posting solid gains. Coeur Mining (CDE) shares continue to outperform for us, up 8.9% this week, and Dutch Bros (BROS) shares were up a stellar 16.3%.
Nvidia (NVDA) met high expectations yesterday for the July quarter, hitting $46.7 billion in revenue, up 56% from the year-earlier period. However, it cautioned that third-quarter revenue growth will not be as impressive, disappointing analysts and investors.
Explorer stocks did not disappoint this week, with many of our positions posting solid gains. Coeur Mining (CDE) shares continue to outperform for us, up 8.9% this week, and Dutch Bros (BROS) shares were up a stellar 16.3%.
Updates
In today’s note, we discuss pertinent developments for some of the stocks in the portfolio, including GE Aerospace (GE), Paramount Global (PARA), SLB Ltd. (SLB), Starbucks (SBUX) and UiPath (PATH).
This month’s catalyst report features a mixed bag of longer-term attractive turnaround candidates in industries ranging from car rentals to dental equipment to semiconductors.
This month’s catalyst report features a mixed bag of longer-term attractive turnaround candidates in industries ranging from car rentals to dental equipment to semiconductors.
WHAT TO DO NOW: Remain defensive. The market has gotten off its duff somewhat this week, but as seen the past couple of weeks, there’s still plenty of selling and news-driven action out there. We do think it’s possible a repair process has begun, but right now, the trends of the major indexes and most stocks are pointed down, so we continue to advise a defensive stance. We’ll again stand pat tonight with our four small-ish positions and our big cash position, though we’ll be on the horn if we have any changes (including possibly re-jiggering the portfolio a bit) in the days ahead.
The S&P 600 SmallCap Index is flat over the last week.
The upside move from the extreme oversold conditions that began two weeks ago has faded as the market grapples with tariff uncertainty.
Uncertainty will continue to linger even though Trump clarified part of his tariff plan last night through an executive order imposing permanent tariffs on autos not produced in the U.S.
The upside move from the extreme oversold conditions that began two weeks ago has faded as the market grapples with tariff uncertainty.
Uncertainty will continue to linger even though Trump clarified part of his tariff plan last night through an executive order imposing permanent tariffs on autos not produced in the U.S.
The last two months have felt historically volatile.
Since Donald Trump took office for a second time and immediately started handing out tariffs like they were surprise take-home prizes at an Oprah taping (“YOU get a tariff, and YOU get a tariff!”), the market has been unsettled. And indeed, from mid-February through mid-March, things weren’t simply unsettled – they were bad. Both the S&P 500 and the Nasdaq entered correction territory – the fifth-fastest correction in the last 75 years, in the case of the S&P. Fears of higher inflation and possibly recession have come rushing back to the surface, consumer confidence is at a 12-year low, and interest rate angst is back in full force.
And yet, actual volatility – as measured by the VIX, a.k.a. the “investor fear gauge” – has been … fairly muted?
Since Donald Trump took office for a second time and immediately started handing out tariffs like they were surprise take-home prizes at an Oprah taping (“YOU get a tariff, and YOU get a tariff!”), the market has been unsettled. And indeed, from mid-February through mid-March, things weren’t simply unsettled – they were bad. Both the S&P 500 and the Nasdaq entered correction territory – the fifth-fastest correction in the last 75 years, in the case of the S&P. Fears of higher inflation and possibly recession have come rushing back to the surface, consumer confidence is at a 12-year low, and interest rate angst is back in full force.
And yet, actual volatility – as measured by the VIX, a.k.a. the “investor fear gauge” – has been … fairly muted?
The market has been recovering since it fell into correction territory earlier this month. The S&P was up for the week last week for the first time in a month and Monday was a strong day. But we might not be out of the woods yet.
Even if the bottom is in (which it might not be), it is unlikely that stocks can generate lasting upside traction until there is more clarity on the tariff situation. But the market really hasn’t been as bad as it might seem.
Even if the bottom is in (which it might not be), it is unlikely that stocks can generate lasting upside traction until there is more clarity on the tariff situation. But the market really hasn’t been as bad as it might seem.
In today’s note, we discuss pertinent developments for several of the stocks in the portfolio, including Agnico Eagle Mines (AEM), Alcoa (AA), Atlassian (TEAM), GE Aerospace (GE), Paramount Global (PARA), SLB Ltd. (SLB) and Starbucks (SBUX).
Gold and silver continue to benefit from safe-haven buying, boosting our holding of Agnico Eagle Mines (AEM).
Gold and silver continue to benefit from safe-haven buying, boosting our holding of Agnico Eagle Mines (AEM).
Today’s Weekly Update will be short and sweet. I am traveling back to the U.S. after a March break vacation with my wife, kids, parents and brother and sister’s families in the Bahamas.
The main market event of the week was yesterday’s FOMC meeting, which concluded with the Fed opting to hold rates steady. During his press conference Fed Chair Jerome Powell used the word “uncertainty” about a thousand times.
The main market event of the week was yesterday’s FOMC meeting, which concluded with the Fed opting to hold rates steady. During his press conference Fed Chair Jerome Powell used the word “uncertainty” about a thousand times.
I’m in Japan this week as Warren Buffett indicated that his Berkshire is raising its stakes in Mitsubishi, Marubeni, Mitsui, Itochu and Sumitomo. Berkshire’s average holding across the five stocks increased by just over one percentage point to about 9.3%. This comes as financial pundits continue to determine the meaning of why Berkshire has accumulated a massive cash position.
Perhaps Buffett is betting that America’s share of global equity indices may be close to peaking at almost 70%.
Perhaps Buffett is betting that America’s share of global equity indices may be close to peaking at almost 70%.
March Madness starts today. It’s my favorite sporting event of the year, as the possibilities and unpredictability of a 68-team basketball tournament involving 18-to-23-year-olds never fail to deliver on its “madness” moniker. It’s messy, it’s volatile, and you never know what’s going to happen next. Sort of like the stock market in the era of Trump, tariffs and angst-ridden Fed announcements like yesterday.
Last week the S&P 500 index plunged into correction territory. The Nasdaq was already there. Has the market bottomed out or is there more downside to go?
It’s been a while since selling has gotten this ugly. The last market correction was in October of 2023. This is the second of this bull market, which began in October of 2022. That’s not unusual. Corrections are normal in a bull market. The S&P had run up about 75% in a little over two years and was due for a consolidation, especially the technology sector. But is that all this is or is it something more?
It’s been a while since selling has gotten this ugly. The last market correction was in October of 2023. This is the second of this bull market, which began in October of 2022. That’s not unusual. Corrections are normal in a bull market. The S&P had run up about 75% in a little over two years and was due for a consolidation, especially the technology sector. But is that all this is or is it something more?
The S&P 500 officially hit correction territory last week, down 10% or more from the high. While the bulk of the selling might be near the end, stocks are unlikely to gain significant and lasting upside traction until current uncertainties dissipate.
Last week’s inflation report was good. The CPI number was better than expected and showed a decrease in the level of price increases for the first time in several months. The economy appears to be slowing, but investors are likely okay with that if there isn’t a recession. Those two things add up to lower interest rates. But the tariff uncertainty seems to be preventing any kind of positive new narrative from taking shape in the market.
Last week’s inflation report was good. The CPI number was better than expected and showed a decrease in the level of price increases for the first time in several months. The economy appears to be slowing, but investors are likely okay with that if there isn’t a recession. Those two things add up to lower interest rates. But the tariff uncertainty seems to be preventing any kind of positive new narrative from taking shape in the market.
In today’s note, we discuss pertinent developments for some of the stocks in the portfolio, including Agnico-Eagle Mines (AEM), GE Aerospace (GE), Paramount Global (PARA), Sirius XM (SIRI), Teladoc Health (TDOC) and UiPath (PATH).
Gold and silver continue to benefit from safe-haven buying, boosting our holding of Agnico-Eagle Mines (AEM).
Trump’s tariffs are directly, or indirectly, roiling some of holdings, including Sirius XM (SIRI) and UiPath (PATH). The favorable long-term outlooks for both stocks remain unchanged, however.
Gold and silver continue to benefit from safe-haven buying, boosting our holding of Agnico-Eagle Mines (AEM).
Trump’s tariffs are directly, or indirectly, roiling some of holdings, including Sirius XM (SIRI) and UiPath (PATH). The favorable long-term outlooks for both stocks remain unchanged, however.
Alerts
Solventum (SOLV), a spinoff of 3M’s healthcare business, was mentioned in last week’s CTL podcast.
On Tuesday morning I suggested traders might want to take some profits in positions accumulated the week before, because of a possible dearth of catalysts on the near-term horizon. I also suggested maintaining long-term exposure to the group.
Back on August 28 after the close, I shared bullish commentary on the cannabis group which was melting down at the time.
Yesterday we learned that the Drug Enforcement Agency (DEA) has decided to hold an administrative law judge (ALJ) hearing on rescheduling cannabis. It is set for December 2.
The decision dashes all hopes of rescheduling before the election, sending cannabis stocks much lower.
The decision dashes all hopes of rescheduling before the election, sending cannabis stocks much lower.
Artivion (AORT) Delivers Q2 Beat; Sell Remaining Half of EverQuote (EVER)
Portfolios
An updated portfolio for Cabot Options Institute – Earnings Trader.
An updated portfolio for Cabot Options Institute – Income Trader.
An updated portfolio for Cabot Options Institute – Quant Trader.
An updated portfolio for Cabot Options Institute – Fundamentals Portfolio
An updated portfolio for Cabot Options Institute – Fundamentals Portfolio
An updated portfolio for Cabot Options Institute – Quant Trader.
An updated portfolio for Cabot Options Institute – Income Trader.
An updated portfolio for Cabot Options Institute – Fundamentals: All-Weather Portfolio
An updated portfolio for Cabot Options Institute – Income Trader
An updated portfolio for Cabot Options Institute – Quant Trader
An updated portfolio for Cabot Options Institute – Fundamentals: All-Weather Portfolio
An updated portfolio for Cabot Options Institute – Quant Trader
Strategy
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.